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. [Operator Instructions] I would now like to turn the call over to Michael Hance, Chief Legal Officer.

Good morning, and thank you, operator, and thanks, everyone, for joining the call today. Before we jump in, I just wanted to take a moment to thank our teammates, customers and shareholders, many of whom are on the call today for the incredible support over the last several months as I served as Interim CEO. In particular, I want to acknowledge the employees and independent contractors and drivers who have been and continue to work tirelessly to provide best-in-class service to our customers and make this combination that we're working on the success. I'm humbled by what you do, and I am so grateful for your hard work. Thank you. Last quarter, I told you that my mandate as interim CEO was to provide the appropriate leadership while our teams continue to work through the integration of Forward and Omni. At the same time, our Board's dedicated search committee was focused on promptly identifying a top-quality CEO to run the Company during the next phase of our growth and development. That work is done, and I personally couldn't be more pleased with the outcome. I'm thrilled to introduce you to Shawn Stewart who began his tenure as CEO of Forward on April 28. The Board and our advisers conducted a thorough search and are confident Shawn is the right leader to drive Forward's future success. He knows this industry inside and out and has a demonstrated track record of successfully delivering growth, operational excellence and profitability. As an 18-year veteran a Forward who cares deeply about the Company's success, I'm personally committed to ensuring Shawn hits the ground running as I return to my role as Chief Legal Officer and Secretary. And I know all of our teammates share that same commitment. I'll close by reiterating that we recognize these past few months have been bumpy as we navigated turbulence in the freight market and within our company. Our team is confident that is behind us, and we are all united and energized by the opportunities ahead. With that, please allow me to turn it over to Shawn for his remarks before Rebecca runs us through the numbers. Shawn?

Thank you, Michael, and thank you to those on the call who have provided a warm welcome and words of encouragement as I assume my new role a week ago, Monday. I won't go into more details about my background as I'm sure you've all seen the press release. But let me just say that I couldn't be more excited to join forward at this critical juncture. The addition of Omni paves the way for the Company to become a market leader in global supply chain as we leverage the new capabilities while enhancing our best-in-class expedited LTL and others round services. I'm going to pass the call to Rebecca in a moment to provide you with details about our financial results. Given that I've been here less than two weeks, I'm not going to speak too much, except to say that these results are not indicative of what you will see from us the rest of the year. We are headed up and onward from this day. I also want to share my view about the context of the Company's Q1 performance, which I think is important to keep in mind. Our first quarter results were negatively impacted by two really tough headwinds. First, these results were generated in a weak freight environment. Second, I'm convinced that these results reflect the impact of the distraction by the challenging circumstances leading up to the closing of the Omni transaction. I wasn't here, but you don't have to write a roller coaster to know that people riding the roller coaster probably aren't focused on much else. Since closing, Michael and the team have done a great job pushing forward with integrating two companies and capturing synergies, which you will hear more about later. But I think it's really unrealistic to think…

Thanks, Shawn, and good morning, everyone. Let's start by reviewing the fourth quarter results for 2024. I'm not going to read through slide by slide, but will reference certain slides by number when helpful. Before I dive into the numbers, I want to reiterate a point that Shawn made in his remarks. We do not believe that our first quarter results are indicative of what we expect for the remainder of 2024. Those numbers don't tell the full story about the potential earnings power of the combined company. Let me highlight a few of the reasons why, some of which Shawn has already touched on. First, the first quarter is always the worst quarter of the year for business based on historical seasonal trends. Next, these results continue to be impacted by challenging market conditions that persisted throughout the quarter, particularly in the Intermodal, Truckload Brokerage and Omni lines of businesses. The challenging market conditions led to decreased customer demand for those services, a pattern that we have seen since the second quarter of the prior year. As we continue to execute our revenue growth strategies in the first quarter, we saw positive trends in our less-than-truckload business with weight per shipment growth of 7.4% and shipments per day growth of 1.4% over the same period last year. We have experienced solid retention levels with our legacy Forward customers, which has been positive for revenue growth. During the first quarter, we also saw a 0.7% increase in our revenue per shipment, excluding fuel and a 6.2% decrease in the revenue per hundredweight, excluding fuel, over the prior year period. The decline in the revenue per hundredweight, excluding fuel was driven primarily by the shift in the business mix as we execute on the expansion of our door-to-door solutions. Finally, our…

[Operator Instructions] First question is coming from Bruce Chan with Stifel.

This is Andrew Cox, on for Bruce. We know it's early, Shawn, but we did want to square up what you feel your mandate here at Forward is. Why did you take this position, what you bring to the organization? And what do you feel you can get done in relation to those areas of improvement you found to be very attainable in your diligence?

Thank you, Andrew, for the question. Well, to be honest with you, I love this business. And when I looked at the opportunity of two great companies that I respected from my past coming together, I saw the true potential of that, obviously, also was the bumpiness of the transaction. And secondly, Andrew, I love challenge. So for sure, it's going to be a great challenge, but one that I'm extremely excited about, ready for, and I know we can bring this together and draw the true potential of this acquisition together. And so that's why I took the opportunity.

Great, Shawn. We look forward to seeing what you're capable of achieving here. And Rebecca, if I could just follow up with a quick one. I know you guys are within the realm of the debt covenants this quarter. But I just wanted to know if you had any response from creditors, how much runway they may be willing to give you moving forward?

Yes. Andrew, thanks for the question. We've looked -- as we talked about, we'll come back in our second quarter and give full year guidance for 2024. But we talked about the levers we're going to pull in terms of profitability, in terms of cost reduction, in terms of asset divestitures. And so when we look at all of that, which is on the table, we believe that we'll continue to be within our bank covenants. And so there will be no need for us to go back and talk with our creditors. So we just feel confident in the plan that we have in place and we've now Shawn on board. We're very focused on working through those levers, and we believe that, that will help us in terms of having -- continuing to have the headroom from now until it becomes a maintenance covenant.

And we'll take our next question from Bascome Majors with Susquehanna.

Can you talk a little bit about the results of the Omni [Auto] Ada and anything you learned out of that? And did any of the historical figures change and why?

Yes. Bascome, great question. In terms of the preliminary numbers that we talked about on our first -- on our fourth quarter earnings call, as we mentioned, the audit was in progress at that time. We did not have any number changes from that preliminary estimate from our fourth quarter earnings call. It was more of getting through the audit process to get it complete.

And on the last earnings call, you talked -- I mean, yes, we can see the quarterly cash flow in the statement, but there's a lot of noise from the deal and working capital there. On the last call, you talked about being cash flow positive relative to debt service for the first four or five weeks of ownership. How has that played out? Now that you're several months in. Are you pretty comfortable about that? And how much breathing room do you have?

Yes. Bascome, as we -- you're right, we did talk a bit about first four to five weeks of what we saw from a liquidity standpoint and being able to generate cash to service the debt. As we -- as I talked about earlier, we have had quite a bit of onetime only cost in the first quarter. We expect there to be some additional onetime-only costs in the second quarter. But when we look at the second half of the year, we believe that noise will be gone and we are back to normalization. And so I do think that once you strip out those onetime only costs, I do think that we are free cash flow positive, and we feel pretty good about that. We just got to get some of these onetime costs behind us to get to the second half to have a normalization.

And I know you don't want to guide the second quarter at this point, but do you have any sense of the magnitude of those onetime costs and how they will compare as a cash flow drag to what you experienced in the last few months?

Yes. I certainly think -- you're right, that we are not guiding to the second quarter, but I think there were the largest ones coming out of the closing of the acquisition are in the first quarter. So I think the height of them are in the first quarter, and they will paper down into the second quarter.

You talked about normal seasonality, March to April typically being negative. So it's good to hear that, that's headed in a more positive direction. Could you quantify that and just give a range around how super seasonal we are here?

Yes. I think it's -- from our standpoint, we know that it's positive. If you look back to last year, there was a bit of some noise in terms of where the market was in second quarter from March to April of last year. So I think you can probably reference back to there in terms of where we are this year. It's a little more, I would say, normalization in terms of where the market conditions are. So we like to see this as a favorable in terms of the sequential growth from March to April, given that those market conditions are now somewhat the same between March and April. And so that gives us a lot of confidence in terms of our ability, as we talked about, become profitable and have the revenue growth and the synergy capture between the two entities.

And last for me, just to clarify that point. You talked about revenue being super seasonal month-over-month with the growth. Does operating income or profit follow that shape as well? Or has that been different?

Yes. We're just not in a position on this call to be able to speak to the bottom line for that revenue. Generally, one would think that revenue is up in terms of being able to cover off on those fixed costs. So generally you would expect for there to be the profitability to follow the revenue. But we're not just in a position on this call to be able to address the numbers.

We'll take our next question from Scott Group with Wolfe Research.

Good morning. Nice to speak with you, Shawn and Rebecca. So I just -- one thing I just want to clarify, wasn't following. The slides say that there's been $55 million of synergies realized to date, but it sounds like Rebecca, you're talking about a much different number. So could you just clarify that?

Yes, sure. Scott, good question. If we look at this slide, I just want to -- maybe it's helpful to kind of walk through some of these numbers. So the $55 million is what we've already achieved. That's the annualized run rate. We recognized $7.5 million in our P&L in the first quarter. So that would be over 12 months is the $55 million and the $7.5 million is what we recorded in the first quarter. For the first 12 months of this year of 2024, we expect that number to be $47 million. Does that help to clarify?

Yes. That's helpful. So I know we're not getting specific guidance, but do you think Omni gets back to positive EBITDA in Q2 as the synergies ramp and given the revenue uptick you're talking about?

Yes. Scott, as you mentioned, we're not going to give guidance for Q2, but we are -- we recognize that this is a top priority for us, and we are focused on the levers that we can pull in terms of generating profitability for the combined entity, really focusing on revenue growth, focusing on the cost structure and being able to align that cost structure. And so I think between those two as well as our synergies. So I think between the profitability of the revenue growth, I think looking at the cost structure and as well as the synergies, I think those are all levers that we are actively working to be able to generate profitability, not only for Omni, but also for the combined entity.

Okay. Maybe I'll try to ask it a little differently. So you said that you expect to stay within the covenants, and there's -- obviously, there's a lot of noise in a lot of add backs. How much EBITDA do you need to generate in Q2 to stay within the -- stay under the 6x covenant?

Yes. Scott, I think as we said, we're not going to give the guidance, but we -- we'll give you more full year guidance when we get on the second quarter call, but we obviously have projected out what we believe and we foresee the earnings potential of the combined entity to be. And so looking at those numbers and being able to run the calculation, we believe we'll still have the headroom as we go into the second quarter. And just as a reminder, the second quarter is the first time that we officially have to test for that financial covenant. That will only allow us access to that revolver. But we feel really -- we've run the numbers and we feel like there's the headroom, and we'll be in compliance as we look ahead, and we look forward to sharing more about that full year guidance on our next earnings call.

Okay. And then the March to April commentary, is that -- did you see that at -- Expedited, Intermodal, Omni, where are you seeing the sequential improvement? Is it everywhere?

Yes. That was a -- that's a consolidated number, but we have seen growth in all lines of business.

Okay. And then maybe just last question. So the way that you guys reported today in terms of Omni has its own revenue and earnings line and then adding back the purchase amortization, which I think is something you haven't done before. Is this the new reporting structure just so we have for our models?

Yes. I think, Scott, with Shawn on board, we're certainly going to evaluate our segment reporting. And as Shawn sees fit in terms of how he views the business, those segments potentially could change. We're not -- right now, we're not able to speak to what that may or may not look like. I will say from an acquisition amortization standpoint, we do plan to add that back going forward. So I think you can count that in your model. But I think in terms of the reportable segments, this may or not shift depending on how Shawn views the business on a go-forward basis.

And we'll take our next question from Stephanie Moore with Jefferies.

Shawn, I wanted to touch on some comments that you made about some of the early revenue synergy captures that you're seeing and just the opportunity there. So maybe you could talk a little bit about the genesis of some of those synergies, [indiscernible] demand from your current customers and just thoughts on kind of revenue synergies now with you at the helm and obviously, the integration in place?

Thank you, Stephanie. So what I see here is, obviously, the legacy Omni business utilizing the asset of Forward is a big piece. And when you start looking at the potential future, it's important when people look at and they make decisions on, do you have your own assets or not? And so I would say there is two major segments here of the domestic Forward moving into the network; and two, how we leverage how we're leveraging our international business, utilizing the network on a pre and post international business.

Got it. I guess maybe taking this -- I guess, one point of clarification, and maybe you said this before, but I'm just trying to get a sense of it. The historical monthly seasonality between March and April, what is that normally, for total company or tonnage or the best ways that you break that out?

Yes. I think, Stephanie, what we said in our earnings release is that if you just look at last year, it was a contraction. It was 15%, and that was on a pro forma basis between the two companies. So that wasn't just us buying Omni to increase that number. That was on a pro forma basis. So it's negative 15% last year versus a 6% growth this year.

Got it. And then just, I guess, another one for me. You talked about the continued focus on a portfolio review. Any color there in terms of which assets within the business do you think might be not helpful or not part of the strategic plan of the combined entity with the legacy Expedited and Omni businesses? Can you give us a little bit more color on what might not be part of the long-term strategy?

Stephanie, this is Michael. Great question. And we are actioning a plan to divest noncore assets in 2024. But really, we can't give specifics beyond that, but that -- we are working that plan aggressively.

Okay. But in 2024, got it. That's helpful. And then lastly for me, I think it will certainly be helpful to get some more color on 2024 guidance when you provide -- when you report 2Q. That being said, at that point, we will probably be -- you know at that point, we will be eight months into the year. And as you can imagine, we're all going to be focused on 2025 as well in some respects. So any chance of updating maybe kind of the long-term potential and a long-term -- or provide a multiyear view of what the combined entity can be or at least maybe update some of those original numbers that were provided when the acquisition was announced?

Yes. Stephanie, I think as Shawn mentioned in his remarks that we are looking to give transparency to the investor community. And so I think there certainly could be an opportunity for us to be able to give a longer-term view because you are correct. By that time, we will be through the large portion of 2024. So it's certainly not off the table. And we want to give the right view to the shareholder and analyst community to better understand the value that we see with the combined entity.

We will take our next question from Christopher Kuhn with Benchmark.

Shawn, welcome to Forward.

Thank you, sir.

Rebecca, I think you said the historical EBITDA figures didn't change, but I mean, it does look like maybe some of the adjustments might have from the presentation you gave last year to the presentation you have this morning. Can you just help me understand that?

Yes. So maybe, Chris, just to make sure that I understand. I think you're referring back to the presentation, the investor presentation we gave in -- in August of 2023. Is that correct?

Yes.

Yes. There's only just a handful of adjustments that were excluded from the presentation, more so to conform with non-GAAP reporting for a public company. And so there's just a handful. It's really just a pro forma EBITDA adjustment that were removed from that presentation and carried forward. Otherwise, everything is the exact same.

Okay. And to that end, there's $65 million of EBITDA add backs in the quarter. You broke that out a little bit more in the quarter-to-date numbers for -- can you maybe break out that $65 million, so just we can understand what's in there? I know there's transaction costs, but maybe what's in that number?

Yes, that's right. The $65 million is really -- it's broken out into two numbers, the largest of which, as you have pointed out, is going to be the transaction and integration costs and then severance cost is the other piece that we have in there. So this transaction and integration costs would be anything that's related to this acquisition that the combined entity incurred during the quarter that's in our P&L. And then the severance cost, obviously, our reduction enforced actions that were taken. And so it's the cost associated with those. We consider those to be onetime only nonrecurring costs.

Okay. Okay. And then just, I think, did you mention on the how -- did you mention during the call how that core LTL network business did? I know the Brokerage business and the Intermodal business hurt the EBITDA. But I'm just wondering how the core LTL business did or in terms of your expectations?

Yes, certainly, from our less-than-truckload line of business, our core business, as you've called from an operating tax standpoint, we saw some favorability in terms of the volume growth. And we certainly saw from a revenue per shipment standpoint, ex fuel, we also saw some positive growth there. That would reflect a staggered GRI coming in to the revenue throughout the quarter. But we did see some green sheets in our less-than-truckload line of business. So we feel really good about that in terms of the first quarter.

Yes, I'm just -- I'm wondering about the EBITDA. I know you don't break that out, but I'm just wondering how the EBITDA is in that core business, just based -- compared to your expectations?

Yes. We didn't break that out. We talked about that from an Expedited freight segment. But certainly, Chris, just -- I think the -- what we're seeing from a positive nature on the operating stats, I think, certainly would reflect the positivity from an EBITDA standpoint.

Okay. And then just lastly, you talked about the freight markets being weak in the first quarter, but what does that persist into the rest of the year? How do you feel comfortable in terms of your covenants and reducing the leverage and hitting your cost synergy targets?

Yes. So certainly, Chris, as we're thinking ahead to those covenants. Certainly, what we can speak about is what we can control. And so what we can control are taking out costs. And so kind of rightsizing the cost for the combined entity. We can control in some respects, right, kind of asset dispositions. And then obviously, continuing to grow from a revenue of profitability. It is, as you pointed out, it will be a bit difficult from the revenue profitability in this environment. But we've seen already April being positive. We now have Shawn that's on board. And so we see all of that as being some good signs as we head into the second quarter.

[Operator Instructions] We'll take our next question from Bruce Chan with Stifel.

It's Andrew again. I just wanted to address attrition, both on the customer side and on the Omni's sales force side. Last quarter, you said you guys weren't seeing any material customer attrition. I just wanted to know if anything has changed there. And then also, what's the attrition been like at Omni sales force and what's the plan to integrate the team? And then as a follow-up, Shawn, what are some of the things that you can bring and what you can do to defend against both customer attrition and attrition of the Omni sales force?

Andrew, happy to answer. This is Michael. I'll start and then pass it to Shawn. I'm pleased to report that the answers on customer attrition and salespeople attrition is still positive. I mean I've had many interactions with our customers over the past several months. And as Shawn said on the call in his opening remarks, they're looking for us to continue to provide them with the same great service that enables them to win, and we are committed to doing that and have continued to do that. And so we have not seen customer attrition. And with respect to the sales team, we have a great sales team, and they are laser-focused on winning in this tough environment, and we're grateful for that. And there are, as part of one of our integration work streams is sort of working on how to integrate from a commercial side and sales side, and that's fully engaged and ongoing. And I think with Shawn now at the helm, he'll be speaking into that and directing it and steering it. And you'll hear more about that in days ahead, but Shawn, I'll pass the mic to you on that.

Yes. So thank you for the question, Andrew. Look, in full transparency, if you're not growing your debt in this business and I'd like to spend a large majority of my time personally involved with customers. So obviously, I've got a lot of work to do ahead of me with the team to get the most optimal out of this venture quickly. But I will segment my time over this next quarter to split those time capsules, if you will, between direct interaction with customers, with the sales team to ensure that we continue to give that confidence and listening to understanding what solutions we can bring to their supply chain throughout this combined network.

And Andrew, if I could just jump back in. I'm not doing justice because I've had the great pleasure of sitting with our sales leaders and working with them closely over the past several months. And I just can't tell you how impressed I am with them and how dedicated they are to be delivering that great service to our customers. I've been in so many meetings where they get kudos from the customer because our people are just so committed. So I think that is a great asset for us and something that, as Shawn said in his remarks, our great people are the foundation for which we're going to build on. And so I just want to call that out specifically and say thank you again to those folks who are listening on the call.

We will take our next question from Tyler Brown with Raymond James.

So -- just so I have it on the EBITDA calculation for the debt covenant. Is it basically you just take the last four quarters of pro forma EBITDA and then they add kind of the run rate synergies. Is that effectively correct?

Yes, Tyler. On our debt, we did give -- in the appendix, we gave a reconciliation for the trailing 12 months. But you're right in terms of just the pro formas of the last four quarters and then there's adjustments that we add back, the largest of which would be our due diligence transaction and integration costs. But then you're right on the run rate of the cost synergies. So that's right. It is -- the $75 million obviously adjusted for any that we realized within our own P&L or wins that we've achieved. But in implicit terms, that's correct.

Okay. So if I come back to Scott's question at even kind of another different way, but what was the bank applicable pro forma EBITDA in the second half of '23? Do you have that by chance maybe for Q3 and Q4 because it's very hard to do the calculation?

Yes. We just provided the -- the bank's calculation is on a trailing 12 months. And so we wanted to be transparent in terms of what that looked like. And so we provided the trailing 12 months versus breaking it out between the quarters to get there.

Okay. Well, obviously, cash flow is going to be super important here. And based on the comments, again, because I think on the last quarter call, you said that February was cash flow positive, which implies that March was a big burn. I mean, can you commit to having positive operating cash flow in Q2? Or you're just not ready to do that?

Yes. I don't think we are ready to speak to really Q2. But Tyler, I can assure you that this is a -- as you said, this is a top priority for the Company. We are very focused on liquidity. We're very focused on deleveraging. We will acknowledge that there are some onetime only cost in the second quarter as we have some lingering expenses to be paid from this acquisition. But once you get to the second half of the year, it's more in a normalized environment. We also believe that these synergies that we've talked about, we've already proven that $7.5 million in our P&L for the first quarter, and we believe that there is more yet to come in the second quarter and in the second half of the year. So -- also, as we talked about on the cost reduction, we have some programs that are underway as we speak. We'll give you more clarity of those on our second quarter earnings call. But all the actions that we are taking sets us up to be able to be cash flow positive, as you have asked in your question, and that's what our focus is, and that's what we're working to be able to provide you on our second quarter earnings call. But hopefully, that could give some context about how we're viewing liquidity and the actions that we're taking.

Okay. A couple more. So I think on the cash flow statement, you also paid out a $12 million earn-out. What was that for?

Yes, that's right. It's down in the financing section. There was a legacy Omni acquisition where we were -- an earnout was earned and due and payable. It was split between Q1 and Q2. So the $12 million that you see down in the financing, that's one piece of it. There'll be a second piece in the second quarter.

Okay. Equal size.

No, it's a smaller. A larger portion was paid in the first quarter. It's a smaller portion in the second quarter.

Okay. And my last one, so on the leverage ratio calculation, I thought that the cash cap was, say, $50 million. It seems like you were able to add back $155 million in the [calc] this quarter. Am I just misunderstanding how the calculation is done?

No. Tyler, after a further review, we are able to add back unrestricted cash, which essentially is our domestic cash. And so that is correct. That's why the $155 million is a tieback to our balance sheet because we were able to take a larger portion of that as long as it's not restricted cash to deduct. It's netting against the debt.

And next, we'll take another question from Bascome Majors with Susquehanna.

Just to go back to Tyler and Scott's angle, as we look at the trailing 4Q lender EBITDA, you're going to lose the second quarter of last year, which will obviously be challenging even with sequential improvement versus the first quarter of this year. Is there any way to frame the lender number of EBITDA on an adjusted basis for the second quarter last year, just so we can think about the risk of losing that going forward?

Yes. I think, Bascome, again, we -- you're right that we will drop off as we move into the second quarter. You're right, we will drop off one quarter. I think it's -- as we've kind of started the call, I'll kind of go back to what we had, Shawn and I, both have said is that we just don't believe that the first quarter is really representative for the remainder of the year. And so while we do -- we will drop off that quarter, as you mentioned, I think as we think ahead to second quarter, I think it's a misnomer to believe that Q1 will be reflective of Q2 results. And we have actions that are underway in terms of all the things that we've talked about. And so with that, we do believe that we'll be in compliance. And so even with dropping off of last quarter and picking up our second quarter results.

Okay. And, Shawn, maybe from you, I know you've been here days, not months, quarters or years, but you spent a career at a business that was acquired and then owned by highly leveraged state for a long time. Can you talk a little bit about sort of the -- kind of leverage crisis-type experience that you learned from that? And how that skill set of both running a business while managing a challenging debt load and cash flow situation has led you to this opportunity here at Forward Air? And what you've learned from that, that will enable you to create value for equity holders here over the next few years?

Sure. I appreciate the question. I would say, just maybe a high level, what I learned is that you don't win the game playing defense and you don't win the game just play an offense. It's how you play both of them at the same time, to bring a situation that's not so good into something that's really positive. And so my approach to this opportunity of being here is that we are completely focused on both of those at the same time, and that will take us to the optimal situation that we need to be in at the quickest rate.

And that will end our Q&A session, and this will conclude today's Forward Air First Quarter 2024 Earnings Conference Call. Please disconnect your lines at this time and have a wonderful day.