Forward Air Corporation (NASDAQ:FWRD) Q1 2024 Earnings Call Transcript

Forward Air Corporation (NASDAQ:FWRD) Q1 2024 Earnings Call Transcript May 9, 2024

Forward Air Corporation isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: 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.

Michael Hance: 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?

Shawn Stewart: 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 that the ups and downs of the months leading to closing are reflected in our Q1 performance. Thankfully, that distraction is behind us now. As I mentioned, it is premature for me to start talking about Ford’s numbers, but today, I want to commit to two things. First, as I said earlier, we are headed up from here. When we are back on this call at the end of the second quarter, I believe we will be talking about different results that show significant improvement. I need a little bit more time before we are ready to give you targets, but I can tell you that in my first days with the team, we are focused on accelerating synergy capture and identifying opportunities to eliminate significant costs from our structure.

We are going to aggressively and urgently address our profitability issues, and I fully expect us to be a category leader in our space with corresponding financial results. Second, we are going to enhance our investor communications to ensure that we are clear, transparent and comprehensive with our data and communication. You should expect to see steady improvement in information flow over the next couple of quarters, providing you with the financial information that you need and want. Starting with our second quarter earnings release, we will provide full year 2024 guidance and information about our path to achievement. Why am I confident about these commitments, because I did my own diligence before accepting the Forward opportunity. And I found a number of things that I like and I’m excited about.

First, this organization is made of great people. During these first two weeks on the job, I’ve been impressed with the quality and dedication of people I’ve met throughout the legacy Forward and Omni business. And I’ve been pleased to find that these businesses share a common DNA of providing excellent customer service. That will not change, and the quality and commitment of our people will serve as a strong foundation for our growth. Second, I can’t stress this enough. As a result of this combination, Forward now has an incredible and unique platform for long-term growth and success, and its current areas of underperformance are very addressable. Let’s talk about the platform. In the Omni legacy business, we now have a true global supply chain network to add to our core LTL network.

Remember, we run the best-in-class premium service LTL network in the U.S. with an on-time percentage of 98.6% and a cargo claims ratio of 0.04%. We are starting to see the power of the revenue synergies of these assets. Because of our combined capabilities, we were recently awarded a substantial volume of business from a Fortune 500 global technology company. We are finalizing the contract now, and we expect the business to start in June. We have similar opportunities in the advanced stages of our sales pipeline. Also, we continue to gain new business wins from existing customers. As an example, we recently renewed a contract with one of our top 20 legacy Forward customers that will generate an annualized revenue 4x its historical trends. Additionally, in a tough freight environment, our intermodal team added 13 new logos in the first quarter.

All this makes me optimistic about the rest of the year. Another point of strength is our broad and attractive customer base spanning our three distinct commercial channels. Let me pause to say thank you to all of our customers for your business and support. Under my leadership, we plan to drive growth in all three channels, but I want to be clear. We remain committed to our legacy Forward customers, including freight porters, airlines and 3PLs. We are committing to continuing to provide them with our premium LTL services to enable them to grow the business. We have honored that commitment since closing, and we will continue to provide these key customers with that same great service. In my diligence review, I found that Omni has a strong track record with its customers and does a great job of providing them with solutions around the world.

I will name one. Omni provides critical value-added warehouse services for [indiscernible]. We are honored by the trust placed on us by customers like [indiscernible]. In my view, there is much to be excited about at Forward. Those are my initial high-level thoughts, and I naturally will provide more detailed comments on next quarter’s call. Right now, addressing the business and financial performance will be the focus of all my energy and time. Rebecca will update you on some progress made so far this year, and I look forward to providing additional updates soon as we make even more headway. Hopefully, the slides we filed along with the press release demonstrate our renewed commitment to providing enhanced disclosure of our performance and integration of Omni.

With that, let me turn it over to Rebecca to run through the quarter and provide an update on the Omni integration. Rebecca?

Rebecca Garbrick: 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 Q1 results reflect minimal synergy impact, and we expect to see a steady increase in the subsequent quarters until the synergies are fully realized by the end of 2025. From a liquidity standpoint, at the end of March, we had a $340 million capacity on our revolver and $172 million of cash on hand. We are taking all actions to improve liquidity, and we do not foresee the need to draw on the revolver. We look forward to sharing more details about our path to deleveraging in the context of our 2024 full year guidance during our second quarter’s earnings call. Before we look at the numbers, I want to point out that the Omni results are reflected in our first quarter results from the closing of the acquisition, that would be January 25 through the end of the quarter.

Our first quarter revenue was $542 million, an increase of 52% or $184 million as compared to the first quarter in the prior year. This increase of $184 million over the prior year period was driven by $225 million of revenue generated by our Omni segment and $4 million of incremental revenue generated by our Expedited Freight segment, partially offset by an incremental decline of $32 million from our Intermodal segment. Our adjusted EBITDA was $29 million, a decline of 51% or $30 million as compared to the first quarter in the prior year. This decrease of $30 million was driven by an adjusted EBITDA loss in the Omni segment of $6 million and incremental EBITDA loss of $7 million in our Expedited Freight segment and incremental EBITDA loss of $8 million in our Intermodal segment and incremental EBITDA loss of $9 million in other operations.

For other operations in the first quarter of 2023, we recorded a onetime benefit of $9 million from the substantial reversal of an accrual from an incentive plan established for employees in 2021. A similar benefit was not reported in the first quarter of 2024. We saw adjusted operating income of $13 million, excluding acquisition amortization compared to $47 million in the prior year. Acquisition amortization is the amortization related to the allocation of the purchase price of Omni to intangible assets. We reported adjusted net loss per diluted share on a continuing operations basis, excluding acquisition amortization of $0.64 compared to net income per diluted share on a continuing operation basis of $1.27 in the prior year. Our operating cash flow for the fourth quarter was a negative $52 million compared to a positive $61 million for the prior year period.

Our operating cash flow for the first quarter included the payment of transaction and integration costs of $40 million. We consider the payment of transaction and integration costs to be onetime-only costs that are not expected to reoccur in the second half of the year. We project our liquidity to be at a lower point in the first half of the year as a result of these onetime only costs. Looking ahead to April, our shipments per day increased approximately 4% and our revenue per shipment, excluding fuel, increased 2% over the same period last year in our less-than-truckload line of business. Additionally, on a consolidated basis, our revenue grew sequentially from March to April by 6%, a period that historically has shown contraction versus growth based on seasonality.

The 5.9% general rate increase we announced in December went into effect in February and will enable us to continue to serve our customers with the same precision execution in an environment with rising operating costs. The capture rate was higher than 2022 and the rate increase is comparable with the increase in the operating costs expected for 2024. Now turning to the integration of Omni. On Slide 6, we outlined some key metrics on Forward’s business. And on Slide 7, at Omni, which we hope is helpful historical context. But what we’re really excited about is what these companies look like together and the opportunity for value creation received emerging from the combination. We are pleased with the progress we are making on integration. As you will see on Slide 10, we have provided updated cost synergy targets.

We now expect to deliver full run rate cost synergies of $73 million by the end of 2025, which is very much in line with the initial call synergy targets provided in August 2023. We have adjusted the initial estimate of $75 million by less than $2 million due to volumes associated with the LTL and [type] synergies. We are pleased to report that we’ve already delivered synergies of $7.5 million in the first quarter, and we expect to realize $55 million on an annualized basis. We expect to derive the rest of the synergies of $18 million from incremental actions in the area of network optimization, facilities consolidation, SG&A, technology and brokerage. With regards to our capital position, as you will see on Slide 10, as of March 31, the combined entity had more than $512 million of liquidity.

Last quarter, we outlined relevant terms of our existing credit facilities, so I will not go into that detail again here, but I will highlight that we have headroom in our financial covenants as we continue to focus on our integration and realize the cost synergy opportunities. We remain compliant with our bank covenants at the end of the first quarter. In terms of our capital allocation priorities, we are committed to derisking our capital structure, and we are already undertaking several initiatives to deleverage. We intend to return to net leverage of 4.5x by the end of 2025. Key steps include a focus on profitability of the combined entity and the realization of the cost synergies to generate cash from operations as well as an accelerated portfolio review to identify potential divestitures.

We are actively reviewing our portfolio and plan to take swift action to monetize on those assets. With that, I’ll now turn the call back to the operator to take comments and questions. Operator?

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Q&A Session

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

Andrew Cox: 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?

Shawn Stewart: 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.

Andrew Cox: 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?

Rebecca Garbrick: 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.

Operator: And we’ll take our next question from Bascome Majors with Susquehanna.

Bascome Majors: 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?

Rebecca Garbrick: 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.

Bascome Majors: 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?

Rebecca Garbrick: 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.

Bascome Majors: 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?

Rebecca Garbrick: 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.

Bascome Majors: 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?

Rebecca Garbrick: 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.

Bascome Majors: 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?

Rebecca Garbrick: 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.

Operator: We’ll take our next question from Scott Group with Wolfe Research.

Scott Group: 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?

Rebecca Garbrick: 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?

Scott Group: 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?

Rebecca Garbrick: 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.

Scott Group: 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?

Rebecca Garbrick: 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.

Scott Group: 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?

Rebecca Garbrick: Yes. That was a — that’s a consolidated number, but we have seen growth in all lines of business.

Scott Group: 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?

Rebecca Garbrick: 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.

Operator: And we’ll take our next question from Stephanie Moore with Jefferies.

Stephanie Moore: 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?

Shawn Stewart: 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.

Stephanie Moore: 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?

Rebecca Garbrick: 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.

Stephanie Moore: 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?

Michael Hance: 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.

Stephanie Moore: 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?

Rebecca Garbrick: 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.

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

Christopher Kuhn: Shawn, welcome to Forward.

Shawn Stewart: Thank you, sir.

Christopher Kuhn: 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?

Rebecca Garbrick: 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?

Christopher Kuhn: Yes.

Rebecca Garbrick: 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.

Christopher Kuhn: 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?

Rebecca Garbrick: 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.

Christopher Kuhn: 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?

Rebecca Garbrick: 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.

Christopher Kuhn: 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?

Rebecca Garbrick: 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.

Christopher Kuhn: 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?

Rebecca Garbrick: 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: [Operator Instructions] We’ll take our next question from Bruce Chan with Stifel.