Forward Air Corporation (NASDAQ:FWRD) Q4 2022 Earnings Call Transcript

We always look at GRI in a combination of what’s the actual take rate, so that typically is somewhere between 70% and 90%. And that’s the mitigation where we gave some of it back for earned growth makes sense. And we have those kind of — we call them value exchanges in place. We had them in place last year and this year. So you should expect 200 customers plus that actually have commitments to go with us because it’s good for them and good for us. And you should expect a 70% or so take rate perhaps even more than that of the GRI. Both of these numbers are fairly common and are somewhat consistent with what we saw last year.

Scott Group: And then can I just clarify one real quick thing. So with the $0.60 fuel headwind, is that including the benefit of changing the surcharge tables? Or is that separate?

Thomas Schmitt: So that would be — let me just do this real time. This is kind of a net number. So we look at it came down, and then we just looked at what it was last year. So if we adjusted in safe argument sake in October and we got 2 or 3 months with a higher fuel surcharge number, then the $0.61 would — step down would include that step down from that higher number.

Scott Group: So it’s including the benefit of the new surcharge tables? Meaning if you didn’t change the surcharge table, the headwind would have been bigger. Is that what you’re saying?

Thomas Schmitt: No. If we hadn’t changed the surcharge table, the headwind would be smaller because the actual fuel surcharge collected was bigger last year because of that adjustment. So the step down is bigger now. So it may have been — but that difference, by the way, just from a math perspective, is a few cents. So this would be going from $0.56 to $0.61.

Scott Group: Well, I thought you raised the surcharge tables. Okay. Never mind.

Thomas Schmitt: We did. We did. We collected more fuel surcharge because of it.

Operator: Next, we’ll go to Bascome Majors with Susquehanna.

Bascome Majors: Tom, not to go back to mix again, but I think it was really illustrative when last spring, you shared that investor deck where you kind of let us visualize what the terminals used to look like before some of the changes you made and what they look like now. And I think maybe some of the investor concern around mix in the shipment weight is getting a little smaller is that we’re going back a little bit in the way of where we were before. So can you help us understand, if we were to walk on the floor today, what does one of your LTL terminals look like? And just visualize the shrinkage in the shipment size and why it’s not a step back and all the hard work that you’ve done in this very strong environment over the last 2 years.

Thomas Schmitt: Yes. Thanks, Bascome, for asking. By the way, for those of us or you that looked at our investor relations side in our deck, we just talked about it over the last several days, that visual of what our unclaimed terminals look like before the cleanse and what they look like all palletized today, we probably have to take that picture back in because I think it is a big part of our go-forward story of better high-value freight operated in a cleansed environment. The one thing I do want to point out, we’re not stepping back. We’re actually sticking with this. So these terminals look the same as they did after the cleanse today, and they always will. What unfortunately looks a bit different is if you look at a big shipment that had last year 7 or 8 high-value treadmills in there, now it has 4 treadmills in there.