Thank you for joining Forward Air Corporation's Third 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 third quarter 2022 results, which was furnished to the SEC on Form 8-K and on the wire yesterday after the market close. 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, including statements regarding our expected fourth quarter 2022 and fiscal year 2023. 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 this earnings call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise. During the call, there may also 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. Now I'll turn the call over to Tom Schmitt, CEO of Forward Air. Thank you, Rich, and good morning to all of you on the call joining us. I started our last earnings call with a statement, we keep getting better. That statement actually never gets old, so I'll say it again, we keep getting better and better. Q1 and Q2 were first and second quarter records, and Q3, the quarter we just finished, also was our best third quarter ever. We expect the fourth quarter to continue that track record and that string. In fact, we're shooting for earnings per share of $2 in the fourth quarter, which is a sequential step up from Q3, which we just released, finishing at $1.93. That step up is very much in line with what we had in the two years just before the pandemic broke out, 2018 and 2019. Those were $0.05 and $0.14 step up respectively from Q3 to Q4. This year is very much in line with that. We therefore expect that the year will be finishing up in record territory of $7.50+. That also still means we intend to get better and better, and we don't wanna be done here. Next year, from where we're sitting right now, we expect is gonna be better than this year. 2023 will be a step up from 2022. Now, on that last statement, you might ask how so? Everybody else is keep being very cautious. We are. We are seeing the same things everybody else is seeing. We get fewer imports via ocean and air. Some of our customers, domestic forwarders, international forwarders specifically, with their imports, airlines with their imports, that is down. We see that. Even look at our tonnage in LTL, we saw tonnage for Q3, the quarter we just finished, slightly ahead of last year, 1.5% over the previous third quarter. That's a good thing, but September was slightly down if you run the math from the mid-quarter update to the full quarter. We also in line with industry estimates, we also expect fuel to be down next year by about $0.70 or so per gallon. That, as you know, is a headwind in our industry. Why are we still saying that we expect 2023 to be a better year than 2022? It's because of our performance program called Forward 23. It's working. We have revenue and margin initiatives that we believe outweigh the fuel and volume headwinds for next year. It's our brand of what we call precision execution at work. Let me just briefly reinforce those six key levers inside that Forward 23 program that make us very, very confident. The first one is we will have more live events. We all talked about this a lot. We brought live events back together with our core customers this year, and we're gonna bring back more next year. We're also gonna tap into some smaller events orchestrators that do not use forwarders. That could be more than just a bring back. Our numbers confirm that live events are coming back. Frankly, just when we walk through the Atlanta terminal, which I just did earlier this week, you can see it. You see the containers. You see the trade show containers, the concert setups. We will have more live events next year than we had this year. Sometimes with live events, you also have a beautiful trifecta. These are high value freight shipments to begin with that are profitable, very profitable shipments for us. Oftentimes, these trade shows or concert movements go to many stops. You have one sale event but multiple revenue events coming from it. Oftentimes there's a guaranteed service associated with it where our customers want to make extra certain that we have all the handling principles in place, last in, first out, that maximize the odds of a smooth 100%, guaranteed and delivered, on time performance. Secondly, we also are looking to get more share of wallet with our existing core business partners. We have had tremendous domestic international forwarder customers for a long time. Those that know us best, they tag team with us. They go for high value freight with us together, and we are winning more together with them. Even in a softer environment, we're growing with some of those core business partners that we know best and that know us best. Third, we are selling more direct to those types of shippers who do not use forwarders. We said this is gonna be a early innings here this year, $20 million or so in LTL revenue from selling direct, and we're on track for that. Next year, we expect a ramp up of that. There's also untapped upsides that we intend to go after for next year. Number four, we are having much fewer outside brokered miles. Those are miles that typically are more expensive than using our core independent contractors. Also some of those carriers do not know us or our customers as well as our independent contractors do. When we're in 5% or so outside brokered miles as a percentage of total miles territory, that's a sweet spot, and that's where we're at right now, which means the vast majority of what we move gets actually handled by those drivers who know us and our customers best. The fifth lever is the supporting businesses. Yes, LTL is the main show, and the main show still is, kind of in 80 OR territory for September, which is terrific. The supporting businesses are doing their part certainly too. If you check out our release and you're looking at our intermodal drayage business, that's a rock star performance in the 15% OR, or margin territory or 85 OR territory for Q3, for instance. The sixth and final lever is those supporting businesses, they do make our LTL business better more and more. Truckload has become a very significant LTL customer, uses LTL a lot, which helps balancing loads. Intermodal and LTL, we more and more co-sell our portfolio of those services to our customers. Final mile started relying actually on over the road LTL services for its, product also. A lot of helping each other out and making the main show LTL better. Because of these six levers outweighing in my mind and our estimate the headwinds that we have from fuel and from softer volumes overall, we do believe that 2023 will be another record year better than 2022. I spend a ton of time in tandem with our teammates. They are focused laser sharp on making us all we can be. We are far from done, and we keep getting better and better. With that, we're gonna go straight into questions. Rich, back to you. Certainly. Thank you. The floor is now open for questions and comments. You may ask as many questions as you like before we move to the next caller in queue. If you wish to ask a question, please press one then zero on your touch tone phone. You may remove yourself from queue at any time by pressing one zero again. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press one then zero at this time. We'll begin with the line of Bruce Chan with Stifel. Please go ahead. Hey, everyone. Thanks, operator. Appreciate the time. Tom, you know, great to hear about your Forward 23 program. I think, you know, that's good news given all the concerns out there about the environment. You know, maybe you can just share some color with us about what sort of macro assumptions underpin your expectation that 2023 can be a better year. Is that sort of like a 5% down tonnage environment? What kind of happens and what abilities do you have to flex down if it gets worse than that? I think that Bruce, that's a good starting point. When Rebecca and I work with our operating teams and our support teams, we obviously take the best estimates that we have from the outside world. I mentioned the fuel as an example. Fuel, this year will end up somewhere between $4.97 and $5.03 as an average per gallon. Next year, that number will be somewhere in the $4.20s. We use the best estimates available. We also, just very specifically to your point, if we do everything kind of business as usual, meaning same amount of customers, same business we go after together, and no new markets, no new customers, if that were the case, which is not, then we probably would be down somewhere in the 5% or so range. That's probably a very, very good assumption, and that's what we put in there. Now on top of that, Bruce, we are putting the impact of those Forward 23 initiatives, which means we are going for more share of wallet. We are going for new markets with existing customers and new customers. That's why the end result is not -5%. Again, everything else being equal, the end result would be the same as everybody else is seeing, which would be softer volumes could mean -5%. Okay. Got it. Just to be clear, you think that, you know, next year could be not just a revenue positive year, but you know, both the tonnage and the yield positive here as well. Absolutely, yes. Okay, great. That's super helpful. And then maybe just one more before I turn it over. On the final mile side, just wondering if you'd talk about some of the headwinds there and how you see them affecting, you know, the business as you move into next year. I know, you know, we've spoken a bit about AB5, maybe just an update there. And then also just from a durable goods front, you know, are you seeing any materials flowing there? And if you have opportunities to offset that business. Yeah, Bruce, there's probably at least two points that you trigger here. Let me start with the first one. Our final mile business, the way we define final mile is the delivery and installation of high-value appliances in local markets, about 100 markets across the U.S. That business, obviously, when you talk about installing dishwashers or fridges, that business would be down with our consumer goods shipments being down. Frankly, with you and me and everybody else here on this call having bought about as many appliances as you can possibly buy in the last 2.5 years. However, our team does a phenomenal job of not just selling existing markets, existing customers. We are adding new markets. I mean, there's something to be said about being at the top of the podium with world-class retailers like The Home Depot, where they called us the home appliance carrier of the year. That gets us the chance to actually compete and win more markets with them. That's what's driving volume positively. Frankly, also, the team has done a phenomenal job, even in the last 12 months, getting two huge global brands to become new customers of ours. Again, between those things, we are growing in this business that otherwise would be very much challenged. That gets to your point about durables and consumer goods. If, again, if all we did was selling existing business to existing customers in existing markets, we'd be down. We're not because of what I just described. AB5, for those of you on the call who are not as close as some of us have to be, this is a kind of a set of rules that make it, I think the test to be your own business owner harder. What we expect is with California being first and possibly other states following, that some of the independent contractors that drive on our behalf, they will have to go through more rigor to basically show that they run their own businesses, they are their own entrepreneurs and operators, and there's probably some additional cost to that. We have models like we do with our Forward 23 revenue and margin initiative models. We have models that show what that additional cost could be, 5%-6% perhaps. As if and when these higher costs to us occur, we have only one choice. We have to share those costs with our customers. It might be a bit of a tougher environment. Frankly, when we talk about independent contractors, those are people who run their own business, and it's very clear that they run their own business. By the way, they can take it anywhere tomorrow if they choose to. Their tests might become harder. There may be a cost penalty of those enhanced tests, and that cost penalty we would be passing on to our customers. Okay. That's great color. Really appreciate it, and congrats on the result this quarter. Thank you, Bruce. We'll now go to the line of Todd Fowler with KeyBanc Capital Markets. Please go ahead. Hi. Great. Thanks. Good morning, Tom. Hi, Rebecca. Morning, Todd. Hey, good morning. I appreciate, you know, the confidence in the outlook to 2023, but I don't wanna skip over the fourth quarter. You know, I appreciate the, you know, the view that we'll see a step up in Q4 similar to what we've seen, you know, kind of pre-pandemic. I'm just curious, though, Tom, if you can maybe unpack a little bit. You know, we're hearing a lot of weakness and kind of low peak expectations. I think that you had the comment that October tonnage was negative, and it looks like September might have been as well. Maybe if you could just walk through kind of your expectation to see Q4 up sequentially versus Q3, just given what we're hearing in the broader marketplace around the peak trends. Yeah. Good point. You did the math correctly, Todd. September was a small step down after 3% and 5% positive in July and August respectively. As I said, just using most recent data, last week, October, we were down by about 5% or so. When we run our model for the fourth quarter, obviously we have those numbers as part of it. The one thing that we should not underestimate is the robustness and the strength and the quality of the business in all of our lines of business. We are much more effective. Again, Todd, join us again for a walk through a terminal. It looks very different from what it looked like a year or two ago in terms of the quality of the freight. We have in the fourth quarter a lower fuel forecast assumption compared to the previous quarters. We have in the fourth quarter realistic volume adjustments, and we in the fourth quarter also have the high quality of freight business assumptions that frankly so far have panned out. They will. I think they will be playing out also in the fourth quarter. It's a math exercise. I think the team also over the last several quarters, certainly Q3 was a good example. We know how to adjust when we have to. In Q3, to give a specific example, fuel came in lower. There was a four-six week period where fuel had dropped quite a bit. It's been back up again, but it had dropped quite a bit. Fuel came in lower than what we had expected. Frankly, this is a highly agile team. We can do good things faster when called for. We made it up with the quality of the freight in Q3. If you want to headline it, Q4, in our minds, will be a quarter that we will deliver because of the quality of the freight that we have in our network. Okay. Just purely looking at the tonnage comps and the tonnage numbers, that doesn't tell the whole story. It's to your point, we've got to think about the mix. Maybe to that point, Tom, you know, when I look at revenue per hundredweight ex fuel, it was down sequentially. You know, it was up 5% year-over-year, and that's a bit of a deceleration. Maybe you can help us think about what's going on with yield on an ex fuel basis and, you know, how mix is impacting the reported numbers that we're seeing. First thing I would say is if you look at revenue per hundredweight for the third quarter, it's up 18.4%. That's pretty strong actually. The quality of our freight in terms of moving high value freight, getting compensated with a super strong disciplined pricing approach, is working. I would say if you look at revenue per shipment, that's a good metric, 10.7% up for the quarter. Revenue per hundredweight, 18.4% up for the quarter. Those are good, strong numbers. Again, I'm not sure, Todd, what you're looking at. I like the quality of the freight, and I like the way we price for that quality. Got it, Tom. Yeah, I might have pulled the wrong number there on the comp side, so we'll have to just check that. It sounds like that the pricing's holding in. Maybe just the last one for me, you know, on your bullet points for 2023, kind of talking about use of outside miles and purchased transportation. It sounds like that the network right now is really, I think you said kind of around 5%, which is one of the lower numbers that I can remember. Do you feel like that on the PT side, you're kind of at the, you know, I hate to say there's always room for improvement, but really kind of the best level that you can be at, or is there still some opportunity to improve, you know, the PT and the network balance piece, just given what we're seeing with capacity in the market? I mean, Todd, I would say that there's two halves to that point. The first point is the absolute number of outside brokered miles. When I talk with our COO, Chris Ruble, and his team leaders, Justin Lindsay, they would tell you 5% is kind of that sweet spot that you wanna be shooting for. We had numbers in the past that were as low as 3%, but somewhere there mathematically, you're obviously maxing out. Now what you always can do better is making sure the cost and service of those outside brokered miles gets optimized. Justin Lindsay and his team are doing a phenomenal job of finding good service at very, very competitive cost levels. That's actually a lever. That's where there's still untapped upside. The load balancing that you also mentioned, that's the other half I think that we talked to, Todd. That's important too. I mean, making sure that when we need a backhaul, we get a backhaul. It's not just the amount of miles, it's also where we have it and where it actually comes into the system, that it actually makes sure we have fully utilized runs and that a backhaul is actually served with real shipments. 5%, yep, that's pretty close to where it's gonna be. However, the service and the cost levels, untapped upside, and making sure that in the system there truly are backhauls that actually make sense for us, still also untapped upside. Got it. That sounds good. Yeah, probably it's time to do a terminal walkthrough at some point, so we'll put that on the calendar. Thanks for the time this morning. Perfect. Thank you, Todd. Yep. Thank you. Thank you. Thank you. Yep. Next, we'll go to the line of Jack Atkins with Stephens. Please go ahead. Okay, great. Good morning, Tom. Good morning, Rebecca. Thanks for the time, and congrats on a great quarter. Thanks, Jack. I guess, you know, Tom, I'd love to go back to some of your comments that you made in your opening statement around sort of how the complementary business lines that you have could be feeding and supporting expedited LTL in 2023. You know, particularly expedited truckload and then final mile. Could you maybe talk a bit more about that and give some, you know, an example or two of what you mean there? 'Cause I think that could. That's a lever that, you know, I don't think we've really been kind of focused on before. Yeah, Jack, good point. I think if you go back over the last two or three years, when we put the Forward 23 program together, which is in essence a performance program that gets us to spectacular performance in 2022 and 2023. By the way, we just talked with our management team and our board earlier this week about making sure that Forward 23 may have an expiration date as a program, but it will be followed by the next logical step change enhancement. We are not done with performance enhancement on December 31st of 2023. Specifically, Chris Ruble, COO, and his team, they've done a very, very focused job making sure that truckload and LTL are truly co-managed. They used to be actually two silos about two-three years ago. They were very separate, and they no longer are. When you talk to our leaders in those teams, they're looking at one fleet, they're looking at one network, and they're optimizing truckload and LTL in a very complementary way. We have seen 10x from some one-year period to a period later in terms of specific lanes where we use backhaul. Much more collaboration, team sport. Certainly the word silo is one that we at this point have a hard time spelling. Then with final mile, the beautiful thing is that team not only, as I said before, is getting better and better as a number one provider of high value appliances in those markets. I said before, they're finding new customers. They also are winning new markets with existing customers. The beautiful thing is, obviously these dishwashers and fridges, they need to get to these local markets where they get delivered and installed. In the past, the line haul of how these goods got there was something frankly, something we didn't pay a hell of a lot of attention to. That's no longer the case. We are paying attention to it now. The number of conversations I've got with Jeff Potter, the sales leader on that team, about line haul, bringing those goods to these local markets has gone way up. A specific example would be for some of those larger final mile customers doing the line haul, having a truckload and LTL conversation, and that's tied to the actual final mile business. That's happening more and more. This is why for our supporting businesses, we have two tests. One, they have to carry their own weight, and two, they have to make the main show better. Our three businesses right now are passing both of those tests. Okay. That's great, and I appreciate you walking us through that. Maybe shifting gears for a moment and thinking about service and reliability and you know, I think it's becoming increasingly important within the LTL community, the shipper community, you know, in terms of, you know, being able to rely on their partner carriers. It's something that I think helps make market share gains accelerate and makes pricing stickier through cycle. I guess, how are you all thinking about, you know, your service levels? You know, the Mastio Survey for the LTL industry just came out in the last couple of weeks, but I'd be curious how you guys are thinking about that promoter score or, you know, just any sort of metrics internally to think about service and if that's improving and maybe where you'd like to take that over the next year or two. Jack, very topical. We're working with SJ Consulting and ShipMatrix, one of their portfolio companies, on getting very similar to what you just referred to, Mastio, getting external third party data to make sure that we know apples to apples how good we are and how we stand up and compete against other first-class companies. We are getting studies in place right now, and we are obviously going to share the outcomes with our customers, both in customer specific conversations, but also possibly via broadcast communications with our first class marketing team. We're looking at, in terms of claims and damages, how do we stack up against the top tier of LTL providers? We're looking at on time performance, how we're stacking up. We're looking at making sure when it comes to hitting very tight time windows, how we're stacking up. The one thing I can say is all the data, we're kind of in the sausage making stage right now. All the data we start seeing back is making us extremely bullish and confident about the way we stack up. Our customers are telling us individually that we are, when it comes to most sensitive shipments, and when it comes to making sure that everything possible is done for zero damages, they choose us. The data that we start getting back tells us why they should do that and why they are doing that. This is gonna be very powerful, and we're gonna be using it very similar to Jack, to what you talked about. It's gonna be so helpful to our operators to our business partner customers, and to our sales team to actually have a third party validate what we intrinsically kind of know and what some individual customers have told us. again, when over the next few months we share some of that data, I think it's gonna be very powerful and compelling based on everything we've seen so far. Okay. All right. That's great. I think that'll be great to learn more about as we move forward. Last question before I hand it over, would you just be on the M&A environment? It's obviously becoming a much more challenging macro and freight backdrop. Valuations are lower. But I would just be curious to know how conversations are going with potential targets on the M&A front? Are you seeing folks being more willing to kind of come to the table now, or is that still something that fairly challenging? Yeah. I mean, obviously, Jack, we announce acquisitions and companies joining our family when they happen. So far this year, I think we had technically one acquisition with a beautiful Northwest acquisition in our intermodal business, Edgmon joining our family. Going into this year, if you remember, we said typically in a given year, we'll have two of the kind of beautiful complementary acquisitions. We said J&P Hall was a very tasty appetizer in the LTL business, but may not have been the main course yet. The year's not over yet. And conversations to your point specifically, Jack, yeah, they may have gotten a bit easier. I think people are more willing to say in an environment that's a bit more challenging to graduate and make sure that their business ends up in a good professional home for the next long time, decade plus. We have had a very, very fortunate approach with our M&A team, Michael Hance, Kyle Rickert, Eric Rose, that entire team, having long conversations, oftentimes over years, with family-owned and -run businesses that at some point will be ready to say, "Take our legacy and bring it into a great professional home, and please make sure that these people that we've known, those companies I've known for three decades, that they, for as long as they wanna go, have a great home with Forward Air." We are certainly not insulated from ups and downs of the economy, but we are, and this is a long game you're playing here, oftentimes, again, with many, many years of exchanges with the same companies. When the time is right for them, they come over. Yes, conversations have become slightly easier. Our approach, though, is one that's typically a long game. The third thing, just back to my perhaps first point, the year's not over yet. Okay, well, sounds great. Thanks again for the time. Really appreciate it. Okay. Thanks, Jack. We'll now go to the line of Tyler Brown with Raymond James. Please go ahead. Hey, good morning. Morning, Tyler. Hey, Tom. I just wanted to actually start with intermodal. I mean, this year it's pretty clear intermodal is, let's call it maybe crushing it. I mean, yield has skyrocketed. EBIT's probably gonna be nearly double last year. Can you talk about why those intermodal yields have shot up so much? How much of that rate increase is from accessorials? And if the railroads do make a hard turn on service, will those accessorials roll off? And what does that ultimately mean to that unit's profitability? I'm gonna start, and Rebecca, you might actually add a bit more flavor on the accessorials and the sustainability of that. The one thing, Tyler, that personally I've spent a lot of time with Ron Vales, who's a first-class operations leader, and his team over there. I always had the belief that intermodal drayage for us will be a solid double-double business unit, like double-digit growth. Some of it comes through acquisition and but all the double-digit margin. The second point is last year, this year, 2022, we did have quite a bit of amplified accessorial storage. I mean, the whole notion of congestion in the ports means that somehow these shipments had to be held. We helped our customers holding those shipments. We get storage fees. You have on the revenue side, you do have an amplification of our revenue. You also, some of that, obviously has a margin positive consequence. It tends to be that the storage fees, though, were actually less profitable in some cases than the core services that we provide. The margin has actually not been artificially enhanced by storage fees. Revenue has. I do believe, and I think this is the basis of the whole point, Tyler, that you're making. This business truly has become better and better. We do more turns than some of the competition do on a given day. We also look left and right between LTL and the intermodal drayage business, and we adopt operating practices that make sense. Chris Ruble, our COO, is responsible for operational excellence in all of our business units, including intermodal drayage. I do believe that this unit is a permanent double-digit margin company. You might see a fall off in the revenue growth with the storage and detention fees normalizing over the next several months. On the margin front, I think what you're seeing this year is real. Do you feel EBIT dollars are up or down in that business next year? Sorry to put you on the spot, but I'm just kinda curious about what's in that 202 3 outlook for intermodal. Yeah, Tyler. There is some, you know, normalization, you know, kind of underpinning our assumptions for intermodal, but offsetting that would be, you know, our acquisitions, some of the tuck-in acquisitions that we've done. We continue to grow those. You know, from the time that we buy them, we grow them organically, and those typically have some higher margins just, you know, based on some of the existing pricing that we have when we, you know, acquire them. I think overall, yes, we will see some downgrade in those accessorial, but I think that'll be more than offset with some of those acquisitions that we continue to grow. Okay, that's very helpful. I may have missed it, but did you give what the Q3 LTL OR was specifically? We did not, and we tend not to do that because, again, there's a lot of interplay between truckload, LTL, and final mile, which is why we call this the expedited freight segment. The one thing I did say, Tyler, is that I think just early on the call, that for September, specifically in LTL, we were in 80 OR territory again. Yeah. I mean, maybe to kind of come back to this, I mean, if I look at Q1, Q2, Q3, I kind of think about Q4, it feels like the LTL, and maybe you don't look at it totally that way, but it feels that the LTL is probably low 80s%, somewhere in that, in that ballpark. If I go back and might pull out an old model back in, call it the heyday of the mid-2000s, you guys were actually running sub- 80. Do you think that is a possibility next year? I think that's well put. Being sub- 80 can be a possibility for next year. Now, the one thing I would wanna say is for the performance enhancement we had this year and for the performance next year, it is helpful for us when we look at how good are we actually in each of our lines of business, specifically LTL, to obviously run the math with fuel because that's the way we run our business, but also put fuel aside. We got a little bit of a tailwind on fuel this year that is probably not the typical year. We expect, as I said earlier, a headwind on the fuel side for next year, which still we believe we're gonna outweigh or not compensate with all the initiatives we got going on. To your very specific question, does our entire team feel that a sub-80 OR in LTL is possible and is coming our way because we're earning it? Absolutely. Okay. Then back on the outside broker miles. I think you said you're at 5% in Q3. You're probably similar in Q4. If you look back, those numbers were a lot higher in the first half, if I'm not mistaken. I think in Q3 you were at 12%. I don't know if you gave Q1, but you're probably higher than that. If you hang around this 5%, shouldn't there be at least a first half 2023 tailwind on the broker mile piece at least? Yeah. This is still a couple things, just to make sure that we represent our facts correctly. 5% is kind of where the Justin Lindsay and team have been driven the outside broker miles to over the last few weeks. The Q3 average is higher than that, but right now we're kind of in 5% territory. We intend to stay that way. You're absolutely correct. I mean, there are two things going on. One is the strength of the management team and precision execution of what they do. This team is getting better and better, and it's very good already. The market either helps you or hurts you. First half of this year we had a crazy freight market, as we did in the last part of last year. That makes it harder to get access to your own independent contractors enough. So yeah, we were probably in 20-ish territory in the first part of the year. We came down to the mid-teens middle of the year, and we're now in 5% territory. We absolutely expect, and that goes back to what I said before, when we have fuel headwind next year compared to this year, when we have lower volumes, apples to apples before our initiatives, then these six things that I mentioned and some supporting Forward 23 programs kick in. One of them, the fourth one I mentioned early on this call is exactly that, Tyler. I do expect that the 5% level of outside brokered miles at highly cost-effective rates that our team is actually getting those rates, those outside miles for is gonna be a significant tailwind in the first part of next year. Yeah. Okay. That's excellent. My last one, Rebecca. Mm-hmm. I don't know if it's talked about enough, but free cash flow year to date has been really strong. Yeah. It looks like you're on track to convert well over 100% of earnings. Can you talk about, number one, is that outlook for conversion, generally speaking, gonna be over 100%? Is that a good number to use? Two, can you update us on 2022 CapEx? And three, any early looks on 2023 CapEx? Because I think Columbus has had its ribbon cutting, if I'm not mistaken. Yes, it has. That is correct. Yeah. Let me start, Tyler, with just the CapEx for Q4. We did take it down slightly from where we were from last quarter. Last quarter we projected that our CapEx this year would be $40 million. We've taken that down to about $38 million, and that's purely driven by our equipment and just supply chains and delays of getting that equipment. If you remember, we've got some vintage equipment, so some trailers, some forklifts, you know, items that just need to get replaced that we didn't replace because of, you know, the pandemic in 2020 and then supply chain constraints in 2021. I do think, you know, $38 million for this full year is what we will land from just a CapEx standpoint. You're right, Tyler. For this year, we thought about a third of our CapEx would go to IT, a third would go to that CMH building, which we have done the ribbon cutting, and then a third would go to our equipment. As we think ahead into next year, I do think that while we won't have the CMH building, we are going to replace that with probably some additional equipment that we'll need to have as well as some IT. I don't necessarily expect, you know, just from an early preview for next year that CapEx would significantly go down. It might be right in line or slightly above. To your point, I do think we've had some super strong free cash flow conversion, and I expect that to continue into next year. Okay. That is all extremely helpful. Thank you guys so much for the time. Thanks, Tyler. Next, we have the line of Christopher Kuhn with The Benchmark Company. Please go ahead. Yeah. Good morning, Tom. Good morning, guys. Thanks for taking my question. Can you just, Tom, talk about the events business in terms of like where we are versus pre-pandemic? I think you mentioned you might even be above that as we move along just given some of the initiatives you had. Then just following up on that, I mean, if the economy does really turn down, could, you know, that progress slow or is there enough sort of pent-up demand to continue growing there? Thanks. Yeah. Hey, Chris, thanks for dialing in. Thanks for the question and thanks for your interest in our amazing company here. Events business, rough numbers. I believe last year we were probably at 25% of what that business was for us before the pandemic hit. We went into this year saying we'd probably be about 75% of what it was before. That number seems to play out. We look at specific segments like trade shows and we go back a year and look at what was in Q3 last year versus Q3 this year, and that 3:1 ratio seems to hold. So if it was 25% last year, it may be 75% this year. Next year it should be at least 90%. My sense is, don't forget this is working with our first-class events divisions of our partners, and we also are looking for small medium-sized events orchestrators. We have a tremendous kind of sales support machine, led by Keith Karczewski, that actually knows how to tap into SIC code specifically. If there's events orchestrators who do not work with third parties or domestic or international forwarders, we will go to those directly. We actually have an opportunity not just bring business back fully, but go beyond 100%. To your specific point. Next year, perhaps 90%, and then perhaps the year after, more than just 100% bring back because there are additional businesses that we are going after. Your point about if the economy is super soft for a sustained period of time, say it's a recession not just for a couple of quarters, but actually for a year, and it's steeper. Does that have an impact? Yes, it does. Because I mean, obviously, people's disposable income, you have only so many opportunities to spend fewer dollars. Having said that, after two and a half years, and that's my observation. I've got no monopoly on wisdom here, but it's, I think, a fairly robust observation. After two and a half years of everybody here living in a home-based economy, we want to be in an experience-based economy again. We want experience events. As and when you curtail your spending and you already bought two fridges and three microwaves, you probably will spend $1 on that concert and going, in some cases, on that trip, because again, there's pent-up demand from 2.5 years of being severely limited. We feel pretty strong about both accessing more sources for events business than what we had before. We feel very strong about working with our first-class partners. I mean, they've been sticking with us and vice versa. We've been talking about bringing the events business back together for the entire 2+ years. I feel from an emotional perspective and a more like sentiment perspective, very strong about people allocating their dollars in experiences, and experiences certainly include the types of events that we support. The last thing I should say is, between our pricing support and our sales team, that's [Stephan Berschin's] team and Keith Karczewski's team, we know exactly how profitable all these events business. Finally, it's a business that goes for minimum damages and a precision execution time, tight time windows that we are the best at in this country. We get compensated for it. Our fascination with events business has a very good commercial reason. Great, Tom. Thanks. Appreciate it. Thank you, Chris. Next we have on the line now Stephanie Moore with Jefferies. Please go ahead. Hi, good morning, everybody. Morning, Stephanie. I wanted to touch a little bit on your pricing actions. I think there has been a good amount of investments being made, you know, in personnel as well as, I believe, some technology and processes. Maybe if you could just give us an update on where you stand right now and kind of your thoughts for 2023 as you know continue to drive, you know, what is very strong pricing. Yeah. Stephanie, I mean, we've talked over like the years about this. My strong belief is, and some of it goes way back to my days at FedEx and certainly Purolator, DB Schenker. First-class companies in the transportation business have to be first class in pricing and pricing discipline. We, I think over the last several years, joined those first-class companies in tools, processes, the people with strong expertise in LTL pricing specifically. By the way, the same thing is true for our other business lines also. Intermodal pricing is, we've become so much better. We put a lot of specificity in place in terms of pricing discipline and predictability. We work with our customers every year there's a GRI. It's on the same date, the first part of February. We work with customers during late summer and fall about making sure that we have expectations on both sides. Next year, there will be a GRI. It will be in a space we are in a high inflation environment, where we're asking for a significant increase because it costs us more to tap into resources, drivers, equipment, as Rebecca just mentioned, investing into the safety of everybody that's part of our company. We are a top-tier safety company, and there's also investment in safety technology that we need to recoup. We are very pricing disciplined. That GRI is something that's very predictable, but we're not done yet. I mean, we just had a pricing review with our board, and [Stephan] characterized. He may be a bit bullish optimistic. He said we're in early innings. I'd say we're perhaps in the middle innings, but there's more that we can be doing, specifically also dynamic pricing, day of week, origin and destination, lightness and heaviness by specific zip codes. So getting a kind of much more dynamic and real-time pricing adjustments is something that's high on our agenda. The second thing is, as we just started selling directly to people who make and ship goods, we have to get equally surgical and specific by origin, by destination, by rural versus urban, commercial versus residential, on the direct shipping side, the same way we've, over the last two or three years, gotten better on the indirect side, selling to those intermediaries. A short way of saying pricing has become a core discipline for us as it had to be, and we're far from done with pricing actions. The team has a tremendous roadmap, and again, you should expect the same pricing discipline, accelerating that you would expect from any other first-class transportation company. Got it. No, that's really helpful. Kind of sticking with the trends that you saw throughout the third quarter and kind of early into October here, did you notice? I know it can be really difficult, but maybe any specific categories of weakness that might have been driving? I know that you have, you know, a diverse but also some, I think, strong presence. Obviously, we've talked a lot about events here, but I know you're in healthcare and machinery quite a bit. Maybe you could talk to, you know, as best as you can, just any maybe strengths or weaknesses, you know, on the category level. Yeah. As I said, and Stephanie, I talked a bit to this earlier, let me put a lens on it from two angles. The first one is the types of categories of customers. We see much more softness over the last several weeks from specifically international forwarders that import less via ocean and air, and from airlines directly. We see quite a bit of strength, yes, still with the domestic forwarders that we've been working with for a long time. When you look at the categories specifically, the high value freight, and this is when I talked in previous earnings calls, what we've done over the last couple of years has made us more essential, has made us more resilient. Medical equipment looks strong. Industrial goods look strong. Some of the e-commerce, e-tailing, retailing goods, some of the high end of which we still move, doesn't look so strong. These are the things that a Target, a Walmart, a Wayfair, an Amazon are saying publicly, "Hey, we don't need that many shipments coming here because we already have all those goods sitting in our warehouses here." For the high-end retail, e-tail, e-commerce goods, we see the consequences of that. We no longer have the kayaks and the rugs, and we hardly have any bigger furniture. We do have the high-end heavy treadmills, and that is moving less now than it used to move a quarter ago and certainly a year ago. The industrial goods, the medical equipment, the high-value freight that we sought out much more over the last couple of years as part of Grow Forward, that is very resilient and is holding up extremely well. Great. That's really helpful. Then lastly from me, you know, it's kind of a follow-up to a prior question. You're clearly generating, you know, really strong free cash flow, and it looks like that should continue into next year. Maybe talk a little bit about your capital allocation plan. I think you paid down some debt, but, you know, at this point, you know, what's your opportunity for share repurchases, M&A appetite, you know, anything there? Yeah. Stephanie, good question. You know, we obviously have our dividend that we'll continue to pay, you know, into the fourth quarter and into next year. After our dividend payment, you know, we look to reinvest back into our business. We've kind of talked about those equipment purchases with Tyler, you know, and some IT investments, we think those will continue, you know, into next year. In terms of where it goes from there between M&A and share repurchases, it all depends on what's in front of us in terms of an M&A, you know, opportunity. You know, we would choose an M&A opportunity over a share repurchase. Certainly, you know, just with the interest rates getting higher and higher on the debt, you know, sometimes we find it, you know, advantageous for us to pay down some of the debt to reduce our interest costs. That's how we think about, you know, our capital allocation, you know, just in general. I think as we think about, you know, going into next year, like I said, I think the M&A opportunity will kind of drive some of those, you know, decisions after we reinvest back into our company. Let me, Stephanie, let me just add one thing that you just triggered, and Tyler, this also goes back to your question. CapEx next year being roughly kind of in line with this year, despite the fact that Columbus, the big hub, investment happened this year and obviously won't repeat next year. We just launched, and we talked about a project, Eagle Eye in operations a year or two ago. This is basically us kicking the tires and making extra certain, that Tim Osborne, Justin Lindsay, Chris Ruble, all of their teams, making extra certain that the processes that we employ in our terminals and also across our network, are we routing correctly? Are we always using the first or second or third best route? We put that in place with Project Eagle Eye. Now we believe the in-terminal and over-the-road processes are solid. We're taking it now to the next level, and we call that Project Falcon. It's a cool collaboration between our Jay Tomasello and his IT team and the business partners in operations, also the commercial team, making sure that our business technology inside the terminals keeps going up. More efficiency, more accuracy, the way we track things, the way we dispatch things. First-class, kind of our best-practice technology being implemented. While Eagle Eye cleaned up our processes, now we have the opportunity to put first-class business technology in a sound process environment. That's what's happening over the next year to two years. Project Falcon, you'll hear more about that. If you just step back, think about it this way, in our operations, we did a tremendous job making sure that we have processes that make sense. Now we're putting the systems and the support tools in place to actually make these processes that are sound processes now even more efficient and accurate. Long way of saying, CapEx next year will be in line with this year because, yes, we no longer have a Columbus investment. However, we have a tremendous opportunity to upgrade our business technology inside our terminals. One last point that I think is worth mentioning also, the outside brokered miles came up several times. Yes, we do a tremendous job making sure we get good brokered miles with, we also on the HR and people side, Kyle Mitchin and Ryan Gilliam, their entire team does a tremendous job attracting and keeping our drivers. Keeping those drivers is obviously the number one thing we need to be doing to make sure we don't have an enhanced need of brokered miles. The reason why we have few brokered miles, like even going into next year, the tailwind that we talked about is exactly because we do a tremendous job keeping the drivers that we actually have on our IC roster. Stephanie, I'm not sure that- Awesome. I'm sorry. Go ahead. No, that's it. That was exactly what I was looking for. I just had one quick, housekeeping. Could you just remind us what is left in your current share repurchase authorization? I believe we've got about. It's done in shares, Stephanie. I think we've got, I think it's 3 million shares, about 3.5 million shares left on that share repurchase. Definitely we've got a long way to go, and so we'll reach the end of that authorization from our board. Understood. Well, really appreciate it, and congrats on such a good quarter. Thank you, Stephanie. We'll now go to the line of Scott Group with Wolfe Research. Please go ahead. Hey, thanks. I just have a few really quick things. The tonnage in October down mid-single. Any color on shipment and weight per shipment trends? First of all, good morning, Scott. Shipments look fine. The weight is probably a bit lighter, and that's, and there's a reason for that, and it's actually intentional. Let me just walk you through it. It's a mix issue. Let me do that quickly. The number of shipments will look strong, the weight per shipment will look soft. Now you say, like, should we be concerned that you're now getting back to weaker furniture? The answer is no, you should not be concerned. What's happening is, yeah, I mentioned this before with international forwarders, airlines and some of the customers that actually use our door-to-door service being softer, we have done a really, really effective job. The entire commercial team, our new CCO, Nancee Ronning, Melissa Feeser, her entire team, have done a very good job working very, very closely with those customers that know us best to do more high-value freight for them. The customers that know us best, Scott, are domestic forwarders that tend to do airport-to-airport business and they move with us what otherwise would be air freight. These tend to be pure units, smaller shipments, and while it's high-value freight, they're not bulk commodities in kind of in six or eight units. They're much smaller. Doing more high-value freight airport-to-airport with those customers that know us best, to some extent compensate for the weakness of import from other customers means we're doing more airport-to-airport, less door-to-door, and therefore less bulky stuff that actually comes in smaller units because it typically would have been air freight otherwise. Long way of saying weights are going down, shipments are holding up very nicely, and the weights going down is not a return to weaker furniture. It's actually the fact that it's airport-to-airport higher value freight. Okay. The outside miles, can you just remind us what percentage of those are you paying in the spot market versus contract? It's called a total of 5% of our total miles, and I would say it's roughly half/half. Okay. Just really quick, what's the effective tax rate for Q4? We said in our earnings release, Scott, that our full year rate would be 25.6% for our effective tax rate. Okay. In that ballpark for Q4? Correct. Okay. Thank you, guys. Okay. Thanks, Scott. Our final question will be Bascome Majors with Susquehanna. Please go ahead. Tom, following up with the first question, I just wanted to clarify, you talked about expecting to be able to do better than a, call it LTL market, mid-single digit tonnage decline next year. It was that insinuating that your model to get to up earnings next year assumes better than a 5% decline, or is that just saying we, you know, we're modeling 5% down with the market, but hope to do better? Thank you. In our model for next year, by the way, we hope is not a strategy. We do actually have game plans. We don't just keep our fingers crossed and hope. We do assume our collective set of actions and we assume that in our models that end up showing next year in our expectation to be better than this year, we assume to be doing better than minus 5%. Okay. Thank you for clarifying that. Can you talk about price competition? Obviously a concern in the more traditional LTL market, but your customer base and network are non-traditional in that sense. You know, if core LTL pricing gets more competitive in a down tonnage market, you know, where might you feel the need to protect share, and where are you fairly insulated as far as your portfolio? Yeah, my sense is, Bascom, that the more successful we are with true high value freight, and again, think of industrial goods, electronics, server racks, medical equipment. The more successful we are with that events business, a good example, where the margin for error, either in a damage reshipment or a hitting tight time window situation is close to zero, we feel very strong about the pricing discipline that we can enforce. In a higher end retail, e-tail, e-commerce field, think of heavyweight treadmills as an example, I do believe you'll see a bit more competitive pressure. I think overall we feel very, very confident that next year, yes, next year will be the year of actually focus on profitable growth organically. Next year will be another strong pricing year. To be very specific, I think in the high-end consumer space is where there will be a bit of a battlefield. Thank you for that. Lastly from me, I mean, you've given a pretty compelling look at how things could go next year if you execute on your strategy and you continue to outperform the market and your operational goals. Can you give us the glass half empty approach? Like, what is it that could be different than your assumptions that drive a worse bottom- line outcome? I don't know if you want to cite, you know, one or two things that would keep you up most at night if you got those wrong. When you stress test the model to the downside, can you talk about what things might look like, you know, in the other scenario than the, call it, $7.50+ that you're guiding to and managing to? Thank you. Yeah. Bascome, good question, and obviously one that, Rebecca, myself, our entire team, is focused on. We have game plans of what we intend to execute. We obviously also have game plans how we defend ourselves when things get really rocky beyond expectations. We have a model. We just did a review that stress model with our board earlier this week that assumes flat volumes, in some cases even negative volumes, that assumes that fuel is going down so much way beyond the $4.21-$4.28 expectation that the industry sources would imply. We have models that get us back into $6+ territory. We fully intend to execute on everything we talked about over the last hour. Forward 23 is a robust program that makes that $6+ scenario highly unlikely. I am very confident that with everything we have got underway, and again, we covered a good part of it over the last hour, we are winning in a softer environment. We're winning this year. We're winning next year. We, as like every first-class company does, we do have a kind of worst case scenario, and we have very specific cost containment actions and other actions in place that insulate us from dire consequences. To be very clear, the game plan here is to win in a softer environment. That's what our game plan currently calls for this year and for next year. Thank you for that candid sharing of your downside model, and it's encouraging to hear that, you know, in this, quote, highly unlikely scenario, that looks like your stock would still be trading, you know, kind of below its long-term average, closer to 20. Thank you for the time. Thanks, Bascome. Thank you. That concludes Forward Air's third quarter 2022 earnings conference call. Please remember that this webcast will be available on the investor relations section of Forward Air's website at www.forwardaircorp.com shortly after this call. You may now disconnect.