Forward Air Corp (Delaware) (FWRD) 2006 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the fourth quarter and fiscal year 2006 Forward Air Corporation earnings conference call. [OPERATOR INSTRUCTIONS] A replay of this call will be available following the conference call at www.forwardair.com.

I would now like to turn the presentation over to your host for today's call. Ms. Lera Doherty. Please proceed, ma'am.

Thank you. Good morning and thank you for joining us. Before we start I'd like to again point out that both our press release and this call are accessible on the Investor Relations section of our website at www.forwardair.com. With us this morning are Bruce Campbell, our President and Chief Executive Officer; and Rodney Bell, our Chief Financial Officer. By now you should have received our press release announcing fourth quarter and fiscal year 2006 results which we furnished to the SEC on Form 8-K and across the wire yesterday after market close.

Please be aware that this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Including statements, among others, regarding the Company's expected future financial performance, for this purpose any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. Without limiting the foregoing, words such as believes, anticipates, plans, expects, and similar expressions are intended to identify forward-looking statements. You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in our filings with the Securities and Exchange Commission and in the press release issued yesterday, and consequently actual operations and results may differ materially from the results discussed in the forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statements whether as a result of new information, future events, or otherwise. And now with that caveat, I will turn the call over to Bruce Campbell, our President and CEO.

Thank you, Lera, and good morning to each of you joining our call. Without question the fourth quarter of 2006 imposed a number of difficult challenges on the Forward Air team. Stating the obvious, the freight environment wasn't nearly as robust as in past years, and we did not experience the normal holiday peak as we typically do. In spite of these conditions, we were still able to grow our revenue, although certainly not to the levels we are used to experiencing.

Clearly, the star for the quarter was our truckload brokerage segment which showed growth of 58.3% for the quarter, and 31.4% for the year. Our largest segment, the airport-to-airport business, slowed -- pardon me, showed slightly less tonnage on a year-over-year basis but more importantly produced an increase in shipment count, which is a key metric for us. We enter 2007 with a continued emphasis on the growth of our airport to airport segment, but just as importantly, a new strategy which emphasizes developing other complementary value-added services. We have named this new strategy completing the model and believe with successful implementation it will allow us to round out our offerings to our existing customer base, add new customers, and more importantly, give us the ability to consistently generate double-digit revenue growth into the foreseeable future.

The specific product lines are our pickup and delivery service, known as Forward Air complete. Value added handling, which encompasses a wide array of handling services, the further development of our truckload business, and finally, a renewed emphasis on airline Road Feeder services which as many of you recall with the exception of a few airlines we backed away from because of the obvious financial issues associated with the airline industry. We believe with the proper allocation of resources, and by resources we mean assigning the right professionals and giving them the tools necessary to accomplish the initiative, we will be successful in each of these important areas. And now for a review of our financials, Rodney Bell, our Chief Financial Officer.

Thank you, Bruce. And thank you all for joining us this morning. After my comments we will open the lines for your questions. Financial results for the fourth quarter 2006 are as follows. Operating revenue increased 4.1 million or 4.6%, to 93.2 million from 89.1 million in 2005. Income from operations was 18.9 million, which was an approximate 2% increase over the 18.6 million reported in 2005. As a percentage of operating revenue, income from operations declined 60 basis points to 20.6 versus a 20.9 in the fourth quarter of '05. Net income for the period was flat at $12.2 million for both periods. Diluted earnings per share was $0.40 compared to $0.38 which is a 5.3% increase over 2005.

The financial results for the 12 months ended 12/31/06 are as follows. Operating revenue increased 31.8 million, or 9.9%, to 352.8 million versus 320.9 million. Income from operations increased $8 million, or -- pardon me, 11.8% to 75.4 compared to 67.4 million for the 12 months. As a percentage of operating revenue, income from operations expanded 40 basis points to 21.4 from 21.0 last year. Net income for the period increased 8.9% to 48.9 million from 44.9 million in 2005. Income per diluted share was $1.55 versus $1.39 per share in 2005, or an 11.5% increase.

The components of our fourth quarter operating revenue were as follows. Traditional line haul decreased just less than 1% from 78.1 million to 77.5 million. Logistics revenue, which is primarily our truckload brokerage business, increased 58.3% from 6.0 million to $9.6 million in 2006. Other revenue increased 26.9% from 4.9 million to 6.2 million. This was due primarily to the revenue generated by our Forward Air complete product. Beginning in 2007 we will report Forward Air complete along with line haul revenue due to the similar operating characteristics of those businesses.

For the 12 months ended traditional line haul revenue increased 8.2% from 276.9 million to 299.7 million, logistics revenue increased 31.4% from 24.4 million to 32.1 million. Other income increased 7.2% from 19.6 to 21 million.

And now the operating expenses associated with the fourth quarter 2006 compared to the same period 2005 were as follows. Purchased transportation for the airport to airport network was 41.5% of airport to airport revenue compared to 41.3% in 2005. Purchase transportation for logistics was 73.7% of logistics revenue versus 70.3% last year. The percentage increase in logistics was due to a shift of relatively more costly outside capacity to cover the increase in our truckload brokerage business. Salaries, wages, and benefits as a percentage of operating revenue declined 80 basis points to 20.3% from 21.1% in 2005. The impact of early -- of our early vesting of options in 2005 along with reduced incentives were offset by higher healthcare costs and the impact of FAS 123R.

Operating leases as percentage of revenue increased 40 basis points to 4.1% from 3.7% due to higher lease payments on facility upgrades. Depreciation and amortization as a percentage of revenue were flat at 2.6% for both periods. Insurance and claims decreased 20 basis points to 1.3 from 1.5% in 2005 due to better claims experience offset slightly by higher premiums. Finally, other operating expenses decreased 40 basis points to 7.2% from 7.6%. This was primarily due to costs associated with disposing of old trailers that were replaced in the fourth quarter of 2005, along with better cost controls and discretionary expenses this year.

For the 12 months ended 12/31/06 purchased transportation for our airport to airport network was 39.4% but that revenue compared to 40.0% in 2005. This was attributed to better load factors along with better cost management. Logistics PT was 71.0% versus 70.3% of logistics revenue. Again this was due to proportionally a high reliance on outside power. Salaries, wages, and benefits as well as operating leases were essentially flat as a percentage of revenue. Depreciation and amortization declined 30 basis points from 20.8 to 20.5%. Insurance and claims were 1.7% in 2005 and 1.6% in 2006. Lastly, other operating expenses as a percentage improved 20 basis points or 7.8% versus 7.6%.

Some other relevant operating statistics for the quarter are as follows. Total assets as of December 31, 2006, were 213 million from 212.6 million at the end of 2005. Cash flow from operations were 14.3 million for the quarter and 52.5 million for the year. Our cash and short-term investment position decreased 9.4 million from 69.9 million from 79.3 million in 2005. Within the quarter the Company repurchased 100,000 shares of stock for approximately 2.9 million to bring our total repurchases for the year to 1.3 million, an approximate cost of 41.7 million, 1.6 million shares remain available for repurchase under our 2005 repurchase plan. Average line haul pounds per week for the fourth quarter decreased approximately 2% to 33.9 million pounds per week from 34.6 million pounds per week in 2005. Also during the quarter our average shipment size declined approximately 6% from 766 pounds per shipment to 723. Total shipments for the quarter were up 2% versus the fourth quarter 2005. Business days were consistent at 63 days for the quarter and 254 days for the year. The number of terminals remained as a consistent 81 versus previous quarter's.

And finally, guidance for the fourth quarter is as follows. We are forecasting operating revenues to grow between 6 and 10% over first quarter of 2007. We are projecting EPS to come in between $0.35 and $0.39 per share compared to $0.35 per share last year. Thank you for joining us. And the operator will now start taking your questions.

Thank you, sir. [OPERATOR INSTRUCTIONS] Jon Langenfeld of Robert W. Baird.

This is Ben Hartford stepping in for Jon this morning. Just starting with line haul, could you talk a little bit about the trends you experienced throughout the quarter and into January?

Be a little bit more explicit on line haul, you mean our airport to airport business?

Yes, I'm sorry.

Great. Actually, October was fairly strong. And then we saw the -- I guess you would say the lack then we saw the -- I guess you would say the lack of a peak season that did not occur in November-December, which made the comp very difficult. So strong October and then a moderating balance of the year.

Okay. Then do you care to comment about what you have seen year to date?

You know, I'd love to comment on it. I guess we want to make sure that it's going to come through, but for the past few weeks, business levels have been good.

Okay. Good. Then on the pricing side, how much in the yield growth number how much is due to price, how much is fuel coming down, and mix a part of the equation?

I wish I could, or either Rodney or I could answer that absolutely. Part of it is, in fact, a yield increase. I don't think we had a big fuel impact. And overall we were happy with how we maintained our yield during the quarter.

Okay. Did you experience some freight diversion, do you believe, because of the more readily available truckload capacity environment in the fourth quarter?

That's a great question, and again it's one of those areas where it's difficult to quantify, but we firmly believe that to be a true statement.

Okay. Quickly, on logistics, talk a little bit about the pipeline with contracts. You've had success capturing some. Do you -- are you still optimistic about what you see going forward in '07?

We really are, and with that, obviously we have people listening to this call that we are not going to name customers, but we feel very good about it. We feel we have positioned the right professionals into each of these areas. They have a very big challenge in front of them, and we think we're going to have some pretty good results as the year goes on.

Good. One last one, if I could get it what. What are your CapEx expectations for the upcoming quarter and year?

For the quarter, it's -- that's a hard one to call because we have our building projects in process right now, and weather issues. I'll just go ahead and give it to you for the year. We are going to spend $45 million completing the three buildings in Chicago, Atlanta, and Dallas that we started, we announced last year, and what we refer to as maintenance or replacement type CapEx somewhere between 8 and 10 million, pretty much ratably over the year.

Thank you.

And our next question comes from the line of Edward Wolfe of Bear Stearns.

Good morning, guys. This is [Tim Denoyer] stepping in for Ed. Couple of quick things. You said you expect logistics to continue to grow fairly strong. Can you quantify roughly what the -- what impact that had on the margins this quarter and if you expect that to continue going into next year?

Well, I think it's important to note that our airport-to-airport business is obviously very profitable, and we have, you know, with a good group of professionals, been able to drive that operating ratio down. When we bring in other businesses, one of the negatives of bringing in these other businesses, pick up and delivery, truckload brokerage, or whatever, of those four product lines we're concentrating on, we will not maintain those types of margins. It just simply is not in the books. On the other hand, our goal, when we took on this new strategy, was very simple. We are going to achieve double-digit revenue growth on a consistent quarterly basis. That's objective number one.

Objective number two, and regardless, as Ed points out all the time, we're very cyclical. And, you know, as much as I'd like to disagree with him, he's been right in the past about that. We are out to disprove that, and we are going to. So we are going to gain the revenue growth, but that leads to, we will probably, as you might imagine, and anybody else that understands these businesses, we are going to give up some margin deterioration. On the other hand, we are going to drive, which is a key objective for us, bottom line income. So part of the issue in the past has been my fixation on having the best operating ratio in the industry. That probably went overboard, and I'll take the blame for it. We are fixated today on growing revenue in the double-digit area, number one, and number two, growing earnings per share on a consistent basis regardless of the economic conditions.

Got you. Can you quantify, in the fourth quarter how much of the 210 basis point OR deterioration was due to pricing versus tonnage -- or, sorry, due to mix of the higher logistics business?

We can get you that number. As we sit here today, we would tell you that the majority of it was the fact that there was a larger component of truckload business, but rather than -- and especially since we're on the road, give you this is what we think, we can give you exact numbers.

Well, the difficulty, if I could, is that it is more costly, but then again, part of the strategy behind the truckload brokerage business is the positioning of our own power into areas where we need it for balance. So you're actually giving up, but then again you benefit from the standpoint of positioning in the system, you actually benefit, so it makes it kind of a moving target.

Yes. Okay. Next, can you comment on pricing a little bit? Are you seeing a bit more competitive pricing environment out there? The yields were down a bit.

It's what I would call a typical part of the cycle where we have some pricing pressure. The really bigger pricing pressure are on some of the competitors who choose either not to dim their freight or they have increased their dim weight, dim weight meaning where we go in and every shipment is basically measured, and if the weight doesn't carry the cube, then the cube factor takes over. We have a dim factor of 250 pounds. Our competitors have changed to 300 pounds. That implies to me that they must have trailers that are 20% bigger than ours, or you don't make money, which both of those are true. So, anyway, that's the type of pricing pressures we have seen.

Got you. Do you have an estimate of where your tax rate is going to be next year?

Right now we're estimating right around 37.8.

37.8. Thank you very much.

And our next question comes from the line of Ken Hoexter Merrill Lynch.

Good morning, it's [Chris Weatherby] in for Ken. On the logistics side, curious to see where you think it could go as a percent of total revenue, line haul decreased in the fourth quarter as a percent of overall revenue. Just to get an idea, as you're looking to grow this business where you think it could ultimately go?

Just to make sure we're clear on this, Chris, the revenue of that business or?

The revenue of the logistics side. As you're growing the logistics side, and it's becoming a larger part of your total pie, just curious as to where you envision that going?

Well, over the long term I'd like to see it equal to our airport-to-airport business because I think it gives us at that point much more smooth results, if you will.

Okay.

But that's not going to occur this year, obviously.

A little bit more of a long-term horizon, I would imagine.

Right.

As far as the pressure on your margins going forward from the growth of that business, I mean, is it possible to really expand margins at all going forward over the next couple of years as you look to grow that business, or should we pretty much be looking at kind of a flat situation at best?

We will -- I would assume, as we get more and more into this, we are going to become more and more efficient, similar to when we started Forward Air, and we will be able to drive margin improvement again, but when you bring on this new business next to a business that's operating at an operating ratio of 78, 79, we are going to have some margin deterioration, but overall we are going to have income improvement, and that's what we're after.

Switching over to line haul pricing, if I could, couple of questions have been asked. I just want to make sure I'm clear here. As far as any comments you can give on first quarter specific pricing, whether or not that's holding up. Is it a flat type of situation with the low single digit number? Any color you can give on that.

So far we have not seen, other than some of the antics I described earlier, we haven't seen any unusual type of yield pressure. We do have a 3% rate increase that goes into effect the beginning of March. That is not an across the board increase. It affects a portion of our customer base, but not the entire customer base. So we are going to gain some yield there.

Are you comfortable mentioning how much of your customer base it affects?

About 50%.

50%.

And part of the philosophy behind that, and the reason we're a little bit esoteric there, is if a customer agrees to grow a certain percentage with us, we will waive, temporarily, the increase, and then see if they can, in fact, grow. If they can, great, we're not interested in upping the rates. If they can't grow, then the rate is going up.

I think you had mentioned it was hard to get an idea what fuel -- kind of how fuel impacted pricing in the fourth quarter, but directionally, is it fair to assume that it was a drag on that 1.4% growth that we saw on pricing?

I think it's fair to assume it was a slight drag. I wouldn't put a lot of emphasis on that.

Great. Thank you very much.

You're welcome. Thank you.

Our next question comes from the line of Alex Brand of Stephens.

Good morning, guys. I just want to make sure I understand how this strategy -- or at least how you think it's going to play out as we go through particularly '07. And I guess the first question there is, it sounds like your Q1 guidance is based on you kind of seeing some better trends, and so you feel like you can get a little acceleration in the top line. And I assume that's mostly sort of the traditional business and this getting to a top line of double-digit percentage sustainable is something that we should expect later in the year.

I think that's a very fair assessment. Q1 so far, we're hesitant to say -- I mean, if you looked at the fourth quarter at the end of October we thought we were going to have a good quarter, then we ran into some difficult times. So far through the first quarter, we're okay with where we are. We think that we will have a nice contribution from our new strategy, but obviously it's still small, and so any contribution it gives is still not going to be as great as if we can drive the airport-to-airport business.

But is it fair to say that you think you can get up to this double-digit growth rate that you want to sustain? Is that a goal for '07 full year, or--?

I can assure you that is a goal for '07.

All right. Fair enough. Now, as part of that, it sounds like you're working on other -- your other products to sort of leverage the network beyond the line haul.

Correct.

Is there -- I guess you've kind of run out of core business acquisitions that you thought made sense. Is there anything that you might be able to do, even small tuck-ins, that might make sense to help aid or sort of accelerate this strategy with one of the other products?

That's a great question. We think so. The problem with acquisitions, and everybody in the business world today realizes it, is if it's a very good logistics company, and it is a certain size, then in comes all the private equity money. They spend probably twice what they should spend on the Company, and it takes a strategic buyer like us out of the equation. On the other hand, where our opportunity is on the acquisition side is the smaller acquisitions which would give us girth in some of these new business or product lines that we want to develop, and develop in a pretty quick manner. So we think we'll have some tuck-ins in each of those areas. Will that happen or not? We don't know. But we're a little bit optimistic.

Okay. And my last question sort of part of the strategy as well, I think this year will be the biggest CapEx year you've ever had. Can you just talk about at least qualitatively how you have thought about or how we should think about the return on those investments? What does it sort of do for you? How does it help you drive the growth that will allow to you sort of get the returns back for your shareholders that you are looking for?

That's a great question, Alex. We spend a lot of time internally discussing really a year ago we were committing a significant amount of money and obviously that's shareholders money, over $50 million. What that bought us were three facilities that we talked about earlier. Atlanta, Chicago, and Dallas. It also allowed us to double the size of Columbus. There were a couple of reasons. One is a very basic reason. In each of those cities we simply couldn't find a building that would suit our needs, because of the size of the operation. But secondly, and more importantly was in each of those three cities, we had handcuffed our sales efforts. And by that I mean they were absolutely full, and it was very difficult for them to take on more and more business.

Most importantly, as we began this strategy that we talked about earlier, we actually began the development of a year ago, if we were to go to Chicago and say, hey, we want you to handle the banning and debanning of an ocean customer they would have looked at us and laughed because they wouldn't have been able to. They simply did not have the physical facilities to make that happen. Once these buildings are complete, Chicago, be first, then Atlanta, then Dallas that opens up all types of revenue opportunities that we simply in the past couldn't take advantage of. So that was a key component of this strategy and our ongoing strategy into the future. Then I would add that we have one other facility that we are bringing on line, which is a lease as opposed to an own, and that is our Los Angeles facility, which we are basically doubling in size, and we have been absolutely hamstrung there due to the physical size of our existing building. That's both a good problem and a bad problem. The good part of it is we have shown great growth there. The bad part of it is, it's difficult to grow unless we put them in the right environment where they can be successful. We think effective with that change in L.A. in June we open up a whole new opportunity for them to sell and to really accelerate our handling opportunities and other opportunities for growth. So four -- actually five key cities where we think we have huge opportunities.

Now, interestingly, then I will shut up -- I'm being long-winded -- interestingly, we have completed the Columbus hub, doubling that. Within two weeks of us completing the Columbus hub we brought into that the Pilot Air freight private sort, if you will, and that now basically has added $1 million revenue to the Forward Air coffers on an annual basis. So we know if we build the right terminals, spend the right amount of money in the right cities with the right professionals to, as I call it, jack up the revenue, we are going to get a good payoff.

Excellent color, Bruce. Thank you very much.

Thanks.

And our next question comes from the line of John Fox of Fenimore Asset Management.

Had two questions. You indicate in the lease that the number of shipments were up but the tonnage was down. Wondering if you could just comment on why is that. Obviously it's some type of product mix or customer mix. Maybe you could comment on that, what you're seeing.

I think there are two issues there. One was touched on earlier on the question do you think some of the truckload guys came in because they had capacity and they would pull -- they would take away a 5,000 to 10,000, 15,000 shipment that a year ago when capacity was tight, they weren't interested in that freight. So we lost some business there. But the bigger issue to us is the fact that our customer instead of shipping 700 pounds, only has 650 pounds. It's a very typical process that we go through. We can see it in the cycles, the economic cycles since we have done this for 16 years. We can watch average shipment size, and it is probably one of the best indicators of how the economy is going, and what we have to do to look forward in to the future. So simply a matter of not as much freight as there has been in the past per shipment.

Okay. And then just on the cash flow, the last two years you have had some small disposals of PP&E that did provide some cash flow.

Do you have anything like that for '07? It's de minimus.

Thank you.

Thanks.

And our next question comes from the line of David Roth of Stifel Nicolaus. Please proceed. Mr. Roth, your line is open.

Okay. Sorry about that. Good morning, Bruce. Good morning, Rodney.

Hi, David.

Just had a question on the Forward Air complete product. Now it's in the other segment, and Rodney said it's going to be put in the line haul segment for reporting in 2007.

Correct.

Could you just give us a sense of how much that contributed in the other segment in '06?

In '06, it was approximately $1.5 million.

Okay. And then as you ran through all the numbers I didn't quite catch what the shipment size was for 4Q '06 versus 4Q '05.

766 for '06, and -- I'm sorry, 766 for '05, versus 723 in '06.

Okay, thanks. And on the truckload brokerage side, I guess is that going forward, going to be the fastest growing segment?

I would say that's correct, David.

Then are you having any issues finding capacity out there in the marketplace, or because it's so small, it's not a real problem finding broker carriers to sign up?

Number one, it's not an issue, and number two, obviously we aren't a big player in it, so we have not had an issue finding capacity.

Thank you very much.

Thank you, David.

Our next question comes from the line of David Campbell of Thompson Davis & Company. Please proceed.

Yes, good morning. I wand to ask you, Bruce, and Rod, was there any -- is there any logistics synergies between your truckload brokerage business and the airport-to-airport business? In the way of -- in that you could yo u get business by entering some new customers you hadn't had before for the truckload brokerage, then somehow or other getting that to help you get airport-to-airport business? Is -- there's no synergies there? No, there actually are. The best example would be we get a new customer in the state of North Carolina on the truckload side, and they have loads going to the West Coast. We'll pull the load to the West Coast, and because we're always out of balance, out of L.A. and San Francisco, meaning we need more trucks out there, we then deliver the truckload and go pick up the LTL load. The advantage to us is we are able to, from a quantitative standpoint, we're able to move the load out of L.A. for somewhere between $1, $1.10 a mile on our truck, versus $1.50 in the outside world if we had to use an outside carrier. And then the second side of it, on a qualitative basis, we know our owner/operators are going to give much better service on a much more consistent basis, and that's what we're after. So, yes, there are synergies there, and that's one of the ones we're working very hard. But no impact from that, apparently, in the fourth quarter, because the airport-to-airport business is pretty slow. Actually, we did have the advantage of a better and higher level of service during the fourth quarter, which is traditionally one of our toughest quarters, and we -- it is a new business, so it had minimal impact, but it did impact us some. All right. And the same sort of question I had with regard to the Forward Air direct, the new service. That was supposed to help, I think, add some more airport-to-airport business. With that question, it did. Obviously we went through our start-up phase of in that the latter half of the year in 2006, but without question, if we're able to do a distribution, as an example, for a customer, not only do we get the pick up and/or delivery revenue, but we're able to also, in many cases, bet the line haul revenue, which feeds the airport to airport network. So it, as we develop that, has great synergies. Right. All of it sounds like you may have bottomed out in the airport to airport comparisons, in terms of no growth, or like you had in the fourth quarter. Would that be -- that would be a fair assumption? Well, the numbers are the numbers, and I'd like to sit here and tell you, gee, we just -- we should have grown it, and we didn't, but we are not sitting here telling you that we can't grow the airport to airport because we are going to grow it. Our bigger concern is simply filling out the model and adding, if you will, some smoothness to the revenue, where we can consistently give double-digit revenue growth. But we certainly will push very hard on the airport to airport side. Most of these complementary businesses help to feed that. And what about the focus on international airlines for new logistics business? Is that--? On the international airlines, or truly any airline, we've assigned three professionals to it. We think we have a great team there. We think we have wonderful opportunities. And these are opportunities, David, as you know, having followed us for so many years that we basically walked away from four or five years ago. That industry has changed. Hopefully it's more financially stable now, and we are hard after that business. That's what you meant by the increased emphasis on the Road Feeder services? Exactly. Okay. The beauty of that business, if I may is that it actually does two things. It actually does three. In some cases, we're hauling truckloads, so it feeds our truckload brokerage. In some cases it's LTL, so we are able to feed the network, the airport to airport network. Then third, in some cases there's actually handling that is done, and that we're able to generate fees for. So it's a nice -- another nice fit for the Forward Air model. Right, right, right. And I guess last question, and sorry to bother you so much, but the last question, there has been some discussion, because there was no peak in the truckload business, in the fourth quarter, that some of that was because the shippers deferring deliveries to save costs, and that, therefore, there has been some pickup in January. Do you have any thoughts on that theory? You know, it's a theory. I think what we've said in the past is that we think the shipping public is much -- has better information, better technology, and they are able to better control their supply to the stores as opposed to having a month's worth of inventory, they're probably down to a few days. So I think we're seeing a smoothing of the supply side. In the past, we have talked about the fourth quarters weren't as robust as they had been. They weren't as -- and conversely, the first quarters have tended to be a little bit better. I think that's a phenomenon that will continue, but that's an opinion. That's all that is. Well, Bruce, thank you very much for your good answers.

[OPERATOR INSTRUCTIONS] And our next question comes from the line of Donald Broughton of A.G. Edwards.

My questions have been answered.

Gentlemen, I am currently showing we have no further questions at this time.

Go, Lera.

Thank you, everyone, again, for joining us. I hope you have a good day. And remember that a replay of the call will be available in an hour or two on the Investor Relations portion of our website at www.forwardair.com. Thank you. Bye.

Ladies and gentlemen, thank you for your participation at today's conference call. This does conclude the presentation. And as a reminder a replay of the call will be available one to two hours after today's call at www.forwardair.com. Thank you and have a great day.