Forward Air Corp (Delaware) (FWRD) 2007 Q3 法說會逐字稿

Bruce, it's Ken Hoexter, it looks like they left everybody on an open line.

Is that right? It has been a fun 15 minutes hearing all the reasons why AT&T can't do it right.

I apologize, sir, I can give you your introduction again if you'd like.

That would be great.

Thank you for joining Forward Air Corporation third quarter earnings release conference call. Before we begin, I would like to point out that both the press release and this call are accessible on the Investor Relations section of Forward Air's website at www.forwardair.com. With us this morning are Chairman, President and Chief Executive Officer, Bruce Campbell; and Chief Financial Officer, Rodney Bell. By now you should have received the press release announcing third quarter 2007 results which were furnished to the SEC on Form 8-K and on the wire today after market close.

Please be aware 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 intend to do 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 & 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 any forward-looking statements whether as a result of new information, future events, or otherwise. Now I will turn the call over to Bruce Campbell, Chairman, President, and Chief Executive Officer. Please proceed, sir.

Thank you. Allow me to begin by apologizing for the delay. Good evening, and thanks to each of you for joining our call. As we previously announced, the Forward Air team faced a very sluggish economy during the quarter which impacted both our airport to airport volumes and to a lesser extent pricing yields. As we have experienced in prior down cycles, our competitors tend to become desperate in their attempts to gain share resulting in downward pricing pressures.

We have learned through the years that what serves us best in the long-term is to respond only to specific situations rather than irrational across the board permanent pricing reductions. We continue to feel this is the proper direction for our long-term success. Rather than focus on giving away yield, we have continued our quest to provide our customers the best service possible, not only in on time transit performance but also in the various shipment integrity measures and in providing industry-leading technology. We will continue to focus as once again we feel it has and will continue to serve our customer and us best. We continue to make progress and are completing the model initiatives with once again our logistics group leading the way with a very solid performance. We also saw progress in each of our three other initiative areas and look forward to their continued progress.

I would like to touch for a moment on our late July acquisition of USA Carriers and our subsequent initiative into the pool distribution business. We are quite pleased with the integration process to date of this new product line into the Forward Air family, happy that they contributed a small profit, and we now feel we have a good operating platform from which we can develop a more national presence. Now allow me to introduce Rodney Bell our CFO to review our financial results.

Thank you, Bruce, and thank you all for joining us this evening. After my after my comments we will open the line for your questions. Prior to my comments on the quarter let me remind you that with the acquisition of USA Carriers we referred to here and soon to be formally rebranded as Forward Air Solutions, this this is our first quarter reporting two operating segments. The impact of approximately two months of Solutions is included in our third quarter results. We will provide detail needed to evaluate the overall results as well as the segment results on this call and in greater detail later in our 10-Q filing.

Financial results for the third quarter are as follows--operating revenue increased $7.3 million or 8.1% to $97.7 million from $90.4 million in '06. Income from operations was $16.9 million which was a $2.9 million decrease compared to $19.8 million a year ago. As a percentage of operating revenue, income from operations was 17.3% compared to 21.9% in the third quarter 2006. This 460 basis point decline is attributable to, in general to the challenging business environment that Bruce discussed earlier which resulted in more proportionate growth and from our other revenue cost -- I'm sorry, growth from higher cost revenue sources. Net income for the period was $10.8 million which is a $1.9 million less than the $12.7 million posted in 2006.

Income per diluted share was $0.36 compared to $0.41 in the third quarter of 2006. Operating results for the nine months ended 9/30/07 are as follows--operating revenue increased $18.6 million or 7.2% to $278.2 million from $259.6 million. Income from operations was $51.1 million compared to $56.5 million, a $5.4 million decline. As a percentage of operating revenue, income from operations was 18.3% compared to 21.8% last year. This decline of 350 basis points is attributable to the same reasons cited for the quarter. Net income for the period was $32.5 million versus $36.8 million last year, a $4.3 million decline. Income per diluted share was $1.08 compared to $1.16 per share for the first nine months of 2006.

The breakdown of third quarter operating revenues is as follows--within our Forward Air operating segment traditional line haul revenue decreased 1.9% from $77.2 million to $75.7 million. Logistics revenue, which is primarily our truckload brokerage business increased 43.9% from $8.2 million to $11.8 million. Other revenue in this segment increased 4% from $5 million to $5.2 million. Our Forward Air Solutions segment contributed $5.1 million of pool distribution, operating revenue to the quarter.

Operating expenses associated with the quarter compared to the same period for last year are as follows--overall purchase transportation as a percentage of operating revenue increased 30 basis points from 42.6 to 44.2%. This is due to a shift in the business mix from system revenue in favor of the logistics revenue which is more heavily burdened by purchased transportation offset by lower PT in the Forward Air Solutions segment. With Forward Air Solutions removed our total purchase transportation would have been 43.8% due primarily to the shift in mix.

Purchased transportation for the airport to airport network was 39.4% of revenue compared to 39.9% in 2006, evidence that we continue to control our system costs. PT for logistics was 78.8% of logistics revenue versus 72% last year. The percentage increase in logistics continues to be due to a reliance on relatively more costly outside capacity to cover the increased growth in our truckload brokerage business as well as the impact of lower yielding loads to provide balance for owner operators in our airport to airport network. Salaries, wages, and benefits as a percentage of operating revenue increased 220 basis points to 22.5 from 20.4% in 2006. Approximately 120 basis points are the result of Forward Air solutions which is a more employee labor reliant -- is more employee labor reliant than our other operating segment. The balance of the increase is due to increased workers comp and group insurance costs along with increased share-based compensation offset by reduced incentive pay.

Operating leases as a percentage of revenue increased 40 basis points to 4.6 from 4.2% due to higher lease payments on facility upgrades, approximately one-third of the increase was attributable to Forward Air Solutions. Depreciation and amortization as a percentage of revenue increased 70 basis points to 3% from 2.3% primarily due to placing in service our Columbus terminal expansion and our two new facilities in Chicago and Atlanta. A small amount of the increase was resulted from Forward Air Solutions. Insurance and claims were approximately flat at 1.7% for both periods.

Finally, other operating expenses increased 120 basis points to 8.8 from 7.6%. Costs associated with new facilities as well as training of key personnel were the cause of the 80 basis points increase and the balance was due to Forward Air Solutions. Operating income as a percentage of revenue for our Forward Air segment declined 460 basis points to 17.3% from 21.9%. Forward Air Solutions had operating income as a percentage of revenue of 9.8%. As a result of a favorable tax credit resulting from propane usage offset by the impact of FIN 48 our tax rate for the quarter decreased to 37.3% from 38.1% when we anticipate our ongoing tax rate to be approximately 38%.

Some other relevant operating statistics are as follows--total assets as of September 30, were $216 million compared to $213 million at the end of '06, cash flows from operations were $18.6 million for the quarter and $43.8 million year-to-date. Our cash and short-term investment position decreased $2 million to 18.9 ,o;;million from $20.9 million during the quarter.

Due to material nonpublic knowledge we did not repurchase any common shares of stock in the third quarter. The 634,000 shares available at the end of the second quarter along with the 2 million shares from the 2007 repurchase plan approved by our Board in the third quarter gave us just over 2.6 million shares available at the beginning of Q4. Through today we have repurchased nearly 0.5 million shares at an average price of 28.22 per share.

Average line haul pounds for the third quarter increased 1.8 point -- decreased, excuse me, 1.8% to 32.2 million pounds per week from 32.8 million per week in 2006. Average shipment size was flat at approximately 725 pounds per shipment, and our total shipments were down slightly for the quarter.

Finally, guidance for the third quarter is as follows--we are forecasting operating revenue between 10 and 15% and EPS in the range of $0.35 to $0.39 per share. Growth attributable to our Forward Air operating segment should be between 2 and 5% contributing $0.34 to $0.38 per share on our EPS. Forward Air Solutions will account for between 8 and 10% of our consolidated growth and approximately $0.01 per share to our EPS. Thank you for joining us. The operator will now start taking your questions.

Thank you very much, sir. (OPERATOR INSTRUCTIONS) Our first question is from the line of Brannon Cook of JPMorgan. Please proceed.

Good afternoon. Question on the volume trends in the quarter. Volume trends were on positive in the second quarter. Can you talk a little bit about how things progressed in the third quarter and how things have looked here into October?

July was not good. We saw a little bit of build-up in August and what I would call an improvement Brannon, and then September kind of maintained that. Having said that, it was nothing to jump up and down about, and it couldn't recover July for us. Month to date we're a little bit hesitant to say a whole lot as you might imagine. The Kitty Hawk bankruptcy has had some impact. We don't know how permanent that is. We don't know what's going to happen there, but we did see a little bit of an uptick in how permanent that uptick is or if it was just simply a matter of volumes are picking up, we don't have that answer as we sit here tonight.

But looking towards your fourth quarter revenue guidance at 10 to 15%, you get a little bit more revenue from USA, but it looks like the volume outlook is a little more optimistic?

You hear me hesitating?

Yes.

It has been so long since we have had an optimistic revenue forecast or volume forecast, I am hesitant to say it. I guess we would say we're cautiously optimistic the fourth quarter we'll see some nice volume trends, but again, we've had our ups and downs before.

Okay. On the pricing front, did things mimic the volume trends a bit where you saw incremental weakening in the pricing environment? You talked about the competitors going in and pricing irrationally in some lanes and trying to hold off on that. Was that kind of a -- do you see a similar trend progressing through the quarter and any incremental optimism in the fourth quarter?

Hopefully we're going to be able to maintain the yield a little bit better than we did in the third quarter and certainly nothing our people did wrong. We really witnessed some foolish acts by different competitors, and really on the crazy side. I guess when you're desperate, that's what you do. Hopefully some of that will calm down here in the fourth quarter. Obviously the fourth quarter tends to be the busiest of our four quarters, and perhaps people won't do quite as many desperate things to try to be in the business.

Okay. And a final question just on network size. Do you feel like you're kind of where you need to be right now, comfortable with the balance in the different lanes?

With the footprint?

Yes.

Yes, we're very comfortable.

Okay. Thank you.

Thank you.

Thank you very much, sir. Ladies and gentlemen, your next question comes from the line of Matt McGeary of Sentinel Asset Management. Please proceed.

Good evening.

Good evening.

Could you just remind me about the capital spending program for this year and any insight you might have what that might look like for next year, even just a ballpark kind of view?

Sure. That's changed a little bit due to the delay in getting started with our Dallas facility. Right now we're doing -- we have started in earnest doing some ground prep there. We don't think that will exceed a couple million dollars for the balance of the year. Beyond that, about $1 million in normal spending for the balance of the year. Next year the lion's share of the Dallas facility, call it 13 million, $14 million will be incurred to complete that facility, and in addition to that, our normal spending of about 8 million to $10 million.

Okay. Could you just -- you mentioned something regarding the margins in the logistics business affected by -- I guess can you just talk about sort of what affected those margins and can you -- is it possible to talk about that business in some kind of more normalized level? Are we there? Are they going lower? Can they get higher? Your thoughts there?

We think we have settled in on a pretty good rate. We had the advantage before we decided to expand this business line, this product line of using primarily Forward Air owner/operators to backhaul and put our power and position where we wanted it and at the same time haul a truckload or a brokered load, so that's a lot of words to say this. When we were small, we could put cheaper transportation on it, and as a result, those margins looked really good, and they were really good, but to run it as a ongoing brokerage business that we can settle in on for the balance of our time, we're going to see this type of normalized ratio about a 78, and if you'll recall, we've talked about that repeatedly on the last two or three calls that we would see that number go up, but now we think we have it where we can maintain it. It gives us a nice return on what we invest and certainly we have hardly anything invested to handle this business, so it is a good -- we think it is a good complementary business.

Okay. Good. Thanks. Just lastly, you talk about the credit facility in the release. What is M&A looking like to you guys? Are there opportunities? I got to imagine there is some, obviously there's a fair amount of pain in your industry right now?

In general let me speak in general terms. In general, it is better than it has ever been.

Good. Okay. Thanks, guys. Appreciate it.

Thank you very much, sir. Ladies and gentlemen, your next question comes from the line of David Campbell of Thompson. Please proceed, sir.

Hi, Bruce. The logistics purchased transportation costs are 78%, and that is higher than it used to be, but you're also reducing your airport to airport costs as a percentage of line haul revenues, are you not? That's very accurate. So really you have to look at both of them combined to see the benefits of the whole programs? You're exactly right, David, and if you'll notice, we've been able to really reign our system as Rodney touched on earlier. Our system PT has operated as well as we have ever operated it. Your point is absolutely right. We're pleased with where we are, and I think the question before on the 78 was is it going to settle in there, and we think it will. It is going to stay right in that area, and at the same time help our network. Right. The other revenues of $5.2 million in the quarter, it looks like it is down from last year. Is that an economic problem? Does that show some of the effect of the economy or is that just a loss of some business?

It does slow down some business, but we think that you're going to see that tick back up in the fourth quarter with business to replace some that was lost.

Yes, right. And the -- now called forward solutions revenues, you had roughly two months of that in the third quarter. Can we add a third to that to get a fourth quarter run rate or is it more seasonal than that?

I am sorry, David, it is actually more seasonable in the fourth quarter, seasonal in the fourth quarter if I can spit that out, and we think it is going to be more than the third. It is our first fourth quarter, and we're not sure what peak season is going to look like with those guys. It believes to be a third.

Right. Okay. Thank you very much. Thank you.

Thank you very much, sir. Ladies and gentlemen your next question comes from the line of Jon Langenfeld of Baird. Please proceed.

This is Ben Hartford standing, in for Jon. Good afternoon -- good evening, guys. Question if I could touch on the pricing environment. Looking forward you have got some rationalization in the marketplace I guess you could argue but the issues of lower volumes and excess capacity are still there, so when you look -- when you kind of look into the fourth quarter and then into early '08 what, are your expectations taking in the current environment into account?

Our expectations are that people start exacting rational and that we don't have another competitor go bankrupt. That's what a normal person would think. However, the odds are they won't do that, so we will continue on with our target price reductions where -- and we do that through a process called spot pricing where if the shipment generally qualifies for a lower price, we certainly are willing to give it and send off the competition. On the other hand, where a competitor makes a move, such as changing their dim factor from 250 to 500 which is one of the more ridiculous things I have ever heard in my life, we certainly have no intention of matching that.

Now, our expectation again goes back to it is hard to predict irrational people, so we're hoping that we can hold our own. We're hoping that we exercise good, prudent management. We're hoping that they've heard of good, prudent management and might be able to do the same thing. That's highly unlikely. So in any event we're going to hold the line. We'll give pricing reductions where it makes sense, and where it doesn't we'll go on.

Okay. Would you expect -- has it worsened in the fourth quarter? Has it stabilized? Can you talk to that a little bit?

Last week was better. We're hoping that will carry on through, but it is kind of like predicting volumes, Ben. It gets very difficult in this day and age. It is just really hard.

Understand. Okay. Well, thanks. On the buyback, Rodney, I missed the specific count in the quarter in 4Q. Could you repeat that for me?

Sure can, Ben. Through the, actually through today in the fourth quarter, we've repurchased almost 0.5 million shares.

Okay. Good. And how do you balance your outlook on share repurchases with acquisition opportunities? Obviously the credit facility facilitates that, but how do you guys view both of those two buckets?

Go ahead. Okay. Ben, we're going to keep plenty of -- because the environment as Bruce mentioned is very good right now from the standpoint of M&A, we're going to keep plenty of powder dry but with prices in the [$0.27s] and [$0.28s], we're going to jump all over that, too. I would view it as half and half right now, but based on what we have in the pipeline, along with the current share price.

Okay. And then real quick on the expense side, looking at the two items, the personnel costs and other, obviously the impact from the acquisition, are those good run rates? Are there any specific one-times? I know you had mentioned in the other line you've got some training new personnel, but should we look at that as a good base going forward for those two line items?

Hopefully we are going to be able to improve upon that. We will have higher, with the solutions being brought on, we're going to have higher labor costs because it is more employee intense on the dock side, and it also -- and the drivers side for that matter. And it also tends to be the revenue is generated only by the delivery and handling. You don't have line haul portions in there, so as a percentage of revenue it is going to drive up. We're going to see a little bit higher there. We will also -- we're hoping, better said that we can reign in some of these healthcare costs. We have good weeks and bad weeks in healthcare, and that's kind of driven it a little bit more than we originally anticipated. That's not too unusual where we see the spikes that go on, but hopefully we're going to be able to draw that down a bit, so that's a lot of words to say. The run rate is probably a little bit high. It is our fond wish that it is around 100 basis points too high, but we need to let Solutions settle in before we really can give you absolute answers.

Sure. And then in the fourth quarter you had mentioned rebranding. Is that going to to hit the fourth quarter and is that material at all?

Actually it will hit January 1, where that operating group is -- today we retained the name of USA Carriers simply to facilitate the integration of the business, and we're pleased with that, and we've been able to get the Forward Air part of the story out there now, and so we will begin that process of changing the name from USA Carriers to Forward Air Solutions, and that's also important for our expansion.

Great. Thanks for the time, gentlemen.

Thank you very much.

Thank you very much, sir. (OPERATOR INSTRUCTIONS) Our next question comes from the line of Todd Fowler of KeyBanc Capital Markets. Please proceed.

Good afternoon, guys.

Hi, Todd.

Hey, Bruce, with USA Carriers I think when you guys announced the acquisition last quarter you said that in 2006 the business basically was about a $32 million annual run rate from a revenue standpoint. Based on what you've seen, here the first couple of months, is that business growing organically? Is it feeling some of the pressures of the overall freight slowdown? What would your expectation be for that business on a stand alone going forward?

They're right on target. The majority of that business that we acquired I should say all the business that we acquired is retail business, and believe it or not that has not -- it doesn't appear to have slowed down at all.

I don't believe that. After some of the things I have heard.

It is kind of surprised us, too, but so far we're very pleased with it. We haven't seen any dips. We haven't seen any less shipments coming out, so we're happy with it.

I guess is that business a little bit more insulated then than some of the macro trends we might be hearing from some of the retailers due to the the nature of what the business does or is it something else that, due to the size of the business or something else I might no be thinking of?

I honestly can't answer that. I think perhaps you're right in some of your assumptions, but I don't think we know that answer.

Okay. And then I guess you said that it is trending on track with your expectations. Does that mean that it is growing kind of on an organic basis from where it was historically?

Yes, and understand that the way they look at their business, they divide it in fifths instead of quarters, and they say in their fourth quarter they actually have two fifths, so that's kind of how -- that's how peak that business is. It is almost like going back to the freight days, and obviously driven by the Christmas and post Thanksgiving push.

Okay. So we should see some decent seasonality in the fourth quarter?

Yes.

Fair enough. And then just real quickly, Rodney, I think you covered a little bit of this with Ben, but I wanted to go back on the operating expenses, the other operating expenses. I think you mentioned that some of the increase here during the quarter, the $8.6 million here in the third quarter for other operating expenses which related to facilities openings?

In comparison, yes.

In comparison. Okay. Is that something that -- should that -- does that not reoccur -- does that one-time type costs that were incurred during the third quarter or is that because we have new facilities that are open that we have got a higher run rate of expenses?

Todd, it is not only moving into -- it is the moving out costs as much as it is the moving in costs if you know what I am saying. They won't occur on the large level as they have in this past quarter simply because we're moving into larger facilities, and it is more costly, but we constantly are turning in and out of facilities, so there is always a certain amount of that, but it is not to a level that it was this past quarter.

Okay. That's helpful directionally. Thanks a lot, guys.

Thank you.

Thank you very much, sir. Ladies and gentlemen, your next question comes from the line of Ken Hoexter. Please proceed.

Good evening. Bruce, can you talk a little bit about on the volume side are you seeing any pick-up on the export and does that help you at all to offset any of the decreased import volumes that we're seeing on the air cargo side?

That's a great question. We actually see that on the airline side probably most vividly. There was a time two years ago when the carriers we do business with, the air carriers, they were dying for anything to export, and their imports were just going great guns, and today that has almost slipped.

Does that help you kind of balance out the traffic that you had to stick in the rate increase from the West Coast? What was it about a year or two ago, and does that -- do you start to see any meaningful shift or is this just a minor pick-up?

I think this right now is minor but I am not sure as we watch the dollar if this isn't going to continue and become a bigger issue. I think the bigger issue that affected the West Coast has been the -- especially the containers moving away from Long Beach and other ports and going to Houston and, for instance, our Houston business is exploding, so I think people always find a way or a better way to move their product, and they learn from a few years ago coming through the West Coast was difficult at best.

And then you mentioned that others are being aggressive and you highlighted a couple of pricing things. Is that just from the Kitty Hawk bankruptcy or are you highlighting that it is getting widespread across many different carriers?

Well, we primarily -- the competitors that we look at are Kitty Hawk and Town. I think Kitty Hawk because of the struggles they were going through. As a result we really didn't get into a lot of really crazy things from them. So having said that, you can assume where most of the idiotic actions occurred. Hopefully they will begin ceasing, but it is unlikely.

It is unlikely because though they're in Chapter 11 they are still kicking around? Or it is unlikely--?

No, no, no, no. I lost you there. Kitty Hawk actually has been of little concern to us over the the last month or so. Primarily because I think they were obviously fighting for their lives. I don't know what all they were going through. But we were facing bigger pricing discounts or whatever from the other competitors. There is one main one, and that's Town, and then we see things on a spot basis across the U.S. with smaller carriers, who on a one-off basis will come in and do something silly. Will that expand? Again, it is difficult to predict irrational behavior.

So it sounds like where we are in the economy, it sounds like in a normal cycle when you get this much excess capacity, Bruce, is this beyond what you have seen in your past down turns is this in line with where you think you are and based on your past experience where have you seen it get to from this point?

I think we're really, we're probably hopefully at the end of it and maybe even since we're going into the fourth quarter and some of the other things that have occurred maybe we've seen a slowing down of it in the last few weeks. I am hoping that's the case. I think we're all hoping that's the case. And experience would tell us that hopefully that's -- we're on -- we're going to start an up turn and be through the down part of the cycle, but again a little bit early to predict that.

Okay. Is anything giving you an indication? You said the last few weeks are you seeing pricing competitions slow a bit or?

We've seen it slow, but again we've seen this in other periods of time where we think gee, it is going to finally abate or at least just simply slow down a little bit and then two weeks later it will get crazy again. So we're real hesitant to give you an absolute on that.

I take it you need to see the seasonal volumes uptick, then?

Yes, we would love to see that?

If I can just wrap up on the truckload business that you've launched, the brokerage business, can you kind of give a bit of an update on how that's progressing?

They were you up 20% quarter over quarter or year-over-year, pardon me. They continue to do a good job. We continue to have new opportunities there. I really think as we look into the future, if you go out one, two, three years, this is going to become a vital part of the Forward Air story, and it is really a nice piece of business. We have relatively no investment in it with the exception of our people, and it has really performed well, and we're excited about it.

When you talk 20%, you're talking revenues?

Correct, yes.

And is it profitable yet? Is it break even?

It is very profitable. The problem that we have, Ken, in bringing any new business on to the Forward Air model is nothing is going to be as profitable as our airport to airport business. We're bringing in the brokerage at PT costs of 78, and then you have some other costs, obviously personnel, and some technology, so worst case scenario, it is probably operating at an 85, 86 at the worst. In most companies they would be jumping up and down and saying aren't we good. At Forward Air it doesn't come in first place because even when we have a bad airport to airport quarter, we're operating 81, 82. It is all a matter of perspective and how it sits within the model. Again, if we're making $0.15, $0.14 on a dollar for relatively no investment, we're very happy with it.

Just if I can just throw out, this out then, what's the difference between a recession, an actual recession and when you're seeing right now?

Oh, my God, you will have to talk to Kudlow on that. We've seen the stabilization of the weight per shipment. It is not back to where it was a year ago, but it has stabilized in the last two, three, four weeks we've seen that. We hear a few more stories that are more positive as to negative, but I will temper all that by saying this. It is the time of year where we should be getting busier, so I don't know if people are just happy that in fact we are getting busier, but when you compare it to two years ago, it is nothing compared to that. It is not horrible.

Great. Thanks for the time, Bruce.

Thank you very much, sir. (OPERATOR INSTRUCTIONS) Our next question comes from the line of [Tom Lightcap] of Value Holdings. Please proceed.

Hi. Can you go over again what your fourth quarter EPS and revenue forecast were again?

Sure. It is a little bit confusing, so the revenue -- the overall Company revenue will be between 10 and 15%. Now, of that 10 and 15%, between 2 and 5% will come from the Forward Air statement which is the traditional Forward Air. Between 8 and 10% growth will come from our new operating segment Forward Air Solutions. From an EPS perspective it will be between $0.35 and $0.39 per share, and all accept $0.01 per share will come from Forward Air, that $0.01 will come from Forward Air Solutions.

Okay. And then also your CapEx projections, what was that one more time just for the fourth quarter?

Before it will be somewhere between 2 million and $3 million.

2 million to 3 million. Okay. And then in terms of the USA Carriers business, can you talk a little bit about what, if any, effect the housing market is having on that? Is this more of a business that is geared towards existing pools and is therefore not affected?

It is almost 100% retail business. The customers within this business segment for us , are people like The Limited, the Gap, DSW and absolutely nothing to do outside of the retail end of

Okay. Strictly retail. That's good to know, and then just to clarify, there should be a seasonal uptick in revenues next quarter?

The fourth quarter for this business segment is always the best quarter.

Okay. Great. Excellent. Thank you.

Thank you.

Thank you very much, sir. (OPERATOR INSTRUCTIONS) At this time, sir, we have no further questions in queue.

Thank you.

Thank you very much, ladies and gentlemen for your participation in today's conference call. This concludes your presentation for today. You may now disconnect. Have a good day.