Forward Air Corp (Delaware) (FWRD) 2009 Q1 法說會逐字稿

Thank you for joining Forward Air Corporation's first quarter 2009 earnings release conference call. Before we begin, I would like to point out that both the press release and this call are accessible in 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 Senior Vice President and Chief Financial Officer Rodney Bell. By now, you should have received the press release announcing first quarter's 2009 results, which were furnished to the SEC on Form 8-K and on the wire yesterday at the 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 fact 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 other 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 forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

And now I'll turn the call over to Bruce Campbell, Chairman, President and Chief Executive Officer.

Good morning and thank you for joining us this morning. Stating the obvious, the first quarter was the most difficult in our history. Each of our operating groups felt the ravages of a very difficult economy.

The one bright spot was our Forward Air Complete group, which continued its strong revenue growth in spite of this difficult economy, thanks to Chris Thompson and our Complete group for their efforts.

Our overall direction during this tough period is to concentrate on the very critical fundamentals of our business, which are, first and foremost, everyone is selling and doing everything possible to grow our revenues. Secondly, we continue to work diligently on the cost side of the business and will exhaust every effort to maximize their impact in this important area. Finally, through this difficult period we will continue to provide our customers the very best value for their transportation and logistics spend.

Even during these times, we have some highlights I feel it's important to share. First, our Solutions group received $12.5 million, annualized, in new bid awards which are starting up as we speak. Next, we achieved our best labor performance over the past few weeks, showing great cost controls by all of our groups. And, finally, we achieved the highest service levels in the history of our Company -- all critical fundamentals that are important we continue into the future.

And with that and for a review of our financials, here is our CFO, Rodney Bell.

Thank you, Bruce, and thank you all for joining us this morning. After my comments, we will open the lines for your questions.

Revenue for the first quarter declined $11.3 million or 10.5% from the first quarter of 2008. The revenue decline breaks down as follows. Airport-to-airport revenues inclusive of Forward Air Complete were down $18.9 million, or 23%. The approximate breakout by month, unfortunately all in negative amounts, was 18%, 26% and 23% for January through March, respectively. Low to mid negative 20% trends have continued into the second quarter.

Included in the decline in system revenues was $3.5 million or minus 4.3% from the year-over-year reduction in fuel surcharges. That headwind will persist into the second quarter, which had the highest fuel prices of 2008. All-in deals inclusive of the 3.2% benefit of Forward Air Complete, offset by the previously mentioned drag from fuel surcharge, was down approximately 1%.

Logistics revenue, which has been a solid performer for the last two years, began to see a mid-quarter deceleration which resulted in Logistics revenue increasing only $613,000 (technical difficulty) or 4.9%. We're hopeful that new bid activity that we are currently participating in will replace the decline in revenue.

Other revenue was flat at approximately $5.9 million for the quarter.

Pool distribution revenues from our Forward Air Solutions segment were up $7 million or 89.7%, due to three months' benefit of Service Express purchased in September of 2008 and 2.5 months of Pinch, acquired in mid March of 2008.

Moving into expenses for the quarter, the lower revenue base and negative leverage on those costs, primarily fixed in nature, is apparent.

Consolidated purchased transportation increased 120 basis points to 41.5% of revenue. Airport-to-Airport network PT increased 310 basis points to 41.5%. This increase is due to growth in Forward Air Complete, which has a higher ratio of purchased transportation revenue than our traditional Airport-to-Airport service. Logistics PT was up 440 basis points to 78.6%. This margin deterioration was due to our Logistics group running more lower-margin loads to position our system owner-operators in order to improve balance and reduce higher-cost broker miles in our Airport-to-Airport network. This planned decline in margin has reached its full extent, and we anticipate margins will be relatively stable at this level.

Salaries, wages and benefits were up $2.7 million or 560 basis points from last year. This was due to additional fixed salaries, primarily in our Solutions segment, being up $1.2 million as well as taxes and benefits, driven primarily by higher health care costs being up another $1.2 million.

Operating leases were up $2.2 million or 270 basis points from last year. This increase is due primarily to additional facilities as well as leased and rental equipment assumed in our two 2008 acquisitions. Also up due primarily to the 2008 acquisitions was depreciation and amortization, which increased $1.1 million or 160 basis points from 2008.

Insurance and claims were up nearly $0.5 million or 70 basis points, due primarily to increased premiums due to a higher number of vehicles under coverage as well as one large cargo claim in the quarter. Due to lower overall -- I'm sorry -- due to lower year-over-year diesel fuel prices, fuel expense was down $442,000 or 30 basis points.

Other operating expenses were up $673,000 or 150 basis points. Year-over-year improvements in discretionary spend (technical difficulty) $[150,000] swing in property taxes resulting from a large credit in 2008 along with $430,000 in sales promotion from two (technical difficulty) two customer events that were in part non-refundable.

Lastly, we were required to record a non-cash $7.2 million charge that resulted primarily from impairment of goodwill related to the Forward Air Solutions business segment. The EPS impact of this charge is approximately $0.15 per share.

Without regard to the impairment charges, income from operations fell $14.5 million to $2.1 million for the first quarter. Again, without regard to the impairment charge, our operating ratio slid 1320 basis points to 97.8 from Q1 '08. Of that 1320-point slide, 240 basis points is directly attributed to the performance of our Solutions segment, resulting from the weak economy coupled with the first quarter being traditionally the weakest period for retail.

A recent award of $12 million of new business, traction gaining cost control initiatives and efficiencies that will be realized as our new IT systems come online will allow Solution to begin making a bottom-line contribution in the near term. However, the majority of the OR deterioration is the result of our 23% decline in our Airport-to-Airport revenues. This is the most profitable revenue stream, and it was only partially offset by other lower-yielding revenue sources.

While our sales team is working harder than ever attempting to replace this revenue in order to meaningfully impact this shortfall will require some level of economic recovery and/or a reduction in available trucking capacity.

Net income per diluted share was a negative $0.11, compared to $0.35 a share a year ago. Without the impact of impairment charge -- the impairment charge, Q1 EPS was $0.04 per share, which is the midpoint of our previously revised quarterly guidance.

Other key metrics and operating data are as follows. Total assets decreased $6.5 million to $301 million from year end, primarily as a result of our goodwill impairment charge. Cash flow from operations was $16.5 million for the quarter compared to $10.8 million at the end of Q1 '08. Our cash position since year end has increased $9.1 million to $31.2 million. We ended the quarter with $40.3 million of availability on our $100 million line.

Our days sales outstanding was up slightly to 45 days as compared to 43 days at year end as we continue to closely manage our credit risk. Capital expenditure for the quarter, which was related almost entirely to progress on our Dallas facility, was approximately $4.7 million.

As a reminder, budgeted CapEx for the year is $19.6 million, which includes $14 million to complete our DFW terminal. As compared to Q1 2008, average weekly tonnage was down 21.1%, average shipment size was down 9% to 674 pounds and shipment count was down 14.7%. At quarter end, our Forward Air Inc. segment had terminals in 82 cities, and Solutions had terminals in 19 cities. This is inclusive of three cities with combined operations we currently have planned, combining at least two additional terminals this year.

Assuming no further material deterioration in the current economic environment, we expect a year-over-year decline in revenue for the second quarter in the range of 11% to 16%. We expect income per diluted share to be between $0.06 and $0.12 per share.

That concludes our comments, and now back to the operator for your questions.

(Operator instructions) Alex Brand, Stephens, Inc.

I just want to clarify something I think I know the answer to already. But with respect to your expenses including everything -- the size of your network, the salaries and wages that we saw in Q1 -- is this sort of the run rate? Is the decision at this point that there is not much else you could do that would be worth it in the long run to reduce expenses?

Well, the short answer to that, Alex, is we will continue to look every single day at areas that take out cost. The bigger picture is, we also want to come out of this stronger than we ever have been, and we don't want to destroy the Company trying to hit a three-month earning.

So the answer is yes, that's probably the run rate. We think we can improve it a little bit more in certain areas, but we think that all the time, and we are not willing to take a whole lot more out, for the sake of the business.

Bruce, can you talk about the -- I heard a lot of commentary about the volume trends haven't really improved, therefore revenue hasn't really improved. What about the pricing side of the equation? Has that gotten worse? And are you maybe even trying to take advantage of that and pick up some share?

Actually, we really went through all of last year and maybe the beginning of this year without a lot of yield issues, although the whole time we were waiting for that shoe to drop, and in fact we got into that probably in the January -- somewhere in that time frame, where pricing just really got out of hand on the competitive front. And as a result we decided, if that's what it's going to take to stay in the game, we'll play. And we got very aggressive in certain areas, only in those areas where it was truly a benefit to us, where we had capacity available where we did not have to add expense to handle the revenue, etc.

And you will see us continue to be aggressive in the near term until some sanity returns to the market.

I guess Continue-Way, it looks like they are talking about something that sounds just like your Pool distribution business.

Right.

Are you seeing any legitimate national competition, and is the market big enough that at least two of you can play and still a good long-term strategy for you?

Yes. I think, if they come in or -- you know, there's always going to be new competitors. The market is very large. We think it will continue to grow, and then we also think that a number of the mom and pops, for lack of a more descriptive term, that populate our competitive front today will have a very difficult time getting through the next six months to a year. So there's plenty of room.

Ken Hoexter, Merrill Lynch.

Sounds like somebody is playing a video game in the background there.

Bruce, on the other expenses that you just talked about before, are you saying there is no more room for you to pull out additional costs on the Airport-to-Airport side as volumes are down this 20% level? I'm just wondering; Rodney -- I think Rodney mentioned that -- expects margins to stay at these levels. Are there no other cost triggers you can pull, to pull out some of those excess costs?

Well, there are always others, Ken. Our main push today is to improve our efficiencies. The hidden costs that people don't talk about are productivity issues. If you reduce your rent, you go from $5000 to $4000, there's $1000 right there in front of you that everybody can identify. If your productivity on your dock or in other areas is not very good, people really don't talk about the exact amount of money that's been spent there; that's really too much.

So our whole issue has been, let's push productivity as hard as we can. And we are seeing results from that, some very positive results.

Now, having said all that, if you get away from the productivity issues, we have other areas where we can continue to pull costs out. The issue is, at some point you're going to start -- instead of cutting away fat, you're going to get into muscle. And we are very concerned with that, so we want to make sure that we keep the Company very, very strong through this time period so that we can come out on the other end in a strong fashion also.

But is there a period of watching volumes disappear 20% where you might think about getting rid of maybe a service center or a location? Or does that then start impacting your ability to provide service to those markets, and that's [non-pilot]?

Yes. Having been through this for the last year, I wouldn't rule anything out. But before we got into any type of network restructure or any type of permanent change, there would be a lot of internal discussions before we would make that change. And candidly, right now we are still generating cash. We still have the group making money on the Airport-to-Airport side, certainly not at the levels that we are either accustomed to or would like, but we are making money. That's more than a lot can say today, and we want to protect that.

And then, I think Rodney gave out the trends through the quarter. Is there anything to look into that? Is there certain types of businesses that are working or have shown some stabilization? It looks like March was a little bit decelerated on the decline there. Are you seeing a little bit of deceleration? Are you staying still in that over 20% declines?

We are still in the range that we have been in, it seems like, for about three, four or five -- it seems like too long. It's not noticeably worse, it's not noticeably better. We have some days of -- over a weekend, I think it was two weeks ago, we were -- which is a critical tonnage day for us -- we were only down like 8% or 10%; I don't remember the number. But then it immediately turned around the following week and went back into the double digits.

So it's a little bit all over the board. I wouldn't say it's necessarily getting worse. I would most certainly say it's not getting better. And we don't anticipate for it to get better in the near term.

And can you read into that into any type of commodity moving or fright?

Ken, I think it's across the board. I don't think any type of commodity has been spared in this. It's just simply across the board.

My last question is, on the Solutions side, I think, Bruce, when you were doing your intro you mentioned that there were a lot of new bids that were in process. Can you talk a bit about the -- is this new customers, different type of customers? Are these add-on business to existing operations?

Yes, the $12.5 million consists of about seven bid awards. It's significant business into our existing network structure on the solutions side. I'm actually kind of excited about their business now. They will be able to add this business at minimal additional cost, and the critical factor in running Solutions and running it successful or a pooled distribution company is to have the adequate delivery density. And each of these new awards, or I should say, almost all of them, hit terminals that we needed the business to fill out the portfolio. And we are excited about what it's going to do for us there.

Art Hatfield, Morgan Keegan.

We had a little bit of a breakup on the call, on the connection. Rodney, when you were talking about margins, were you talking about specifically the purchased transportation as a percent of revenue type of number?

And Ken, thanks for allowing me to clarify that; there is some background noise there. I was speaking (technical difficulty) -- there it starts again -- specifically to the Logistics margins.

Okay, that's helpful. I want to ask just one financial statement question. On the cash flow statement, it shows that you had a recovery of receivables in the first quarter. Can you talk about what happened there? I know it's a real small number, but are you seeing any change in trend with regards to customers being able to make payment on any of the receivables?

That small $35,000 recovery is just a flip-flop of how we handle revenue adjustments, [Ken]. But we are very proud of the work that we've done, the very concerted effort on the part of folks in accounts receivable. There is always risk out there in this kind of environment. Quite frankly, with our customer base, there is always risk in good times. But we feel comfortable with our receivables. We are happy with where the DSO is, and in that regard things aren't bad.

Finally, Bruce, just looking longer-term, you took the write-off with regards to the full distribution business in the quarter, but part of that reasoning is market valuations are down. Do you see an environment right now where you see opportunities to invest? And if so, depending on how this year goes, you may end up by the end of the year with a leverage ratio, your debt to EBITDA, close to 1. Have you talked any about where you're willing to take that in the intermediate future?

No. And I don't mean to avoid the question, [Ken], but the way we view acquisitions in this day and age, aside from the fact that we are trying to stay as fiscally conservative as possible, is we are going to be extremely opportunistic. And for us to jump an acquisition today or next month, it would really have to be the right fit in the right area with the right culture, all of those things would have to really be good before we would make that move.

And so we hate to sit here and say, gee, we wouldn't do an acquisition because, if the right one came along, we would. But the whole time, in looking at those opportunities, we would be very mindful of our balance sheet. We have a wonderful balance sheet today. We have no intent of destroying it. We expect to use it throughout this dirty period, if you will, to further differentiate us from our competitors. So we'll be very cautious there.

Edward Wolfe, Wolfe Research.

Bruce, you mentioned that price competition has gotten nasty since January. Where is the price competition coming from? Is it other ATA airport carriers? Is it LTL carriers? Is it in all regions? Talk about that a little bit, if you could.

Well, the simple answer is yes. It is truly across the board. If you go back to the days of deregulation in 1980, I haven't seen it -- this -- you would almost call it irresponsible. Probably the better word is desperate, on some people's parts. It's simply amazing what people are willing to do today. It is ATA carriers, it is the LTL carriers. It's -- you name it, everybody's doing it. There is little, if any, discipline in that area today.

I don't know if you hear the noise in the background.

Yes, it's horrible.

Yes, there's a cost savings. Don't pay for the call.

You talked before about the new pooling business that's coming on. I'm guessing, based on the guidance for second quarter, it's not coming on immediately, all at once. Can you talk a little bit about the timing of that and how we should think about that?

Yes. It's spread throughout primarily the month of April. So some of it the first week, the second week, the third week. We are into our fourth week of bringing on new business. We will bring on -- I believe it's our final one, this weekend, with the [Gap] Business in Baltimore and Richmond.

And one of the reasons we don't have much in there on the guidance, Ed, is because of the startup costs. It is expensive to bring on the business. The good thing about that is, once you bring it on, you are set from that point on, and you tend to keep this business for a long time, assuming you can provide the levels of service they need.

So it actually will probably have a negative impact on us in April. It will turn neutral in May and hopefully be a nice profit contributor for us in June.

And how much is the total revenue on that?

It's $12.5 million annualized. Those are actual awards being implemented as we speak.

So all $25 million, it sounds like, should be on at the end of the month of April run rate?

Correct.

Rodney, can you talk about bad debt and bad debt experience? I know you guys have a lot of small forwarders who historically, in times like now, can have some financial problems on their own. What are you seeing on collectibles, on days outstanding and bad debt? Is that something that you might need to reassure some of your accruals, at some point?

We look at that on a daily basis, Ed. We've had -- in the quarter we had one small pop of a small forwarder, but our collectors are empowered and they are not afraid to put somebody on credit hold if it's getting close. So we've got a pretty good sized hammer when it comes to the small forwarder. And then you watch the medium-size and the big guys as well. Obviously, there's risk in doing business with the airlines. We took the pop in the fourth quarter with Alitalia. We were able to get critical vendor status and recover a good portion of that, which is a nice way to go, once you're going down that road. But all in all, we feel pretty good about receivables.

And you don't see any need throughout this year, at this point, for adding the reserves?

The way the accounting works on that, Ed, it has to be specific reserves. You just can't throw up a general number like in the good old days. But we're as aggressive about that as the auditors will let us.

Todd Fowler, KeyBanc Capital Markets.

I wanted to come at the expense question just from a different angle. It certainly sounds like you got hurt with the negative leverage here, with revenue declining in the quarter. Where would you say that you could increase the tonnage, or where is the capacity on the network right now, given this expense level? Could tonnage go up 10% and you wouldn't have to incur significant costs? Could it go back up another 20% and you would get the positive effect of the leverage going the other way?

Let's look at it this way. The largest component of our expense is PT, as you know. Our PT actually held exactly where we wanted it. That group did a great job. So if you are assuming that we held PT on the way down, we certainly should be able to hold it on the way up, if not make it even better.

That having been said, then you look at the true leverage points in our model, the remaining true leverage points, everything from the overhead salaries, the rents. Those type of fixed costs, Todd, we've become -- it becomes a very profitable piece of business. Anything we add on is going to be extremely profitable.

Exactly. And I guess that's kind of the point of my question, Bruce, as far as those costs, excluding the PT, could you see volumes go up 10% or so and you wouldn't see a significant increase in the salaries line, for example?

Yes. Where you're going to see an increase would be on dock labor, that type of thing. You would not see the management salaries, that type of thing, go up. So I think we could probably take it up at least 15% with absolutely minimal additional costs. And I think, depending on the location of where that business came on, we could go even greater than 15% with very minimal cost.

Could you walk through yield trends during the quarter, and specifically with regards to base yield and where it started in January and specifically where it ended in March?

We actually -- and I remember at the BB&T conference getting questioned over and over about yields. And we really, at that point, had not had a lot of pressure on yield. We have had some, but nothing dramatic. Then it got really -- I guess people got really desperate, and yields really started to cave. We had seen that continue up until today. We try to take a very disciplined approach to it, but it's hard, I can tell you now.

We don't perceive that getting any better. Hopefully, it won't get any worse, but there still are a lot of idiots out there. So hopefully, we can hold the yield level where it is today moving forward.

So the second-quarter guidance basically incorporates, excluding fuel (technical difficulty) no further deterioration yield during the second quarter?

Yes, but on a year-over-year basis there would be a deterioration.

Okay, no that makes sense. Obviously, you guys don't have a significant national competitor in the airport-to-airport business. Do you see or is your sense that there are some of your competitors, maybe decent-sized regional competitors in specific lanes, that you are hearing from a financial standpoint or based upon where they're operating, that they may not make it through the next year or so? Or, what is your sense of the competitive landscape, given where volumes are at and from your knowledge of your main competitors?

Well, the obvious statements to be made here, without us having intimate financial knowledge of the various competitors, is when 20% to 25% of the market disappears, the demand, sooner or later, 20% to 25% of the capacity is going to go. And that obviously is always later. As (inaudible) used to say, (technical difficulty) company, but it's going to happen. We are going to see some failures. We don't have specifics, but we certainly think there will be failures, both in our market, in the pooled distribution market and in the LTL market, which we think we stand to benefit from.

And are you seeing anything yet, even on a small scale?

All the ones you've heard. We've seen little ones disappear, but nothing that would shake up the landscape.

Rodney, if you have it, what was the average weekly line haul tonnage during the quarter?

(inaudible) the percentage in front of me, Todd. I'll shoot you a note on that.

Jon Langenfeld, William Baird.

On the Solutions side, the $12.5 million, how many of those seven bids are new customers versus expanded relationships with existing customers?

Don't hold me absolutely to this; I'll get you the exact answer. All but one of them are expanded relationships. One of them is a new relationship.

And can you talk about how that new one came about with that? Were you referred to that, or how did that fit into the sales process?

Well, our sales team on that side of our business have identified a number of potential customers, and they work very diligently to, number one, introduce us to them; number two, show them our capabilities; and then, number three, become involved in typically what is a bid process. So the sales cycle tends to be anywhere from six months to a year. So all the work that we did last year into the first quarter really paid off.

Do you see the benefits -- I'm sure your existing customers would see the benefit of referring you into other companies to increase your density and lower the per-unit costs. So have you had customer referrals as part of the sales lead generation?

Yes, that's exactly right, Jon. That's exactly what they do, and they have been -- we have been the benefit of that type of conversation amongst the customers. And, obviously, the more density, as you stated, we get into any given delivery area, the more cost-efficient we can be.

You also mentioned the systems coming online for the Solutions business. What is your sense of the existing customers you have, their willingness to adopt this newer platform? I know it's much more robust than the industry standard out there, but how willing are they going to be to change their use of technology in this space?

I think some of the customers -- the way we look at it, Jon, some of the customers it will be very easy because they really don't utilize a lot today. So this will be, at worst, an added benefit to them, and at best a really robust tool for them to use. Other customers at the other end of the spectrum have their way of doing business. They have the software that they want. And all of that is okay because we can make the two softwares compatible in the end. So either way we go, we're okay.

What's critical to us is, we have the transparency that we want in our operating group as we bring the software on, and most of all -- and the visibility for the customer. I think, the more visibility they want, the more valuable this is going to be to them.

Because I was going to ask you, in the sales process, this tool, depending on the customer, could be a game-changer or it could just be something that they don't care about. It depends on the customer?

Yes, except I wouldn't necessarily say they don't care about it, because even the ones that have what they like today, this will be more robust than what they have today.

The last question is on the truck brokerage side. You guys over the years have done a great job of having a premium price offering there for special freight handling needs. In this environment where capacity is just really cheap, how do you go about maybe modifying your approach there in the short term without damaging the longer-term premium price point?

Well, the big issue there, Jon, is what level of service do they want and that they continue to demand a high level of service, which is primarily what our truckload brokerage does. And we tend to not want to move off the price point. We're probably a little bit more disciplined in that area of pricing than we are in our other business segments.

So if they want the high levels of service, they are going to have to pay for it. That having been said, a lot of our existing business, which went up for bid again, as everybody is running out to bid so they can beat up the carriers, we've had to take some price cuts. And that's okay because the day will come when we can turn around and kick that price up. So we're fighting it kind of on both sides there.

Fair enough. If you had to ball-park what sort of rate declines you're seeing in your renewed business, the business you are actually retaining, what do you think it is?

It's really, almost strictly a lane issue, Jon, more than across the board. I would guess 3% to 5%, but that would be a guess.

John Barnes, BB&T Capital Markets.

Bruce, one more question, just kind of from a bad debt or a customer relationship perspective. You had made kind of difficult decisions before, business with the airlines and that type of thing. Given the environment we're in today, could you talk a little bit about customer decisions that you have had to make or particular verticals that you've had to cut back on? And has that eaten into some of the top line?

Great question. We really, John, probably about a year ago, made up our minds that this was going to be, stating the obvious, a very difficult period. And we've learned through the years that when you go through difficult periods you really have to be strong in receivables. We built a really good team, kudos to Rodney and his group there, for doing that, and Mike.

As a result of that, we have a team that has the ability to communicate with our customers to get really good insight on their business and to understand, are they financially capable of paying us, etc., through all that. So it's really based on a relationship. And as a result of all that, we have been able to protect our bad debt very, very well.

Now, going into the future, we have not looked at any vertical and said, we are not going to do airlines again, as an example, which we did do four or five years ago. We are watching it very closely. We aren't taking a lot of guff in that area. If they can't pay us, we move on. But so far, we've taken the approach that we want to maintain a good relationship with the customer and try to work through this together, rather than just boot them out the door or they boot us out the door.

One question, just kind of on pricing, but from a forward look. The last time that we saw, whether it be an environment like this or a weaker player exit the market, you saw some fairly robust improvement in yields very quickly. And I'm curious as to, when this recovers and if some of this capacity does exit the market -- and I agree with you; I think it will, eventually -- would you see -- I guess it's a two-point question.

One, has the irresponsible pricing that we've seen in the last couple of months been sufficiently bad enough that if somebody exits the market you really only get back to where you were? Or, do you think enough capacity is coming out of the marketplace that it would be above what you saw prior?

I would be happy to get back to where we were, John, initially. But I think long-term that it's going to go higher. I think it could -- and especially maybe more so in the truckload side; it could get really high. But we have to have demand come into the equation before that's going to happen, and there simply is no demand today.

At this time there are no other questions in the queue. Thank you for joining us today for Forward Air Corporation's first-quarter 2009 earnings conference call. Please remember the webcast will be available on the IR section of the Forward Air's website shortly after this call. You may now disconnect, and have a great day.