Forward Air Corp (Delaware) (FWRD) 2012 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and thank you for joining Forward Air Corporation's first-quarter 2012 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 CEO Bruce Campbell; and Senior Vice President and CFO Rodney Bell. By now, you should have received the press release announcing first-quarter 2012 results, which were furnished to the SEC on Form 8-K and on the wire yesterday 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 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, I will turn the call over to Bruce Campbell, Chairman, President and CEO.

Thank you, operator, and good morning to each of you joining our first-quarter earnings call. I will be brief in my opening statements, but would like to point out two highlights of the quarter. First, our airport-to-airport business executed extremely well, considering it was indeed the first quarter of the year, showing both some nice revenue growth and good cost controls. Secondly, we had just outstanding performances from our Forward Air Complete team, and from our Forward Air TLX team during the quarter, with both of them growing in excess of 20%, while maintaining their margins. Just a terrific job, and we look forward to more as the year progresses.

And with that, Rodney Bell, our CFO, for his comments.

Thank you, Bruce, and good morning. The 10.5% growth in our airport-to-airport network resulted from 5.4% increase in average weekly tonnage, and a 4.7% increase in yield. Average weekly tonnage for the quarter progressed as follows -- January, 3.8%; February, 5.4%; and March, 6.7%. The yield improvement consists of 1% from linehaul processing, a 1.2% benefit from net field surcharge, along with a 2.5% positive impact from Forward Air Complete, which had quarter growth of 31% and linehaul attachment of 19.4% for the quarter.

Linehaul volumes came in slightly better than expected, while linehaul processing, impacted by business mix and aggressive competitor pricing, was lower than anticipated. We anticipate volume growth in linehaul processing for the second quarter to be roughly comparable with the first. Driven by new customer wins, and a 4.3% increase in revenue per mile, logistics revenue increased 28.9% to $21.1 million. Our Forward Air Solutions segment and new business -- in our Forward Air Solutions segment, new business wins caused revenues to increase 26.3% or $4 million compared to the prior-year quarter.

Leaving revenue, and jumping to expenses, here are a few items we wanted to provide additional color on. The low incremental profitability on the $4 million of Solutions -- of additional Solutions revenue was due to a number of reasons. First, a large portion of the revenue growth came outside the existing route structure, which will drive lower incremental profitability. Secondly, some of the new business wins had start-up costs that were one-time in nature. And lastly, we experienced costs associated with the implementation of certain strategic initiatives during the quarter. These initiatives, which include route frequency reduction and elimination, as well as customer rate increases, will be fully implemented by the end of Q2, enhancing profitability for the balance of the year.

Moving on to some additional explanations of expenses not specific to solutions. Overall PT increased 140 basis points due to a higher proportionate growth of complete and logistics, both of which have a higher PT component on a percentage of revenue basis. Beyond the volume-driven increases in salaries, wages and benefits, the higher year-over-year costs were a result of higher healthcare costs, pardon me. The majority of the increase in insurance and claims expense was due to the negative development of a very old vehicle liability claim, and to a lesser extent, a larger than normal amount of vehicle [phys dam] expense associated with the repairs in the quarter.

Leaving first-quarter expenses, we expect our second-quarter 2012 tax rate to be 38.5%. Net CapEx for the quarter was nearly $13 million on a full-year budget of $20 million. In order to replace higher-cost rental units, as well as secure better pricing, we took delivery of revenue equipment earlier than normal this year.

We ended the quarter with $69.4 million in cash, less than $1 million of debt, and $140 million available on our $150 million line of credit. Lastly, we anticipate second-quarter revenue to be in a range of 8% to 12%, income per diluted share to be between $0.43 and $0.47 per share, compared to $0.40 per share for Q2 2011.

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

Thank you. (Operator Instructions)

And our first question comes from the line of Scott Group from Wolfe Trahan. Please go ahead.

Good morning, guys. How's it going?

Good, thank you.

So, what I understand about the guidance on the revenue side for second quarter, it feels like tonnage was accelerating throughout the quarter, but the guidance points to decelerating revenue growth in second quarter. Can you give us an update on maybe tonnage in April, and why you are expecting the overall revenue growth to slow in 2Q?

If you look at last year, we basically mimicked the trends from a year ago. So, during the first quarter, it was exactly as you said, Scott. It grew throughout the quarter, and the month of March was a very good month. And then we will go through a slowing in April, which is normal, following a trend of a year ago, still ahead of last year. And then we will expect that to build up throughout the quarter, and hit its highest peak in June.

Where is April tracking up so far?

We are ahead of last year, so, we are pleased with where we are.

Okay. In terms of the pricing -- the linehaul yield only up 1%. Can you talk about why we are not seeing better momentum on the yield side?

If you'll remember a year ago, we really started pushing the yield. So, we came into this year with a much tougher comp than normal. If we stuck in a GRI now, it would be probably not well-received because there is a lot of stupidity going on in the market. So, we have taken the tack that we will just follow a -- wait and see what is going to happen on the cost side, wait and see what is going to happen on the demand side, and push maybe at some point in the Fall to look at a GRI. But right now, we just don't know the answer to that.

So, no 2Q GRI this year?

We are not going to say yes, and we're not going to say no to that yet. A lot of time left in the second quarter.

Why is this market different? It feels like everywhere else in freight that pricing seems very rational and rates are going up. What is going on in your industry that is causing the stupidity you're talking about?

I think you have to -- if you compare us to the LTLs, you have to remember that they exhibited extreme stupidity two, three years ago. So, now they talk about, and you and the other analysts, they're increasing their yield. Well, I don't know this factually, but if you go back and look at where they were in '07 and '08, my guess is they haven't caught up to that number yet. And if they did, it was about time. So, again, you are into a situation where we protected yield throughout that process -- or that time period, I should say -- and they did not. So, now, all of a sudden they talk about price being firm, when in fact they were giving it away in '08 and '09. So, to me, it is just about comparisons.

The tougher comps -- do you feel like you are maybe taking some share, and focus a little bit more on volume relative to price?

In certain cases, yes.

Okay. And then just last couple of things. Rodney, you talked about some start-up costs. Was that just on the pool side, or was that somewhere else? And can you quantify those?

That was just on the pool side, and it's -- Scott, it's difficult to quantify.

Okay. And then, we are at a pretty nice cash balance, and based on the CapEx [flow] in the rest of the year, it feels like we should be accelerating pretty nicely. Bruce, any thoughts on uses of that cash between maybe flexing up the buyback or acquisitions?

The answer to that is, yes and yes.

Is there a priority between the two?

If we found a good acquisition, that would be the priority, because we can generate more money with it. If we are unable to do that, then we won't. And we will go other directions.

Got you. Okay. Thanks for the time; appreciate it.

And next we'll go to the line of Jason Seidl from Dahlman Rose.

Hi, Bruce. Hi, Rodney. How are you guys?

Hello, Jason.

I guess I will stick on the pool theme. Rodney, you said it was difficult to quantify the impacts of the start-up costs. And then you also had some strategic initiatives I think you mentioned as well. I mean, if you take those out, ballpark, was pool close to profitability for the quarter?

-- in close.

Excuse me, it was close?

It would have been close, yes.

Okay. And I'm assuming the start-up costs should wane as we get past 2Q. You mentioned that some of the strategic initiative costs should be done by 2Q. But should we expect start-up costs to leave us then, too?

On the business that came on, but we are still in bid season, so there could be additional start-up costs on new business wins in the second quarter.

But you would expect pool to be profitable since it was profitable in March?

We have it modeled at somewhere between a break and contributing $0.01 a share.

A break and $0.01 a share. Okay. In regards to the pricing, I found it interesting that you said there was a lot of stupidity in the marketplace. Is this just one of your larger competitors out there being really dopey in the marketplace, or is this multiple competitors?

I think they fight to see who can lead, Jason -- lead the parade of stupidity.

Okay. On the acquisition front, I always try to -- like to get a feel for the pipeline and how it's looking. Are you seeing more things come up in front of you than, say, a year ago? Or is it about the steady state?

I would say a few more things. Wouldn't you, Bruce?

Yes, it got real busy in the beginning of the year, interestingly enough, and now it has really tailed off. I think that may be driven by some of the targets, in general, not as it applies just to Forward Air, simply aren't hitting EBITDA numbers in the first quarter like they thought. So, that's making people shy. That is strictly an opinion.

You mean shy about putting their companies up for sale? Shy about trying to get a deal done?

Both.

Both? Okay. That's fair enough.

And have you seen any specific strength or weakness in any particular end markets that you guys are serving?

No, business overall is what we would term good. We don't see anything that is just going crazy in either direction.

Okay. Fair enough. Well, listen, guys, thank you for the time, as always. I'll turn it over to somebody else.

Thank you.

And next we'll go to the line of Nate Brochmann from William Blair.

Hi, Bruce and Rodney.

Good morning.

I wanted to talk a little bit -- obviously, you guys are seeing some nice growth in some of the newer services away from just the core airport-to-airport. I just wonder if you could talk a little bit about the bigger drivers behind that, and how much further you think those can go?

I assume you are referring to both our TLX group and to our Forward Air Complete group?

Yes.

We think Complete has a long road to go in terms of growth. We were able to get their -- what we call the attachment rate. We had ramped probably most of 2011 in the 15% range, where a normal airport-to-airport shipment also had a Forward Air Complete component to it. That jumped to 20% in the first quarter, as did their revenue, obviously. So, we really think there is all kinds of growth opportunities there. We're pushing that very hard, and you will see our resources really go to improving the revenue in that area. But they have done just a terrific job.

On our TLX side, you are seeing more -- we are very -- I don't want to make this sound too bad, but we don't want to haul just anything. We offer an expedited truckload product, which means that we're somewhat picky about what we will haul. We do have limited resources, although there are a lot of carriers out there. We also run our own owner/operators. But we want to be very picky, so that we can maintain a margin that is acceptable to us.

Even with us demanding that type of margin, we have been able to grow that business, and grow it significantly, which is a real hats-off to that team of people. And they have done just a terrific job. They maintained really high levels of service, which allows us to then create the value that we want to create for our customer. So, we think there is a lot of opportunities there as we go forward in the year.

Okay. And then also, to go back to the margin productivity a little bit, and I know, again, that it is hard to quantify in terms of excluding some of those start-up costs or one-time things. But if we look at the overall nature of the opportunity on the incremental margin side, do you still feel that you have a heck of a lot of capacity and leverage to go there just with the current structure?

Sure. And realizing that when you talk about TLX and Forward Air Complete, those are fairly fixed margins. So, there is very little incremental gains there, although obviously $2 is better than $1. But on the Forward Air, both airport-to-airport and our Solutions, we have big opportunities as the year goes on.

Great. Thanks very much. I will turn it over.

Thank you.

We'll go next to the line of Jack Atkins from Stephens.

Good morning, guys. Thanks for taking my questions.

Thank you.

First off here, if we could talk about the BAX/Schenker wind-down for a moment. I know we're six to seven weeks into it at this point. Have you guys been able to see any noticeable impact, whether it is in your March volumes or so far in April, to give you any indication whether you are seeing some freight migrate your way from that event?

As definitive as we can be there, Jack, is when a Forward Air customer comes to us and says they have an opportunity on new business that used to be handled by BAX/Schenker. And beyond that, we really have no visibility. Our revenues and tonnages were up. Is that BAX/Schenker? We don't know. We just think is good, hard work on our part. And perhaps there were additional marketing opportunities for our Forward Air customers that wouldn't have been there otherwise. And I am not evading your question, we just can't identify it that clearly.

Sure, that's definitely understandable. Maybe if we look at your business with Estes Express. Because I know that they're looking to potentially outsource some of that deferred air freight piece of the BAX business to 3PL way -- sort of solution. Have you guys seen your revenues with Estes tick up here over the last six or seven weeks?

We never comment on individual customers. Estes is a very good customer, but we don't get into tonnage numbers.

Okay, I understand. And then, looking at the -- just going back to the complete attachment rate in the quarter was very strong, with both volumes and the attachment rate, as you just said. But could you maybe talk about the customers you are targeting for that solution. Are they existing customers or are they new customers? And when you think about the attachment rate as we move through 2012, can you see it tick up above that 20% level? Or do you think this is the run rate for the rest of the year?

That was a lot of questions there, Jack, for a Friday morning. The majority of the business comes from our existing customer base. We do have a product within Forward Air Complete that we loosely call Distributions, which is where you might have a poster distribution for the release of a new movie. And it all has to hit in the various locations on a certain date. But typically, those distributions are handled by our [Forwarder] customers. So, the short answer is, most of our business comes from the Forwarding business -- segment, pardon me.

Okay, great. And then, Rodney, you talked about the impact in the quarter from some one-time insurance-related items. Could you quantify that for us, if you can?

On the vehicle liability, that was about $400,000, and that is under the insurance and claims line item. Under salaries, wages and benefits, which is where our health insurance costs roll up, Jack, about $0.5 million there.

Okay, great. And then the last question from me, and I'll jump back in queue. But Bruce, as you look as your weight per shipment in the quarter, it was down 5.4%. Could you maybe talk for a minute about what is driving that? Does that concern you at all? Or is this normal, given the increases that we have seen with the complete service offering?

If it had been in the past, I would've told you it bothered us a lot. But there are a number of things going on. One is, as I touched on earlier, where we do these distributions, those type of shipments tend to be smaller. So, you will see a little bit of a degradation in our weight per shipment. We went through first quarter, where typically you will see smaller shipments than you do the rest of the year. That is not always true, but typically.

And then finally, I think what we are seeing is what everybody else is seeing, and that is -- products that are being moved in our network and others are shrinking in size. And all of that to say this -- it does not surprise us. We're not concerned about it. But it does make us re-look at different systems and freight handling methods.

Okay, great. Thanks so much, guys.

Thank you.

Thank you. And next we'll go to the line of Todd Fowler from KeyBanc Capital Markets.

Great. Good morning, everyone. Bruce, a question I'm just trying to think through, the incremental margins and the profitability on the complete business. I would think that the incremental margins on that business may not be as good as what you would see from tonnage in the airport-to-airport network. Is that the right way to think about it? Or is there a complement because it is attached to an airport-to-airport shipment, that the revenue growth there can be just as good from an incremental margin standpoint?

The forward is correct. So, that is a transactional business, Todd. So, if we get a shipment, we get $100, we're going to pay out $70 in purchase transportation. So, you can view it almost like a brokerage operation. You will get some overhead benefit. That is about the only incremental value you get. But again, if you drive enough shipments and you drive enough revenue, we are obviously delivering earnings per share, and that's what we are after.

Right. No, I got it. That makes sense, and that's helpful. But if I think about both -- if I think about the complete business and the TLX business growing at pretty good clips here for the rest of this year, how do you think about the operating ratio on the airport-to-airport segment, maybe on a full-year basis? I would assume it would still be better than last year. Would that really be the case?

Yes.

Okay.

Again, we will get some small contribution, is what I would call it, out of growing that business into the airport-to-airport.

Got it. Okay. And then, how does the airport-to-airport network feel as it relates to capacity with the owner/operators at this point? If we continue to see mid-single-digit type tonnage growth, are you able to handle that with your existing network? And then, do you have any plans or thoughts on increasing what you are paying the owner/operators?

We think we're in really good position, in terms of handling the current business levels. And we think we will be in good position as we go throughout the year. We addressed the owner/operators a year ago, I think it was in June or July, sometime in the Summer, where basically we upped their fees, based on if they bought new equipment or not, because new equipment simply costs more than it did five years ago. So, we think we have addressed that for the time being. That is an area that we look at just -- it's comparable to general rate increases and other things that we look at on a monthly basis and sometimes even more often. So, I'll tell you, today, we aren't anticipating an increase. And I would also tell you that, that could change in 30 days.

Sure. Okay, that makes sense. And then, Rodney, I'm not sure if you talked specifically about expectations for Solutions revenue growth in the second quarter. Obviously, it was good revenue growth here in the first quarter. I think that there might be some calendar shift that impacted that. But how should we think about Solutions revenue growth into the second quarter?

Well, I did speak, Todd, about the fact that we are going out and trying to secure rate increases. Sometimes with that, you experience some attrition. So, I'll give you a range. We're looking at it something between 15% and 20% growth for Q2.

Okay, that's helpful. And then did you say specifically what the April tonnage growth was to-date here, through the first three weeks?

No, we did not say specifically, and we would like to keep it that way. We would tell you that it's ahead of last year.

Fair enough. I appreciate it. Those are all the ones that I have. Congratulations.

Thank you.

And next we'll go to the line of John Barnes from RBC Capital Markets.

Hi. Good morning, guys. Bruce, just your commentary around the LTLs and that type of thing. Have you seen either, number one, any new entrants into the market that might be pressuring it? Or is it just that maybe volumes aren't quite as good as we would like them to be, and so, there just seems to be a more competitive environment? People are stretching for maybe freight that they have normally not handled?

I think that is exactly the case. It is not new entrants, John. I think it is your latter comment is right on the money.

Okay. And historically, when we have seen somebody do this, I recall an issue five or six years ago where a really good LTL got into the market but just couldn't make any money doing what you do. Do you think this is short-term in nature? Or do you think this is the LTLs are in better situations now to maybe compete on the -- in terms of the service and the handling and that type of thing?

You always have to remember, we have a competitive factor here, in that if the Forwarder gives their business to an LTL carrier, that there is a strong chance of backselling -- what we call backselling. So, we may get really stupid, and the Forwarder has a business that can go slow, I think they will use them. I think they will use competitors of ours when they don't have to have service, because they can save some money. So, that part of it is pretty normal. The changes tend to occur in lockstep with the economy, and with how well the other players are doing, and they tend to get desperate, and that's when you start to see the pricing.

Okay. There was a lot of anecdotes during the quarter suggesting that maybe LTL volume was actually maybe a little bit better during the quarter than expected, and maybe even a little stronger than what we saw on like the truckload side. So, I'm just trying to balance those two comments, where maybe you heard it was a little bit better. Do you think that is just a -- it feels a little bit better on a year-over-year basis, but it is still not back to where it needs to be? Or would you, in fact, say that maybe LTL is a little stronger in the quarter than --?

I think -- our opinion would be, it was a little bit stronger. But one thing we all have to remember is, there was no weather in the first quarter. And that is very unusual, and so, it really should have been as good as it was.

Okay. I imagine I know the answer to this, just given your commentary around it's tough to quantify certain costs, but you brought the weather issue up. Is there any way to quantify what kind of boost you might have gotten to the margin year-over-year, just because of the costs associated with milder weather?

No. As we like to tell our team, we don't blame weather for either good or bad.

Okay. I like that. And lastly, as you look at the history of the Company, and obviously, several years ago you were a lot more acquisitive. There were more things to buy. As you have gotten farther down the path, the targets have become tougher to find, I guess. At what point do you look at your balance sheet and your free cash flow generation with what you have got today, and maybe explore the opportunity of a dividend on a go-forward basis, just given how much cash you're kicking off now? How good the balance sheet is, and maybe the lack of larger type of deals on a go-forward basis? Is dividend in play here?

We do have a dividend today.

Yes. But I am saying something more than nominal. I guess I'm saying, to a point where maybe you attract a new shareholder base in, that can be involved now?

Well, basically, we started the dividend because we did, in fact, have cash and could support it. And then secondly, to get us into funds that require dividends to be paid by whomever they invested in. And now we're through that, and we will examine at our May Board meeting a number of different options here. That's a -- any more is almost a quarterly examination by the Board of Directors. And when we are finished with that, you guys will be the first ones to know.

All right. Very good. Nice quarter, guys. Thanks for your time, Bruce.

And we have a question from the line of Ken Hoexter from Merrill Lynch.

Good morning, Bruce and Rodney. On the pooling distribution side, can you talk about what -- you talked a little bit about restructuring the business, getting, I guess, a broader base. Maybe can you provide a little more color on what you plan on doing there?

Sure, Ken. We really evaluated location by location where we might be servicing cities that don't make any sense in terms of the amount of freight going. And the frequency might have been three or four times a week we went to the customer base and said -- hey, this does not make any sense; we need to reduce the frequency, get the same amount of freight but have one or two deliveries a week. In some cases, we went to the customer base and said -- this city doesn't make any sense at all because of these long stem miles. We want to eliminate that. So, in some cases, the customer response was -- okay, we eliminate that and we service that using an integrator. In some cases, they say -- okay, we're going to pay you a surcharge, and we still want you to service that city. In that case, then it makes sense.

And then secondarily, we have never taken a rate increase. Rate increases on the Solutions side of the fence is a lot different than on the airport-to-airport side, in that it is really a customer-by-customer conversation and negotiation. So, we're nearly through all of that, and that is going to be helpful to the bottom line as well. But that is really the three big things that are in place or are in the process of going in place right now.

So, three of your acquisitions, the locations you do the pool and distribution are completely separate from the airport-to-airport, correct?

There are some, I think seven -- Bruce is telling me nine locations that they are in the same -- that they have been consolidated. Initially they were separate, but if we -- if it made sense, we consolidated those into the same facility, and we have done that in nine cases.

Okay. That's what I was going to ask, if you were going to start consolidating them to get -- maybe even supply some of those markets in a more efficient way.

And then, on the Forward Air Complete, it sounds like you want to increase your penetration on that side. What have you done with the sales force to increase that business toward those end customers?

With the understanding all our competitors are listening, we are doing the normal sales tack on it, and making it -- I think what we bring to the table is a very, very good product with very reliable service and with top-notch IT available to our customer base. So, each of our AS -- area sales managers push this for us, and do a really good job with it. And we think in the end, it really brings value to the Forwarder.

I appreciate that. Last question is just on the pricing. Bruce, what do you think has turned here? Is it loose capacity? I have not heard you this fired up on calling out some of your competitors in probably about 1.5 years. So, what do you think has changed in this environment?

Thankfully, I don't understand why they do what they do. Because if I did, I would probably be looking for a psychiatric ward somewhere. So, I honestly can't answer that question. I have no idea why they do the stupid things they do. It just is amazing. Why you cut a truckload price 30% -- in truckload, there is no incremental value to that. But that's what they do. They cut them in other lanes, so it just makes no sense to me at all.

So, you are not seeing this just from LTL providers? You are seeing even broader base?

Yes. And again, very limited to our competitors and not to -- don't interpret that for the entire market.

Understood. Appreciate the time, Bruce, Rodney. Thank you.

We'll go to the line of David Ross from Stifel Nicolas. Please go ahead.

Yes. Good morning, gentlemen. You mentioned earlier, Rodney, that to replace the higher-cost rental units, you took some delivery of revenue equipment earlier than normal. Was that just trailers, or were there any tractors in there, too?

Primarily trailers, some forks, Dave, and additionally some city units.

Okay. As far as pool distribution is concerned, have you looked any closer to introducing automation into that network? I know that for a while it did not make sense, and I didn't know at what point, given enough density, that it makes sense to automate some of those functions?

We have, in fact, done that. It is on a market-by-market basis. Some of the smaller facilities, it will probably never make sense, but on our medium and larger facilities, we have in fact done that.

Okay. And then, can you just give an update on the international airline business, and is that trending any differently from the domestic business?

I wouldn't say so. I would say they are very comparable in terms of their volumes, David.

Excellent. That's all I have. Thanks.

Thank you.

Thank you. And we'll go to the line of Ben Hartford from Baird. Please go ahead.

Good morning, guys. Just wanted to get a little bit of perspective on the linehaul volumes this quarter, and any customer attrition that might have taken place in the first quarter that will persist here through the balance of the year, the impact that might have had on the growth rate, and whether that is above and beyond what is normally experienced in terms of attrition in a given year.

It has been what I would call a very normal period. You always have wins and losses, and that is typical of our business, and we tend to get it back after a period of time, especially if the customer is a service-oriented customer. So, pretty much a normal first quarter, is how we would view it. We have a good outlook for the balance of the year across all our business segments, and think we have a lot of opportunities left, regardless of what happens with the economy.

Okay. On the logistics side, looking at revenue and this new business that is layering on, to what degree was it captured in the first quarter? What type of growth rate should we think about for the balance of the year within logistics?

We had modeled right around 20%, Ben.

Okay. That number has not changed? Good.

And then, lastly, on the pool distribution side as well, I guess thinking through that attrition that you had talked about, Rodney, and it appears that revenue is going to be slightly below the first quarter. Is that all attrition? Is that any pull forward into the first quarter because of calendar timing? And what type of -- I guess, can you talk a little bit about that sequential trend?

Yes. I think I mentioned earlier, Ben, we were modeling that Solutions business. And again, there's some question marks on -- of some potential attrition. But between 15% and 20%.

Okay. So, it is not environmental related, it is --?

No.

Okay, that's good. And lastly, on the tax rate side, what type of tax rate should we think about for the balance of the year?

38.5%.

Okay, great. Thanks for the time.

You're welcome.

We'll go to the line of Kevin Sterling from BB&T Capital Markets.

Good morning, Bruce and Rodney.

Good morning.

Most of my questions have been answered, but I don't want to dwell on the pricing subject too much. But Bruce, you had talked about the parade of stupidity. I think history tells us, when customers chase price, go after the lower price, sometimes the service level suffers of your competitors, and the customers come back to you. Are you starting to see that yet, or is it still too early?

In some cases we have seen it, yes.

Okay. And then lastly, looking at your Complete business, talking about achieving a record, near-20% attachment rate. What is your goal for the next couple years with Complete and attachment rate?

We would really like to see that get to 50%.

Okay.

That is a lot of hard work by everybody, and a lot of support by our customers, but that is where we would like to go.

Okay, great. I don't want to dwell on anything else. A lot of my questions have been answered, so, thanks for your time this morning.

Thank you.

Ladies and gentlemen, that concludes our question-and-answer session for today. Thank you for joining us for Forward Air Corporation's first-quarter 2012 earnings conference call. And please remember, the webcast will be available on the IR section of Forward Air's website at www.forwardair.com shortly after this call.

That concludes the conference for today. Thank you for your participation, and for using AT&T executive teleconference service. You may now disconnect.