Earnings Call Transcript - FWRD Q4 2021

Operator, Operator

Thank you for joining Forward Air Corporation's Fourth Quarter 2021 Earnings Release Conference Call. Before we begin, I'd like to point out that both the press release and webcast presentation for this call are accessible on the Investor Relations section of Forward Air's website at www.forwardaircorp.com. With us this morning are CEO, Tom Schmitt; and CFO, Rebecca Garbrick. By now, you should have received the press release announcing our fourth quarter 2021 results, which was furnished to the SEC on Form 8-K and on the wire yesterday after the market closed. Please be aware that certain statements in the company's earnings press release announcement and on this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements which are based on exemptions, intentions and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts. Forward-looking statements can be identified by the use of words such as anticipate, intend, believe, estimate, plan, seek, project, expect, may, will, would, could or should and the negative of these terms or other comparable terminology. This conference call and the Company's earnings press release contain forward-looking statements, which include, but are not limited to, statements relating to future operations and results, any statements of plans, strategies and objectives of management for future operations; and any statements about future financial or operational targets and the likelihood of achieving the same. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission. The press release and webcast presentation relating to this earnings call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. And now I'll turn the call over to Tom Schmitt, CEO of Forward Air. Please go ahead.

Tom Schmitt, CEO

Thank you, Brad, and good morning to all of you listening in. On our last earnings call in October, I said that 2022 will be our double-double, double-digit margins, double-digit annual revenue growth, as we had committed in 2019, if you think back on our Investor Day in New York in June. So I'm very grateful that my teammates and all of our independent contractors decided actually that they are living one of our leadership imperatives and decided they don't wait. So they pulled the double-double Forward from 2022 to 2021. Last year, 2021 actually was a double-double, easily on the revenue growth side and the adjusted operating margin actually came in for at 10.1% for the year. Our record fourth quarter with a $1.40 EPS helped us get there. So congratulations to all of our teammates, to our independent contractors, I'm so proud of pulling this double-double off in 2021. We took this momentum into 2022. January, we just finished, obviously, the first month of the year, had very, very strong LTL volumes, up almost 11% over January of 2021. And the revenue of that LTL volume was almost 34% up over last year's January. So that gave us a lot of confidence, that strong month for our Q1, which led us to a guide of a record $1.17 at midpoint EPS for the first quarter. We also feel pretty strongly that we are ahead of the EPS target for 2023 at this point. We gave a 2023 full year target in our October earnings release. And again, at this point, we are ahead of pace for that target. Now we will keep the momentum going with more shipments in LTL, both from our existing customer base and also through digital access to small and medium-sized businesses that we are going to be selling to more and more directly. We also will not just get more shipments in place with existing and new customers. We also are getting more real-time with dynamic pricing. So when we have slower periods, slower days, slower months, we can adjust pricing almost real-time. Between more shipments with existing and new customers, digital access and dynamic pricing, we are very confident that we have a good chance of margin expansion in LTL; 1.5 to 2 percentage points this year, 1.5 to 2 percentage points next year also. We also will, with that growth further expand our footprint. If you remember, the last 18 months, we expanded our footprint primarily with more access points in secondary markets. The second half of this year, we're actually going to add second terminals in some of our primary hub markets, 4 or 5 for this year and further footprint expansion to come in the subsequent years. Now this is not just an LTL show. This is the main show LTL, but our complementary businesses are doing their part also. Truckload is tag teaming tremendously well with LTL, both from a recruiting front and as well as a load coverage front. Final Mile is winning more awards from some of the most demanding retailers on earth, and those awards actually translate in getting awards for additional markets. We just launched Memphis and Richmond. Intermodal in 2022, those keep doing what they're doing, which is consistent double-double performance. And on the M&A side, in addition to the organic growth in LTL, TL, Final Mile, Intermodal, we will do more and possibly also bigger. We had tremendous success with our tuck-ins, specifically in Intermodal we had 3 tuck-ins last year, building out our geographic footprint. We'll continue doing that. And we also said that the J&P Hall in the LTL space last year was perhaps an appetizer, an amazing appetizer on the LTL acquisition front and the main course may follow here also. Brokerage, we are primarily building out our capabilities organically. However, as and if and when it makes sense for us to add to that organic build-out inorganically, we certainly will be open to doing that. So if you look at all of this together, we've got a ton of untapped upside, we're on it. And I feel extremely confident about the performance potential, and I'm very grateful about the performance reality that our teammates and independent contractors made possible. So we're on it. And we're going to go straight to our Q&A and Rebecca and I will tag team as always. So with that, Brad, let's open the lines for Q&A.

Operator, Operator

Our first question comes from Todd Fowler with KeyBanc Capital Markets.

Todd Fowler, Analyst

Tom, on your comments about the 150 to 200 basis points of margin improvements that you're expecting in '22 and '23. I guess, when I look at where you came off of in '21 on the LTL side, close to 300 basis points. It seems like that the pricing environment remains very strong. Not trying to discount obviously good margin improvement. But can you speak to maybe why it wouldn't be a little bit better than that just given the pricing environment that we're in and kind of the return of tonnage that you're seeing?

Tom Schmitt, CEO

Yes, Todd, good morning. Thanks for asking. I mean, what we tend to do is obviously control what we control and then react to what's going on around us. There's a pretty good chance that the pretty overheated perhaps freight environment over the last 18 months is going to cool down. That cool down is probably not going to happen this month or next, but more likely in the second half of this year. And 2023 is kind of a question mark there also. So you're absolutely correct, with the type of tailwind that we had seen over the last 18 months, those numbers may be on the conservative side with a headwind, which we should be expecting, we still will see significant margin expansion. And those 1.5 to 2 percentage points we see this year, and then we see obviously another 1.5 to 2 percentage points next year. For a headwind environment, I think that would be quite remarkable. For a tailwind environment, you're absolutely correct. This is probably on the conservative side.

Operator, Operator

And we do have a question from the line of Jack Atkins with Stephens.

Jack Atkins, Analyst

So I guess, Tom, if we could maybe kind of start, I'd love to get a sense for how do you think about backfilling the capacity that you've kind of created in the network over the last couple of quarters through the actions to really cleanse all of the unpalletized freight out of there. How much latent capacity would you say you've got in the network currently? And as we kind of think forward over the course of 2022, would you expect to kind of refill the network by the time we exit the year? Or is it going to take maybe a little bit longer than that?

Tom Schmitt, CEO

Yes. Great point. Obviously something that we are modeling. The situation we had by late spring of last year was, we were actually running into a capacity constraint in some of our major terminals. The cleansing gave us, in essence, de facto 15% to 20% additional capacity just by unclogging the floor. With the types of growth rates that we see, we probably by the second half of this year will start being in a similar situation as we were in, in spring of last year, which means we're going to start running into some capacity constraints as we are heading into peak in a few of our major terminals, which is why we're actually adding second terminals in some of our major markets towards the second half of this year. We're going to go at maximum possible speed. This is a high-quality problem. If we dial in many of those 8,800 prospects in the small, medium-sized business segment that are in the high-tech industrial goods, medical devices, parts, automotive industries, then obviously, we hopefully will get into a high-quality problem faster where we run into capacity constraints even more than what we currently model. So yes, backfilling is happening. We have a strong sales force, a strong sales machine that's actually propelling that sales force, selling both into our traditional customer base and then as I said before, with brains, arms and legs as well as digital access more and more also into these small, medium-sized prospects in those high-value industries I've mentioned. So we will run into some constraints in the second half of this year. And if we actually are even more successful than we think we are backfilling, then we are running into a debt constraint even more than what we currently model and that's going to be a high-quality problem.

Operator, Operator

And we do have a question from the line of Scott Group with Wolfe Research.

Scott Group, Analyst

It seems like we're getting one, so I'll just combine a few into one. Is the 150 to 200 basis points of margin consolidated, or does it only apply to the expedited piece? There’s clearly a major mix shift happening. How are you assessing that moving forward? Is there potential for further shifts toward heavier weight, or are we in a stable position? Additionally, what are your thoughts on pricing and GRI for this year?

Tom Schmitt, CEO

First of all, good morning, Scott. Todd and Jack, if there's any additional discussion, feel free to ask more than one question. Regarding your specific points, when I mentioned the margin expansion of 1.5 to 2 this year and another 1.5 to 2 next year, I was referring specifically to the LTL part of our expedited freight segment. This is an LTL figure. Secondly, regarding the mix shift, if you observe heavy trade containers or crates containing medical devices, those represent some of our heaviest and densest freight shipments. We are continuing to upgrade towards that high-end segment, and we are far from finished. This will be an ongoing process, much like the Nike slogan about a race without a finish line. Over the past six months, we’ve increased our average shipment weight from over 600 pounds to over 800 pounds. We plan to build on that. As we delve deeper into high-tech medical devices, industrial goods, and trade show containers, the weights will continue to rise. We've made significant progress, and we’re still in the process. On the pricing front, last year we implemented a General Rate Increase (GRI) of 7.5%, achieving a very high capture rate. Our sales team, led by Scott Schara, did an excellent job collaborating with customers to uphold our commitments, especially regarding on-time performance in a challenging environment. We are also investing in our drivers, with the most recent pay increase being $0.15 per mile. This positions us to maintain customer commitments with the GRI we're enforcing, which are better than our competitors. My expectation for this year, Scott, is that the GRI will have a very high take rate, similar to last year, with very few contractual exceptions. When we state 7.9%, we truly mean 7.9%.

Scott Group, Analyst

And then just to your comment earlier about, at some point the freight environment will slow, right? Do you think that you can keep pushing the mix in your favor even in that kind of environment?

Tom Schmitt, CEO

Absolutely. We believe there is a more than $50 billion LTL market in the U.S. alone, though the numbers may be slightly outdated. Out of that $50 billion, approximately $10 billion is the high-value freight where we are the most compelling option. Our LTL revenue is just under $1 billion, so we estimate that we hold a 9% to 10% market share of the high-value freight we are targeting. If there is no increase in the market at the levels seen last year or the year before, our focus will be on winning a larger share of that market. With our current 9% market share, I believe there is significant untapped potential, regardless of whether we face economic tailwinds like last year or economic headwinds. If we can play the market share game, I'm confident we will succeed.

Scott Group, Analyst

And then maybe just one last thing, if I can, are there any cost opportunities that you're considering or exploring?

Tom Schmitt, CEO

Yes. So we obviously are building a backbone across our business lines, where we use a pretty expansive technology transformation, rationalizing systems. In some cases, we had 4 or 5 systems that we consolidated into one. We also have, on the customer service side, as an example, some of the Level 1, which are the most straightforward customer service functions. We actually outsourced to a lower-cost environment. We have very firm guidelines, what we expect corporate cost to be as a percentage of total revenue. And that percentage number needs to keep coming down. It has come down last year from the previous year. We expect it to come down further. So we tend to be with precision execution, equally rigorous on the cost and efficiency side as we are on the top line expansion side.

Operator, Operator

And our next question comes from the line of Jack Atkins with Stephens.

Jack Atkins, Analyst

I would like to revisit the long-term outlook you've set for 2023. You mentioned that you feel you are performing ahead of plan. Does this long-term guidance account for the terminal expansion program, or would that be an additional consideration? If I remember correctly, it does not include mergers and acquisitions, but I would like to confirm this regarding the terminal expansion opportunity.

Tom Schmitt, CEO

Yes. So two things. One, you're absolutely correct. The numbers of 630 to 670 indicate that 630 reflects our ongoing strategy of organic growth and small acquisitions. If a more substantial LTL or possibly brokerage acquisition occurs, that could take us beyond the 630 target. Regarding terminal expansion, we have a minimum level incorporated. If we grow more quickly and require greater capacity than we currently anticipate, that would present additional upside as well.

Jack Atkins, Analyst

I'm interested in your perspective on the margin potential within your XY network business. In the fourth quarter, you're operating at an incremental margin of around 30 percent, whereas in the middle of last year, you were at low 20s. What do you believe is the appropriate range for incremental margins concerning the revenue growth in expedited LTL?

Tom Schmitt, CEO

Do you want to take that?

Rebecca Garbrick, CFO

Sure. Hello Jack. As we're thinking about these incremental margins, we'll just kind of think about just Q1 for the moment. So that cleansing that we did didn't really start in the benefits we reaped, were in the latter half of last year. So we do believe that there is good opportunity for us from an incremental margin standpoint into Q1. So we are thinking that it would be in that, call it, 25% to 28%, 29% range as we're thinking about those incremental margins.

Jack Atkins, Analyst

That's really, really, pretty powerful for an asset-light model like yourself. So that's great to hear. I guess maybe one other question for me would be just on how we should think about seasonality within the business? I understand there's seasonality to how freight flows across the year. And obviously, you guys would see that in your business as well. But you also have these company-specific things going on, which should accelerate as we go through the year and you backfill the available capacity to your network, you add capacity to the network. Can you help us think about how you're thinking about seasonality internally? Would you think the business is maybe a little bit less seasonal than it's been in the past because of the actions that you've taken? Or should we still expect to see kind of normal seasonal progression as we move through the year?

Tom Schmitt, CEO

Yes, Jack, I mean, obviously, you know the industry and our business extremely well and kind of gave part of the answer already. So with us cleansing the freight and going to more high-value freight, there is actually a deseasonalizing or depeaking going on, specifically when we were super heavy in the lighter weight e-commerce space until we cleansed it. Remember, we talked about kayaks, we talked about rugs, we talked about carpets. Some of the e-commerce business was the loose freight unpalletized that some of our customers could not upgrade together with us, and they actually left our system, which means we tend to have less of an e-commerce peak and then therefore also less of a coming down off of that peak in January now compared to previous years. So I expect us overall to be a little bit less picky and less seasonal than we were in the past just based on the shift of the mix. Having said that, we still are a transportation company that has some of the same patterns that other transportation companies have. A January will typically not be a September. And that's less pronounced than in the past, but there's still some of that. Now having said that, when I mentioned in my remarks, us becoming more real time with more dynamic pricing, there are mechanisms, including dynamic pricing, where we can obviously by adjusting price levels on a day-by-day basis, we can actually, to some extent, counter the natural kind of highs and lows of the season, of the week, of the month, and we're intending to do that. So yes, we will be seasonal. We will be less seasonal than in the past. And we have some good countermeasures in place to actually attack some of those highs and lows. Dynamic pricing is the #1 lever in that space.

Operator, Operator

And our next question comes from the line of Todd Fowler with KeyBanc Capital Market.

Todd Fowler, Analyst

So Tom, I want to clarify your comments about being ahead of pace for the 2023 targets. Are you indicating that you're exceeding the upper end of what you previously outlined, or that you're on track to be comfortably within that range? I'm trying to understand what you're really saying about 2023. Additionally, at what point might you consider reassessing those targets if you continue to perform ahead of them?

Tom Schmitt, CEO

Yes. So let's simplify the math, Todd. And so if we say, take the range and make it more simple and say, the 630 is actually the number that's equivalent to us keep running the business with some of the same parameters, which means we have strong organic growth, and we have some tuck-in acquisitions. That's what gets us to 630 as we announced in October. If I look at the month of January, and that's 1 out of 24 data points in that '22-'23 journey, I believe there are several cents that we are ahead of that pace. Now again, that's where you and I can run math and say like, well, if it's $0.10, that's pretty powerful. If it's $0.03, then obviously, not buying that by 24, is not giving you quite that much. But I do believe, if we keep doing what we've done even in those 6 weeks that we are into 2022, yes, you can assume that there's a few cents every month that we should be ahead. And again, in a tailwind economy, I like my odds of being able to add quite a bit of 630. What I would suggest is we are going to be driving our business, get a few months under our belt. And if February, March, April continue the trend that we've seen in January, we should absolutely revisit that number. But we're 124th into the 2022, 2023 journey. And I feel, obviously, fact based and correct saying that with that 124th in, we're ahead of pace. I feel a bit more comfortable if we are at 324 or 424th into that journey to revisit those targets.

Todd Fowler, Analyst

That's good context, Tom. And then just as a follow-up, can you talk to your appetite at this point for acquisitions? I mean it feels like that there's a lot of momentum within the existing business. You've got a good footprint right now. So how eager are you to look to do something? I understand tuck-ins probably make some sense, but something larger or more sizable just kind of given how the performance is in the core business at this point?

Tom Schmitt, CEO

Yes, Todd. We have a lot of experience in this area. Over the past 5 to 6 years, we've completed around 14 acquisitions. Our track record has been excellent, with each acquisition adding value. When we evaluate potential acquisition targets, we are confident, even if a target is 3 or 4 times larger than what we usually pursue. Our M&A team, led by Kyle Ricketts and Michael Hance, applies the same rigorous grading criteria to larger acquisitions as we do to smaller ones. If an acquisition has a positive assessment based on our previous experience of 14 successful acquisitions, I believe the chances of our next one being successful are strong. Therefore, we will maintain the same level of scrutiny regardless of size. If an acquisition grades out positively, we are confident in our ability to make it work, whether it is significantly larger or the same size as our usual targets.

Operator, Operator

And our next question comes from the line of Bruce Chan with Stifel.

Jizong Chan, Analyst

Tom, you mentioned the events business. I'm curious about what you're seeing in terms of recovery as we emerge from Omicron. How much of that is factored into your first quarter guidance?

Tom Schmitt, CEO

Yes, I'm speaking in general terms. Some of our most profitable LTL business has been inactive since March, almost two years ago. This accounted for about 10% to 15% of our LTL business. Last year, particularly in Q3, we saw around 20% of that return. During my visits to our terminals, I noticed that trade show containers were significantly lower than usual. Conversations with our business partners in the events sector lead us to expect about 60% to 70% of business to return this year. Looking ahead to next year, while there’s no absolute certainty, forecasts suggest we should reach pre-pandemic levels. So, if we saw 20% last year, 60% to 70% this year, and then 100% next year, that would be fantastic. Some of this could exceed our current estimates. We are quite confident in our sales capabilities, and even if we don’t hit those targets, we have other strategies to achieve similar results. This is clearly an opportunity we are pursuing alongside our customers. For instance, reflecting on your recent conference that was held virtually more often than not, we're not back to full levels yet. Other conferences are going in-person, and that's why I believe 60% to 70% is a reasonable estimate. Over the past two years, we've engaged closely with our business partners, and they feel that around two-thirds is a solid projection for this year.

Jizong Chan, Analyst

No, that's very helpful color, and I certainly hope that we're back in person next year. But maybe a sort of similar question on the top line for Final Mile. It looks like growth is kind of leveling out there. I'm wondering if that's more of a function of underlying demand trends in that business. Maybe people bought all the fridges they need. Or is that more due to some of the supply chain congestion coming into the West Coast ports?

Tom Schmitt, CEO

I actually believe that it's mostly between those two factors, but it's probably the former more than the latter. The congestion has persisted for quite some time, and still, the numbers were quite impressive for most of last year. I think when we discuss a home-based economy compared to an events-based economy, the last 18 months have predominantly been a home-based economy for many. You can see some of that changing, which relates to the previous discussion we had. And yes, your characterization is likely very accurate. There's a limit to how many fridges one can purchase, and eventually, people have what they need. We are witnessing some of that. Nonetheless, as I mentioned earlier, if there isn't a competition for a bigger market share, we should focus on capturing what we can. As long as we maintain strong relationships with some of the top retailers globally, we should be gaining more market share and recognition, particularly from partners like Home Depot, who awarded us as their appliance business partner of the year. As a result, we successfully expanded into two additional markets, Richmond and Memphis, and there may be more opportunities ahead. So yes, we are seeing a leveling off in terms of market growth, and we plan to capture our share by being the best partner in supporting those retailers.

Jizong Chan, Analyst

And then maybe just one last one here. As you think about the fleet and how that develops over the course of the years, what are your expectations there as far as outside power versus your owner operators?

Tom Schmitt, CEO

Yes. Last year was challenging. From discussions with many of our competitors, it's notable that among the top 100 ground transportation companies in the U.S., 98 saw a reduction in their fleet size. We were one of those 98, experiencing a decrease in our fleet. However, we are making significant efforts to create an excellent professional environment for our independent contractors. We regularly conduct driver engagement surveys and listen to their feedback, understanding that predictable home times are crucial for them. We provide our drivers with an app that allows them to manage their business, find their next load, track their revenue, and easily generate tax support materials at the end of the year. When they request home time for important events, like their grandchild’s birthday, we strive to accommodate them. Our driver board—a group of 12 fleet owners and drivers—communicates our supportive actions to the broader driver community, which contributes to our retention rates being around twice the industry average. I believe we are starting to reverse last year's trend. We are currently six weeks into our Forward '23 journey, and the HR team, along with operations and safety, has been doing an exceptional job. We are actually expanding our fleet and currently have about 50 more seated trucks than we did at the beginning of the year. I anticipate that 2022 will not only be a year for operators, as our COO Chris Ruble states, but also a year of fleet growth for Forward Air. To complete my earlier point, this growth in our fleet suggests that I expect outside miles as a percentage of total miles to decrease from the 20s to the high teens, effectively bringing it below 20%.

Operator, Operator

And our next question comes from the line of Bascome Majors with Susquehanna.

Bascome Majors, Analyst

Yes. Tom, could you talk a little bit about the cleansing and the sales incentive you had to drive that? And as we look forward to how you're changing your sales incentives to drive the outcomes you're looking for over the next 2 to 3 years?

Tom Schmitt, CEO

Yes. So Bascome, first of all, welcome to our team and to our great group of thought partners. So I mean, this is where we operate as one. It's also one of our leadership imperatives as is we don't wait. The sales team did something last year that was tremendously tough to do. They basically were compensated on the incentive side with a revenue attainment and they consciously drove revenue away. So this is hats off to all of them for doing the right thing. I mean Lance Small, the whole team did a tremendous job, basically doing the right thing for the company and at the same time, basically getting revenue off of their books that they otherwise would be compensated for. Now fortunately, Scott Schara and the team actually have done a tremendous job over the last year designing a sales force compensation system, which we implemented this year. So it's actually active now that to reward sales professionals, not only for revenue growth, but also for the profitability of that revenue. This is not rocket science, but it's something that we had to do, and I think we feel very, very strongly about doing, which is incentivizing sales professionals by the profitability of their book of business, not just by the size of their book of business. So in that sense, what they did last year, actually, it would be a good thing and they would actually be compensated for driving some of the inefficient freight out of the system and getting more efficient, high-value dense right into the system. So that's aligning the operating model in support of our customers with the way we incent sales professionals now in place. And again, hats off to the sales team that they actually did the right thing even when the incentive system was not aligned yet last year. Now fortunately, them doing the right thing and incented to do so are aligned.

Bascome Majors, Analyst

So the profit incentive just started Jan 1.

Tom Schmitt, CEO

For the sales compensation, we have variable sales compensation. To clarify, we have individual objectives for each frontline individual, as well as for Rebecca and me. Most of our individual objectives and incentive compensation, both as a company and as individuals, are tied to the profitability of our actions. As of January this year, the variable component of the sales force compensation has begun to include a profitability dimension.

Bascome Majors, Analyst

And combining it with your other comments about maybe starting to hit capacity in parts of your network in the second half of this year. When you freed up 15% to 20% of the network by seeking denser freight, is that comment intended to say that 15% more shipments can be in the network in 6 to 9 months? Or is that more about certain points of the network that will reach capacity before the network does?

Tom Schmitt, CEO

Yes, it's the latter. When we faced capacity challenges in some of our major terminals and hubs in the spring of last year, we are expecting to encounter similar issues again in the second half of this year. Despite efforts to manage growth, we will reach the same capacity constraints at some hubs that we experienced about a year ago. This isn't a network-wide issue, but rather pertains to individual hubs. Last year, we conducted a project called Eagle Eye to assess routing efficiency, and we want to ensure that terminal constraints do not push us toward inefficient routing. Our operations team, working with Oliver Wyman, effectively identified the top three most efficient routing lanes for specific shipments. We aim to ensure that every shipment in our system adheres to these top three efficient routing guidelines.

Bascome Majors, Analyst

Last one for me. You made some comments earlier about seasonality smoothing a bit with the freight cleansing. Certainly, there are some people looking at your historic seasonality and trying to extrapolate the 1Q out into something in the, call it, $6 implied range for the year. Can you talk about where you get excited about that kind of opportunity? And where we might be getting ahead of ourselves.

Tom Schmitt, CEO

I think that's related to our previous exchange. I could calculate based on one month and then project that over a year for 2022 or two years for 2023. However, I believe it's more prudent to base these projections on three or four months rather than just one. We see considerable potential based on our one-month data, but it's important to note that the target of 630 is set for 2023, and we are only one-twelfth of the way into that journey. So far, we are pleased with our observations. While it's possible to run these calculations, I would prefer our team to focus on excelling in their roles and reassess those goals in a few months rather than after just one month.

Operator, Operator

And at this time, there are no further questions in queue.

Tom Schmitt, CEO

Well, thank you.

Operator, Operator

And ladies and gentlemen, that concludes Forward Air's Fourth Quarter 2021 Earnings Conference Call. Please remember that this webcast will be available on the Investor Relations section of Forward Air's website at www.forwardaircorp.com shortly after this call. You may now disconnect.