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Forward Air (NASDAQ:FWRD)

Q1 2013 Earnings Call

April 19, 2013 9:00 am ET

Executives

Bruce A. Campbell - Executive Chairman, Chief Executive Officer, President and Member of Executive Committee

Rodney L. Bell - Chief Financial Officer, Senior Vice President and Treasurer

Analysts

Kevin W. Sterling - BB&T Capital Markets, Research Division

Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division

Elizabeth Thys - Morgan Stanley, Research Division

Scott H. Group - Wolfe Trahan & Co.

Jack Atkins - Stephens Inc., Research Division

Matthew Dodson

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Operator

Ladies and gentlemen, thank you for joining Forward Air Corporation's First Quarter 2013 Earning Release Conference Call. Before we begin, I'd 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 2013 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, and 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 consequentially, 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'll turn the call over to Bruce Campbell, Chairman, President and CEO.

Bruce A. Campbell

Thank you, operator, and good morning. Thanks to each of you for joining our call.

While our first quarter results were not what we wanted, I would like to focus on some positives from the quarter.

First of all, while volumes and in particular the volumes during the second half of March, were disappointing, volumes since the end of March have been good. We are hopeful that the many sales initiatives we have in place are going to continue to lead us to stronger volumes throughout the second quarter.

Secondly, while still having a loss, we are pleased with the progress of our Solutions group, who landed a major account in the latter part of February, and while costly to implement, it is now producing solid returns.

Additionally, we are bringing on next week another large customer, which will firmly position Solutions for the balance of the year.

Finally, as announced in early March, we were able to complete the acquisition of Total Quality, Inc., which is a premier refrigerated truckload carrier. We are pleased to have their excellent team as part of Forward Air and look forward to their many future contributions.

And now, Rodney Bell, our Chief Financial Officer.

Rodney L. Bell

Thank you, Bruce, and good morning. As Bruce mentioned, we closed on the acquisition of TQI, which was -- which will be reported a new business segment. In Q1, TQI had a partial month revenue of $3.9 million, and that rose up under Other -- under Logistics on our consolidated income statement and had operating income of approximately $200,000.

Airport-to-Airport revenue, inclusive of Forward Air Complete, was down 0.3%. This resulted from total tonnage being down 3.8% for the quarter and a 3.8% increase in yield.

Here's how the average weekly tonnage broke down for the quarter. January was plus 5; February was down 5; and March was -- which is typically the strongest month of the quarter, was down 9%. And as Bruce mentioned, some pretty positive trends going into April after that dismal end to the quarter.

The yield improvement consist of 2% from linehaul pricing, a 0.7% benefit from net fuel surcharge, along with a 1.1% positive impact from Forward Air Complete.

Complete revenue growth, which only grew 4.7%, suffered through the same difficulties as did our core linehaul business.

Additionally, complete phases of difficult prior year comp from the loss of the large customer. This comp will persist through the third quarter.

Logistics revenue, again, which included $3.9 million from TQI, grew 7.8%. Factoring out the impact of TQI, Logistics revenue declined approximately 10%.

This resulted primarily from soft customer demand from both airline and integrated customers, as well as a challenging prior year comparison for the loss of a large customer late in Q1 2012.

On primarily new business wins, Solutions revenues increased 16.1%.

Moving on to expenses. Parts and Transportation in total was up 3%, but down 10 basis points as percentage of revenue. FAI PT improved in both dollars of expenses, while the percentage of revenue of our Solutions PT driven primarily from new business startup cost was higher.

Salaries, wages and benefits increased $778,000 or 2.3%. This was primarily the result of Solutions startup costs and fixed network salaries offset in part by reduced employee incentive accruals.

There was nothing remarkable in operating leases or D&A for the quarter. Insurance and claims expense improved to $138,000 or 4.9%. This was due primarily to better year-over-year cargo claims experience.

Other expenses were up to $2.5 million or 24% as compared to last year. The primary reasons for this increase were $900,000 of TQI transaction cost, $300,000 of Solutions startup cost from new business, our National Meeting that we did back in January, which was $300,000 and $200,000 write-off of bad debt.

Our tax rate was 30.8% compared to 38.7% in Q1 of 2012. This improved tax rate relates primarily to the reinstatement of a 2012 propane tax credit, along with a tax benefit derived from the exercise of incentive stock options.

The improved rates provided approximately $0.04 per share of year-over-year benefit to the quarter. We were not anticipating a magnitude of benefit received in the ISL [ph] exercises.

We expect our Q2 2013 tax rate to be approximately 38%.

CapEx for the quarter was $12 million against the full-year CapEx budget of approximately $35 million.

We ended the quarter with $71.6 million in cash, essentially no debt, and $138.4 million of availability on our $150 million line of credit.

Lastly, we anticipate the second quarter revenue will be in the range of 12% to 18% with approximately 9% of that coming from the TQI acquisition.

Income per diluted share is expected to be between $0.51 and $0.55 compared to $0.48 in the Q2 of 2012.

That concludes our comments. Now back to the operator for your questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Kevin Sterling from BB&T Capital Markets.

Kevin W. Sterling - BB&T Capital Markets, Research Division

Bruce, you mentioned a new customer you just signed in Solutions. Should we expect some higher startup costs initially associated with that new customer?

Bruce A. Campbell

There will be some, but we don't -- as we sit here today, Kevin, don't think it's the magnitude that we went through earlier with the customer we brought on in February.

Kevin W. Sterling - BB&T Capital Markets, Research Division

Okay. And Bruce, it seems like for the past couple of years, there's always been some squirrely pricing for some time, but was it kicked up a notch this quarter?

Bruce A. Campbell

I think it's fair to say that. It's -- from our vantage point, we had a little bit of a slower economy and whenever that happens, then people get stupid. They swallow those stupid pills and start doing stupid things, and that's what happened to us. We maintain, as we always have, that we're going to protect our yield, because in the long-term that's the right thing to do. So we had a little bit of -- actually, we had a lot of it, but we're okay with that.

Kevin W. Sterling - BB&T Capital Markets, Research Division

I mean, right, you've always had that strategy, you maintain your pricing discipline. So it's mainly because just the volumes weren't there, you just saw some squirrely activity.

Bruce A. Campbell

I think our volumes were probably reflected -- and I don't know this with great accuracy, were reflected in our competitors' volumes in terms of, they suffered through some tough times, too. So we, again, don't want to maintain or don't want to lose that strategy of protecting yield, and we didn't.

Kevin W. Sterling - BB&T Capital Markets, Research Division

Right, right. And so let me think about this, historically, those that discount price to chase share don't always offer the best service. I think, if I recall, over time, some of that business will eventually migrate back to you. So while maybe a near-term headwind, do you anticipate that if service levels deteriorated some of your competitors, you may see that business come back to the yield you want?

Bruce A. Campbell

Yes, that's exactly right. And typically, this goes on for a period of time, who knows how long. And then typically, what happens beyond what you suggest it is they go out of business. If you're running freight to -- out of Atlanta into the Florida market at $0.05 or $0.055 a pound, I assure you, unless you have very deep pockets, you will soon be broke.

Operator

Your next question comes from the line of Ben Hartford from Baird.

Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division

The 24 terminals in pool, I assume that's a function now. It's up 5 from the end of the year. I assume that's a function of one or both of these new customers coming on board, is that right, Rodney or Bruce?

Bruce A. Campbell

Yes, it's basically areas -- 2 of the areas are where we're actually picking up the freight. And then 3 of the areas are additional delivery points for us that we're handling on a little bit different methodology than we have in the past, primarily through the utilization of other providers to do the delivery.

Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division

Okay. So that 24 terminal count, will it only grow if you win new customers? Is there an organic growth number to it? And I guess the final question in that part would be -- is there a steady-state number that you think the terminal size will be at maturity for pool?

Rodney L. Bell

I think the quick answer is that's going to depend on customer demand. We certainly are not out looking to buy additional pool companies today, you never know how that could change into the future. But the terminal count, as in this case been -- was driven -- the additional terminal count, I should say, was driven by the customer needs and then in each case, it was a good move for us.

Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division

Okay. Rodney, when we think about the second quarter guidance, obviously the first quarter results, weaker than expected in the Airport-to-Airport segment, you got the full benefit of TQI in the second quarter. If we were to break down, I guess, what's embedded in the assumptions there, is it just that TQI on kind of a full run rate, Solutions benefiting from these new contract wins and being profitable in the second quarter and then some firming up in the margin on the core side? Is that a fair way to think about how you're looking at the second quarter?

Rodney L. Bell

It is Ben. On the low end of the guidance, is what you said, is the benefit of TQI and the Solutions, the new business wins and the incremental profitability there. And so that, coupled with, not a whole lot of help coming from the steady-state, Forward Air, Inc., on the lower end of that, and then on the higher end of that, getting a little bit of help, which we started to see. So I think you're exactly right.

Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division

Bruce, can you provide some perspective in terms of the optimism in April. And I guess characterizing the air freight environment out of Asia as weak, it's there for the first quarter, which probably explains why March was disappointing, plus you had the calendar timing, all the other nonsense in March, but April sounds like it's firming up and there's some optimism that late April and early May, we can have a normal spring once weather starts to improve here. So I'm just curious, what you think -- what you make of this early April trend relative to March and what the expectations are for the balance of the second quarter?

Bruce A. Campbell

Well, you touched on it and you're quite accurate in talking about the West Coast. The big change we saw going into March was the West Coast really slowed down. And based on information from all our people, we didn't lose any share. It just simply the business volume just fell off. Now what we've seen in the last 2 weeks is a much stronger West Coast. The night before last, West Coast on a year-over-year basis was up 400,000 pounds. So we're encouraged by that. We want to see that continue. We think it will continue, perhaps not to that degree, but we think we can continue to grow that area of our country and things will be hopefully, on the positive side throughout the quarter.

Benjamin J. Hartford - Robert W. Baird & Co. Incorporated, Research Division

Okay. And then lastly, can you -- separate from that, can you talk about your kind of e-commerce business, and just maybe give us a sense for how much of it might be related to the either B2C or e-commerce. And how much opportunity might there be, whether it's on the existing core business or Solutions, to provide that type of offering? Is there an interest in that type of offering from your standpoint relative to your customers and what they need?

Bruce A. Campbell

Yes, we do a lot of that today. I couldn't give you an exact number. We do that primarily through our Forward Air relationships, where we, in some cases, will not only linehaul the business but then through our complete product offering, we will actually deliver the business, and that can be both to a business or to an actual end-user consumer. Solutions does some of that. It really depends on which one of their customers that we're talking about. So it's kind of across the board we participate in today. We were told by a major TV manufacturer that we haul more flat screen TVs than any other provider in the U.S. We've done it for a number of years. We know how to handle without damaging them. So the more that develops, the better we do and, hopefully, the better our customer does.

Operator

[Operator Instructions] Next, we'll go to the line of William Greene from Morgan Stanley.

Elizabeth Thys - Morgan Stanley, Research Division

This is Elizabeth in for Bill today. I wanted to ask you about trade downs. We're seeing a lot of negative mix effects out of FedEx and UPS. How does that affect your business? Does that get passed through on the pricing side?

Bruce A. Campbell

Actually, no. We basically have one price per product moving throughout our system. We do not provide a deferred -- an even later deferred pricing for our customers. And candidly, we've never really dealt with that at all. We -- I would back you up and say years ago, we benefited from the beginning process of various shippers downgrading from using airlines and integrators to going on ground. And while we don't see the big benefit today that we did then, we continue to benefit from it. Again, if we have a customer who has good supply chain management, software, they're just not going to put it there, they're going to do put on a deferred carrier like us.

Elizabeth Thys - Morgan Stanley, Research Division

Okay. And then a second one, on the driver side, we're hearing tightening driver market from our truckload carriers, does that affect Forward? Is that something you guys are -- is that a headwind for you guys going forward?

Bruce A. Campbell

It's a good question, but we traditionally have been able to recruit and retain our owner-operator fleet. We continue to have good success there, but we do work very hard at recruiting the right owner-operators. So there's -- I would tell you, it's a little bit harder, but if they're still available, and we certainly don't have any shortage of them now.

Elizabeth Thys - Morgan Stanley, Research Division

Okay. And do you think that has to do with your scheduling just being like more scheduled than maybe a traditional truckload carrier?

Bruce A. Campbell

I think you're exactly on the money and it's a big advantage to us to be able to offer that.

Operator

Your next question comes from the line of Scott Group from Wolfe Trahan.

Scott H. Group - Wolfe Trahan & Co.

So the new pool customers, can you just give us a sense of maybe how much revenue you're expecting from those guys? And are they the traditional retail customers or is it something that maybe helps smooth out some of the margin volatility throughout the year?

Bruce A. Campbell

They are a traditional retail customer, but they tend to delve in a different market, if that makes any sense, Scott. So we're hoping that it tends to be a little less volatile than the current customers we have.

Scott H. Group - Wolfe Trahan & Co.

In terms of the magnitude area?

Bruce A. Campbell

I don't have those exact numbers in front of me. I would say the one we put on in February will become our third largest customer. The one we put on next week will probably be our fifth or sixth largest customer. We can shoot you some numbers after.

Scott H. Group - Wolfe Trahan & Co.

Yes, that's -- I'll follow up off-line. [indiscernible] the April feeling better. I mean, relative to down 9 in March, how is April actually tracking?

Bruce A. Campbell

April, so far, has tracked pretty well. We're pleasantly surprised. We're pleased, we put in a number of initiatives across the Board in all our businesses and it appears they're paying off. And I also think we're benefiting from a better economic environment. And in particular, off the West Coast.

Scott H. Group - Wolfe Trahan & Co.

And are the yields holding in around that 2% level with the better tonnage? And I know it's early, but how are you thinking about a GRI for this year?

Bruce A. Campbell

We'll address that, Scott, later in the year, probably in late June, early July. If you ask me now based on where business is today, it'd probably be fairly tough to implement one, but that could change by May.

Scott H. Group - Wolfe Trahan & Co.

Last couple of things. In terms of TQI, just because we don't have much history with it, how should we think about the seasonality of the revenue and margins of that business?

Bruce A. Campbell

It's fairly comparable to any truckload carrier you will follow. They tend to get busier in the second half of the year, but their business is not nearly as volatile as we experienced with like Solutions.

Scott H. Group - Wolfe Trahan & Co.

But you'd expect better than a 95 OR in that business in the second quarter?

Bruce A. Campbell

Yes, that -- we went through, obviously, some transaction costs, some implementation issues. Just the various things that you go through when you buy a company. So I don't think that one is indicative of what they can do in the future. We will be implementing a new technology system for them at some point in the second quarter. We think that's going to help them greatly and we have other things we could do. And they're doing a great job, too. So it'll get it to where it's operating better than 95.

Scott H. Group - Wolfe Trahan & Co.

Great. And then just last thing, what do you do with the owner-operators and EOBRs? Have you started rolling those out yet? And what kind of impact do you think that has on our operator base?

Bruce A. Campbell

We actually implemented that 2 years ago in January, took 3 or 4 months to get it done. We had a lot of trepidation going into the program, but the truth of the matter is they ended up -- the owner-operators ended up really liking it. We had -- we may have had one casualty from that out of 900-and-some owner-operators. So we're really happy with where it's at and we think it's -- we're positive on EOBRs.

Operator

Your next question comes from the line of Jack Atkins from Stephens.

Jack Atkins - Stephens Inc., Research Division

So, I guess, first off, we talked about the soft macro and the competitive issues, but I'm just sort of curious if you all would be willing to maybe quantify the impact weather and the more challenging weather conditions we face this year versus last year. Any sort of impact that had in the quarter?

Bruce A. Campbell

Let me be real candid and tell you that internally, we just never look at weather as an excuse. Every winter, we go through bad weather. Now let me counter that by saying this first quarter is probably the most unusual in my 23 years here, in that every single week, we had a disruption somewhere until we got, I think, it was mid-March. So it's very hard to quantify. I can tell you where it really hurts us, is any time you're on an network and you get shutdown and part of that network service area, it throws your balance where our inbound and outbound is working, it throws our equipment way out of whack. And the only way to fix that is to immediately reposition it. And most of the times, when you do that, what happens is you're going to incur higher empty mile cost or even run a lighter load average just simply to get the equipment in place. We could throw a number on it, but I wouldn't feel comfortable doing that.

Jack Atkins - Stephens Inc., Research Division

Okay, that makes sense. That's helpful commentary, Bruce. And so, I guess, also, when we think about sort of the industry verticals that you guys serve, just sort of curious if you could maybe talk about the relative strength and weaknesses for your various industry verticals. If you'll be willing to share any thoughts on that?

Bruce A. Campbell

Well, on the Airport-to-Airport side, it remains pretty constant. It's the same as it's always been, where we're handling a lot of what we call electrical equipment. That's a broad category, but that's in fact what is. All those normal things it's very difficult for us to give you an exact number because we don't require the customer, unless it's a hazmat, to give us an exact number. I would tell you what we see creeping up, are more and more home delivery type products. So that runs a gamut of whatever is in your house. If we look at the retail side, which is primarily Solutions, their overall business for the quarter was pretty good, even if we take away the effect of the new customer. So perhaps retail's a -- consumer retail is a little bit better than others, including us, anticipated in the first quarter.

Jack Atkins - Stephens Inc., Research Division

Okay, that's great to hear. And then, last couple of questions for me. On the TQI acquisition, just curious if you guys could maybe talk about -- and I understand it's early days, but just sort of curious if you can talk about the integration process there. How that's going so far? And when you think about TQI, sort of the opportunity for cross selling between your legacy Airport-to-Airport business and then the new life-sciences verticals that you're bringing in here with TQI?

Bruce A. Campbell

Yes, the implementation and the integration process, Jack, was fairly simple. We do operate them as a separate entity, although we do work between their group and the group that handles truckload traditionally for Forward Air. So they're-- they share some load if it works from a balance standpoint. You have to remember, we have limited cross selling because much of their product requires temperature control, which in our traditional Truckload business, we don't have. Can we expand that beyond? Yes, we think we can. That's going to take some time. We have to gain the confidence of their shippers and we have to do a little bit more work in terms of expanding their fleet, which we're underway in doing and just upgrading their technology side from the standpoint of an operating system. So once we get all that done, I mean, we're excited about the opportunity. We think we have a great team up there and a lot of good things will come out of it.

Jack Atkins - Stephens Inc., Research Division

Bruce, is there may be an opportunity on the cost side with TQI? If I remember correctly, a good chunk of their -- their power was from third-party transportation providers. And so just sort of curious maybe if you could think about shifting that -- the owner-operator model, that you guys utilize in your core business?

Bruce A. Campbell

That will occur, not so much of a shift, but we'll go in and complement their existing company suite with owner-operators. We're starting a few next week to run for them, but we probably will always have a need to have some fleet, not a huge fleet, but a representative fleet, for lack of a better word, to run company-owned power for TQI. But I would tell you that most of our growth there, as we go into the future, is going to come from owner-operators.

Jack Atkins - Stephens Inc., Research Division

Okay, okay, and then last question for me, on the M&A side, I know you guys just made a fairly sizable transaction for you all with TQI, but just sort of curious about your appetite for additional M&A going forward. Is it a function of maybe trying to sort of put TQI onto your platform to integrate that, before you look to maybe get more active or are you guys still sort of looking to pursue M&A opportunities in the current environment?

Bruce A. Campbell

I would tell you in general, TQI has been a fairly easy acquisition and integration. So with that having been said, we're certainly continuing to look at opportunities into the future.

Operator

Your next question comes from the line of Matthew Dodson from JWest.

Matthew Dodson

I just have a quick question for you guys. Can you kind of help us understand why you think March fell off and then why you think April has kind of bounced back so sharply?

Bruce A. Campbell

The quick answer to that is, no. Because honestly, it caught us a little bit off guard. You can talk about the Asian influence on the West Coast. You could talk about Easter was earlier this year, but honestly, as we sit here today, we couldn't quantify that or give you accurate sourcing to support that.

Operator

Your next question comes from the line of the Todd Fowler from KeyBanc.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

I was wondering if you could talk about the revenue guidance for the second quarter. The range is a little bit larger than what you typically give and I'm just curious, does that reflect the volatility that you've seen in the volumes in the past couple of weeks or the acquisitions? Or how do we think about the range that you've given on the revenue side?

Rodney L. Bell

Really, it's both of those things, Todd. On the lower end, we're really assuming no additional volume growth on the Airport-to-Airport side. It's pretty flattish and based on what we've seen thus far in April, it could be a little bit better than that. With processing [ph] staying consistent is the other assumption and then flipping to the acquisition that we're going to -- still not sure exactly what -- how good TQI can be. We're going from a baseline of what they did. The first month we operated, we think that's a low end to a bit higher than that, which we think is more realistic. And then Solutions with these new business wins coming on, there's a little bit of a question mark on just how good that can be.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. But Rodney, you've got the earnings per share guidance, I mean, pretty consistent with that $0.04 spread. I'm guessing that if all the stars align and you see something closer to the 18% revenue growth, that the high-end of the guidance would be very doable if not something north of that? Or are there other costs that need to come in to support that revenue that I'm not thinking about?

Bruce A. Campbell

No, that's correct.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. And then, I guess, just to follow up on the comments on TQI. I mean, if I take the 9% growth that you're talking about or that's embedded in the guidance on a revenue basis and this just some rough math, so my numbers may or may not be right, but that annualizes basically close to the $55 million of revenue I think that they did in 2012 that you talked about when you announced the acquisition. Is there something going on there, something to think about why the growth rate -- why they wouldn't be showing more growth or a better growth rate than what they had last year?

Bruce A. Campbell

Actually, in their core business, Todd, it's all 9% growth. What we haven't discussed, which we knew about going into the acquisition, was they had a significant customer, which was a warehouse customer. So they provided labor and they provided various warehouse-type activities for that customer. And the customer told them back in late fall that they were going to shut that warehouse down. So your numbers are exactly on the mark. We are going to replace that business with more traditional core business. And it really had no impact on the deal. We knew about it. And we knew how we were going to recover from it.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. And Bruce, how much would that revenue have been, the warehouse customer?

Bruce A. Campbell

About $6 million of -- out of that $55 million.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. On the yield side, I understand the comments and we've heard this song before. When I look at your yields in the quarter though, they weren't -- they were actually -- they were, I would say, relatively good yields. Is the trade-off that you made here that -- I mean, you were disciplined with price and you're able to keep your yields where there were and you gave up some volume as a result of that, and have you been more aggressive with your pricing, you would have seen a better volume number here on the quarter?

Bruce A. Campbell

Yes.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. And then the last one that I have -- I mean, when I look at Solutions, and I'm not asking to speak to our assumptions or our model, but really the Delta versus what we're looking for in the quarter, was purchase transportation was higher than what we're looking for and essentially, net revenue margins were lower. Is that a function of some of the new business that came on during the quarter? Or is there something else that's going on in the purchase transportation side within Solutions?

Bruce A. Campbell

The #1 component was we had to position equipment, which in this case was 2 fairly remote locations. So that was fairly costly. You also see some of their -- that's a blend number that we're -- and we can talk to you off-line on this because it gets a little bit down in the weeds. It's primarily the start-up cost is the best way to answer it.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. And do you have an idea of, I mean, how we should think about either -- should we see net revenue margins back a couple of hundred basis points higher from where they were? Do you have an idea of the ballpark with it, the start-up cost would have been in the current quarter?

Rodney L. Bell

In total, the start-up cost were about $0.01, Todd.

Todd C. Fowler - KeyBanc Capital Markets Inc., Research Division

Okay. And all of that was in the PT line, Rodney? Or was just some of that and some of the other costs?

Rodney L. Bell

Salaries and benefits and other operating expenses, Todd.

Operator

Ladies and gentlemen, thank you for joining us today for Forward Air Corporation's First Quarter 2013 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 does conclude your conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.

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