Thank you for joining Forward Air Corporation's fourth quarter 2018 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, Mike Morris. By now, you should have received the press release announcing our fourth quarter 2018 results, which was furnished to the SEC on Form 8-K and on the wire yesterday after the market close. Please be aware that during this conference call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements, among others, regarding the company's outlook for the first quarter and fiscal year of 2019, and those forward-looking statements identified in the presentation.
These statements are based on current information and our current expectations. As such, they are subject to risks and other factors that may cause actual operations and results to differ materially from the results discussed in the forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission and 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. Now I'll turn the call over to Tom Schmitt, CEO of Forward Air.
Thank you, Stacey, and good morning to all of you on the call. Before Mike here highlights our record results, let me give you a snapshot after my first five months here with Team Forward Air. Before starting here in September, I was told I would find great people, rock-solid operations, and lots of untapped upside. Now it's five months later, and I know what I was told was actually correct. I did have no surprise moments yet. So we went to work when I got here in September and set out three priorities together.
The first one is obvious, to finish 2018 strong. Together as a team, we did. On nearly every dimension that matters, financials, and most importantly, actually safety. Our overall accident rate was down 20% last year with a big drop in severity. More work to do, but a significant step in truly living a safety culture.
The second priority we set out was achieving a solid, profitable growth year in 2019. We are one month in, obviously, and we are executing. Yes, we do have some headwinds of slowing growth, and at the same time, we are pulling all the levers to make sure we actually make up and even compensate or overcompensate for any headwinds that we face. Good example, perfect example is actually revenue management, which we have started to go into in a very precise, significant, rigorous way. We provide great value as a company through our exceptional service, and I couldn't be more proud of that. With significant investments, though, in both human and capital.
What we actually need to make sure is as we create that exceptional value, that we capture our fair share of it. We did go through, we reassessed our rates, we reassessed surcharges, accessorial charges with that mindset. We are making some necessary adjustments to be more simple, more compelling, and in some cases, frankly, more market competitive. For instance, in oversized charges and also in predictable annual rate reviews this year resulting in a 4.9% GRI in May. We also are making an adjustment in the oversized charge with that same effective date in May. Our third priority that we set out to do is shaping a multi-year beyond 2019 picture, where we take our capabilities in time-critical and high-value shipments and stretch them to all they should be.
Whenever there's a bigger-than-parcel shipment that absolutely has to get there on time and damage-free, think Forward Air, think Forward for freight, intermodal, and increasingly also for final mile. We got it covered. We give you peace of mind. You do what you do, and we take care of you when it matters most. In that context of giving that peace of mind with that exceptional service, value creation, value capture, two of our business units, LTL Intermodal, have hit their stride on that journey beyond 2019. In LTL, we are stretching more and more into B2B door-to-door. For 3PLs, we're doing that for domestic and international forwarders. We also are stretching more and more into B2C final mile. We currently have actually over 100 trucks on the road each day providing over-the-threshold installations of heavy bulk appliances, we are actively expanding in that space.
We're far from done. In intermodal, we got a great acquisition, integration, and execution machine going, we'll keep doing this potentially bigger, faster at the maximum scale for the returns that we have come to expect. Frankly, our other two segments, truckload and pool, they do fit our purpose perfectly. We give you peace of mind when it matters most to you. We are stretching those two businesses. In truckload, both on the fleet and the brokerage side, and in pool with automation that drives margins in retail. We also are taking a sharper operating model into other verticals where that value creation and capture is very compelling. Having said all of that, nailing 2018, a solid profitable growth plan in 2019, and now a multi-year picture in the making beyond 2019, how high is up for that beyond 2019 picture?
We simply will be all we can be and should be as a business, that's true for our business units. I just briefly sketched that out, also for our first-class supporting and enabling functions. We are going to adopt more and more evolving technologies as soon as they make a difference for us. That's true in the office when it comes to taking very specific, rigorous actions on a lane-specific basis, on a customer-specific basis. That's true in our terminals, where we actually enhance dock automation on an ongoing basis. It's also true on the road, where we use a lot of real-time monitoring for enhanced productivity, but also for enhanced safety. Which gets me back to safety, the thing that matters most. We are going to be world-class in safety by any metric that matters.
Talking about world-class, we also are going to continue making this a great place to work. I know logistics may not be the sexiest industry on earth, but there are logistics companies that are absolutely first class and are making these professional homes of a first-class level. I know this from my own past with FedEx, where I spent many years. Logistics companies can be absolutely top-notch places to work. Forward Air certainly is one of them. Talking about top-notch, Bruce Campbell and this amazing Forward Air team have created a wonderful base full of possibilities. We will turn those possibilities into a remarkable reality together. We are far from done. Bruce Campbell also brings one other and final note to mind. Yesterday, we filed an 8-K announcing changes to our board of directors. After a long, successful career, Bruce Campbell is retiring this May.
I'm very fortunate Bruce actually will remain a resource to me and our leadership team for the next two years. Following Bruce's retirement, this is also a testament to the solid game planning here and solid execution. It's expected that I will replace him as Chairman. Craig Carlock will replace Bob Campbell as our lead independent director. As lead for the past five years, Bob has done a great job supporting our growth. He will actually remain on the board. At the same time, Craig's background is very much aligned with our future objectives. We are looking forward to working closely with Craig and the entire board to leverage their diverse experiences and insights. Here at Forward Air, we will never confuse effort with results. Our results give me a lot of confidence. In fact, tons of confidence.
With that, over to you, Mike.
Thanks, Tom. 2018 was a record year for Forward Air across every key financial metric. I personally want to thank the operations and corporate teams for an outstanding job done. We generated a lot of cash flow last year, which we deployed towards growth and shareholder returns. Our growth investments included continued CapEx spending on equipment and technology, as well as acquiring two intermodal companies. Our shareholder initiatives included a 20% increase to our dividend and our repurchase of $66 million worth of stock, which lowered our year-over-year fourth quarter share count by 2.7%. Our leverage increased slightly in 2018 and remains at roughly a quarter turn of EBITDA. Over time, we will look to optimize our capital structure by carrying a more permanent level of debt, which we do not expect will exceed one turn of EBITDA.
As we develop the growth strategies and platforms that Tom described in his remarks, we are also planning an investor day to communicate the future of Forward Air. More details to come, but we're currently targeting June 25th in New York City. Finally, we've launched a new investor relations website, which can be accessed at forwardaircorp.com. We consider it the go-to place for our investor information. Please check it out. With that, Stacey, let's open the line for Q&A.
Thank you. The floor is now open for questions and comments. You may press star then one on your touchtone phone. To remove yourself, press the pound key. Once again, for your questions or comments, press star then one. We'll go to Jack Atkins with Stephens. Please go ahead.
Hey, good morning, Tom and Mike. Tom, congratulations on your promotion to Chairman later on this year.
Hey, Jack, if you could hold on one sec. Stacey, we're having some disruption on the line.
Jack's line is open.
Hey, guys, can you hear me?
Yeah, if you could speak slowly, there's some interference on our line.
Sorry about that, guys. Just wanted to say good morning and congratulations to Tom.
Thanks, Jack.
Thank you, Jack.
Let's kind of dive in here, first on the Expedited LTL segment for a moment. Could you maybe just talk about how the fourth quarter progressed in LTL relative to your expectations, and what type of peak season did you guys see relative to your expectations?
Jack, I do apologize. We're really hearing a lot of crackle on the line, but I think you were talking about fourth quarter LTL relative to our expectations. Maybe I'll start there, and Tom, you can comment as you want to. From a tonnage standpoint, it fell short of our expectations. We did very well from a yield standpoint, Jack. We get this question, so let me put out our tonnage per day throughout the quarter. It was down 4.2% for the quarter. For October, it was down 3.8%. November, it was up 0.5%, and December was down 10.6%. We are, from a tonnage standpoint, lapping the upturn. We had a pretty stiff comparable in 4 Q 2017, and we do expect a stiff comparable to remain for the first half of 2018.
The calendar was also a little tough in December, with the loss of a Friday, and Christmas moving to a Tuesday. Our airport-to-airport tonnage was down, but I think a good story in here was that our door-to-door daily tonnage was up, and the driver there was 3PL. That tonnage grew over 100%, and our shipments in 3PL grew 68%. We're excited about the progress that we've made in door-to-door. Airport-to-airport is still the bigger number and weighed down our tonnage. Yield did very well. You see the numbers in our press release with fuel and without fuel, where we got a tailwind to our June 2018 GRI. Also growth in door-to-door helps yield, because we're getting paid more, because we're doing more things. We're picking it up and delivering it.
When you strip all this out and you look at revenue per ton per mile, and you wash out the length of haul and weight per shipment effects, it was up 6%, so it was very strong. Despite the tonnage decline, we felt we did pretty well in the fourth quarter.
Okay, that's great. Mike, can you hear me a bit better now?
It is a little bit better now.
Yes.
Okay, great. Sorry about that. It must have been an issue with my headset. That's helpful color, Mike. Thank you. Let me kind of pivot a bit and ask. Tom, you talked a good bit about reassessing rates and accessorial charges in your prepared comments. When you think about 2019, sort of where we are, I know it's early in the year, but what portion of the work that you plan to do on the rate side do you think has already been implemented? How would you expect rates and yields within the core Expedited LTL business, and perhaps other segments as well, to trend as you move through 2019?
Yeah. Yeah, completely fair questions. Let me perhaps put the whole revenue management piece in context, that also goes back, Jack, a little bit to your question about tonnage trends. The one thing that we are doing extremely consciously is managing the quality of the business that we're getting, that's absolutely, frankly, good for our customers, it's also good for us. We want to make sure that we move the things that actually really matter a lot to them, good for them, then frankly, from a value creation, value capture perspective, also good for us. That's why tonnage is important, revenue is important, but I always like saying, if it's just revenue on its own, that's empty calories. We are very precise what type of business we're targeting. You might actually see some of the top line and even the tonnage being impacted.
There's a lot of precision and rigor that we are actually inserting to that process. Having said that, to your specific question about how much of that is done versus not done. What we are going to be doing, I think I mentioned this on my last call, we want to make sure we are extremely predictable and plannable for our customers, frankly, also for our own business. There will be a rhythm to rate adjustments. On the basis of that is obviously a general rate review. That's not only true for LTL. It is perhaps most relevant there, but it's true for all of our business lines. Every year, depending on your denomination, you may celebrate different events. For many people, there's on December 25th every year, Christmas Day, there will be every year a rate review.
It's going to be date similar, that people can actually budget and plan for that. This is where the May review for LTL this year comes in, there will be a similar rate review next year. The second thing is on the surcharges and on the accessorial charges. We went through some of them, you will start seeing the impact. I mentioned oversize, where we were frankly, not competitive in what we charge, but extremely competitive in the service that we actually provide. That adjustment will come together with the GRI in May. We also are making very certain that our customers get something that is expected by them and is comparable to our lead competitors, especially also in fuel. Fuel goes up, fuel goes down, that's obviously a market symptom, not a Forward Air specific symptom.
We need to make sure that we are in the range of where our leading competition is. We are making sure with that by adjusting our rate table actually next month in March. Jack, from a very specific perspective, the first kind of set of adjustments you would see over the next three months between March and May. Then there will probably a second wave a little bit later where we actually go through some of the other accessorial charges. If we provide additional services where we frankly so far haven't reflected that fully, there may be something coming. On the basis of a rate adjustment or rate increase every year, fuel surcharge being competitive and the oversize charge, I think a lot of what you will be seeing, you'll be seeing between March next month and between May. Nothing much yet in practice.
A lot happening, March and May. We are going to go through other surcharges, accessorials in the second wave, there may be a second part of that coming later.
Okay, great, Tom. Thank you for that color. Let me ask a couple more questions then I'll hand it over. Within the LTL segment, again, just sticking with that business for a moment, could you give us an update on where outside miles trended in the fourth quarter? Mike, I'm just sort of curious how we should be thinking about purchase transportation within Expedited LTL in 2019. Do you feel like you've been able to turn a corner there? Do you expect to get some traction within the PT line in 2019?
Jack, I'll take that one. First off, broker power was 25.9% of miles in the fourth quarter of 2018 compared to 21.8% of miles in the fourth quarter of 2017. PT is still a headwind. The truckload market loosened in the fourth quarter, but it is still relatively tight, and notably for teams. Teams are very important in our fleet mix. We need to have the optimal level of teams to run the long haul lanes in our network with the greatest efficiency. We did turn the corner a little bit, but broker power was still greater quarter-on-quarter. Where we made a lot of progress was the LTL team's ability to improve density in the network, and also our new pickup and delivery structure where we use owner-operators, lowered our PUD costs while PUD was growing in our network.
Our billable pounds per mile was up about 2.5%, and we got a lot of leverage on the new PUD network that helped lower costs. That may not be the areas where you expected us to be turning the corner, maybe somewhere, but that is, I think, part of turning the corner. We do anticipate PT headwinds remaining. Knock on wood, they'll abate a little bit, but it is still a challenge to get teams, and we really need teams to provide the expedited service levels that we promise our customers.
Okay, great. Last question from me, and I'll hand it over. Just on cash flow, excellent free cash flow year in 2018. Mike, could you give us some insight into how you're thinking about cash flow in 2019? Should we be expecting improvement in terms of free cash flow on a year-over-year basis? I know you don't want to give specific guidance. Just trying to think about the direction of cash flow year-over-year in 2019 versus 2018.
2018 was a stellar year, and working capital played a big role in the levels we achieved. I'm going to remain conservative and assume that as our revenue grows, our working capital may not perform as well. I think working capital will be the swing factor between how 2019 stacks up to 2018. The tax rates have already worked their way through. We don't see any big fundamental shifts in the model. I think working capital and the assumptions you put in your model, Jack, will be the driver of year-on-year.
Okay, great. Thank you again, and congratulations on a great fourth quarter.
Thanks, Jack.
Thanks, Jack.
We will go to Ben Hartford with Baird. Please go ahead.
Hey, good morning, guys. Tom, maybe just to come back to a couple of the recent comments you made, the remarks in the opening salvo about how high is up. When you think about Expedited LTL over the next several years, it sounds like based on fourth quarter and some of the comments that you had just made, that there might be a little bit more of a lean toward yield as opposed to volume. Is there any way that you could give us an idea as to what you think an annual revenue growth profile is for Expedited LTL over the next three-five years? Maybe what the mix is between yield and volume in that number? Thanks.
Ben, first of all, I'm going to give you a little bit of a flavor that, Mike, quantitative. Then, Mike, if you want to add to that would be terrific. The one thing I do want to say upfront, this is an and not an or. We definitely are getting extremely precise to make sure that we actually move the business that really is the critical business for our customers, because that's frankly where the value creation for them comes in and the opportunity for us getting our fair share. That's the kind of making sure we are actually actively matters most part. That really is getting to your point, Ben, about focusing on the quality of the revenue and on yield. Having said that, for us, we believe there's tons of upside also in actually the market share that we should be going after.
Specifically, it goes back also to the previous question, Jack, that Jack had about kind of PT and what we see there. We've had, I think a very tremendous good trend over the last few months in terms of getting better with our surgical driver attraction and retention efforts. Frankly, we are going above and beyond with our team to make sure we do make this the most appealing professional home for drivers. The success actually starts coming. We also are getting up another notch with driver contests going forward beyond even the traditional tools that we've been taking.
I do expect us to be able to dial that valve about quality of revenue yield that you've been talking about, and at the same time, make sure we get a bigger amount of quality drivers going forward so we can actually dial another valve, which is the quantity of revenue. Frankly, with Expedited LTL and going beyond airport to airport, we talked earlier about increase in door to door. We have a lot of upside in terms of possibility and opportunity with our customer segments, the 3PLs, the domestic international forwarders. If we serve three or five airports for one of them today, there's the next five or 10 airports we can be serving for them. I do believe, and I'm not sure it's 50/50 in terms of the impact.
This is a modeling exercise that we are doing and that you obviously also are doing. This is clearly a somewhat equally balanced between the quality of the revenue yield and the actual volume that we're dialing up at the same time because we can increasingly, based on our increasing ability to attract and retain drivers at levels more recently that we have not seen in the year before.
Okay, that's great. That's helpful. Thanks. Mike, if I could come back to your comments on the fourth quarter. I guess specifically, was there a reason that you can attribute to the volume shortfall relative to expectations? You guys had expected flat volume. It was obviously down. I know we had a comp issue, but just normalizing for that, any specific driver of the weakness? Maybe in that vein, obviously, import volumes have been relatively healthy here to start the year. We've heard anecdotes of tight warehouse space across the West Coast. Can you talk about kind of the impact, positive, negative, neutral to your business as you see it in the first quarter and through the balance of the year, given some of those dynamics?
Yeah, I don't have any specific details for you, Ben, in terms of this did that and this did this. We did see reductions in our airport-to-airport tonnage. As I mentioned, we made a lot of that back on door-to-door daily tonnage. In terms of the import volumes, that probably takes a few weeks to work its way through to our intermodal business. Once that congestion works itself out, maybe a two to three-week lag before it starts showing up at the Midwest rail heads. We are in the first quarter, a little concerned about the flow-through effects of what was probably a partial pull forward into the fourth quarter, followed by an early Chinese New Year, which I think started this week. As those Asian factories close, give it two to three weeks, and you see volumes slow on the intermodal side.
Probably a little more headwind on the intermodal side per the last part of your comment.
Okay, that's helpful. Thanks. One last one, just back to the free cash flow point of view. Maybe could you provide an update as to where you sit from an acquisition front and anything imminent? If not, what would be the most likely use of the excess free cash that's likely to build here in 2019? Thanks.
Yep. I don't have any transactions to announce for you today. Our capital stack stays as it has been. Free cash flow obviously covers CapEx. We're going to continue to do a healthy amount of CapEx. A lot more in technology now that we've gotten our trailer fleet age kind of down to an optimal level. We've been swapping out some old vintages, but we're going to divert some of those saved CapEx cash flows into some pretty heavy technology spending to support the types of initiatives that Tom talked about earlier. We'll cover our dividend, and then we'll see where we are in M&A. There's clearly an M&A game plan in the intermodal space. We're also looking at M&A in other spaces, in final mile. We're looking at M&A in different pockets of the portfolio. Whatever's left, we look to buy back.
As we've said publicly before, we like to run with about $20 million of cash on the balance sheet to provide necessary liquidity. We'll see where multiples go in 2019 based upon the macros. We got a lot of dry powder in terms of our cash flow, but we also have a lot of dry powder in terms of our under-levered position. Who knows? If the cycle rolls over and assets become a little cheaper and multiples compress, that's a great time to grow the company.
Let me just reinforce, Ben, the point, Mike, that you made. There's a lot of mind share on our end going into inorganic growth where it makes sense. Over the last few years, you've seen this intermodal, and Mike, you mentioned last mile. There's a lot of mind share. We do believe obviously, that we always will have the discipline to use our cash flow in the most rational way. We also believe, frankly, that with the untapped upside I talked about earlier, some of those best options may not only be share repurchases. I think, to be continued and more to come.
Okay. That's great. Thanks for the time.
Thanks, Ben.
We'll go to Seldon Clarke with Deutsche Bank. Please go ahead.
Hey, good morning. Thanks for the question. In terms of your Q1 guidance, your guidance, let's call it high single-digit revenue growth and low single-digit growth in net income. Could you just help us walk through the puts and takes implied by that guidance, and maybe why some of the operating leverage momentum that you saw in the fourth quarter wouldn't continue into Q1?
Yeah, I'll take that, Seldon. We are a little concerned about a continuation of elevated PT costs. As I mentioned earlier, we made a lot of progress on solos, but we do need to make some progress on teams. Obviously, tonnage levels are going to drop quarter-on-quarter, which could impact our density. I don't know what weather's going to do, but it is a bit concerning. Nice down here in Atlanta, but in other parts of the world, it's pretty difficult. Finally, Seldon, we do see an increase in corporate costs. We have some self-insurance headwinds. We have some CEO transition costs. We are making some corporate investments to enable and support the growth that Tom talked about in revenue management. I mentioned IT, safety, recruiting.
We are going to do a little bit of spending on the corporate side so that we can enable and support the growth. That's my bridge, if you will, in response to your question.
Okay. That's helpful. I guess just in terms of intermodal, could you give us a sense of what the Southwest acquisition contributed to intermodal results in the quarter, and maybe what the right run rate is to think about that business going forward?
Well, I wish I knew the right run rate with this outstanding team we have. We set high expectations, they just continue to obliterate them. From a revenue perspective, Southwest was about $3.5 million last year.
For you guys?
I'm just giving you some clarity. The intermodal revenue quarter-on-quarter was up about $8 million, and about $3.5 million of that was Southwest. Southwest was a very important acquisition for us. We're thrilled to have them be part of the organization. Put us in that Texas market. We're very bullish on that market. We think it's a big growth opportunity for us, a big expansion of our footprint. Whatever positive answer I give you, I'm pretty sure they're going to do even better.
Okay, that's helpful. Is there any I guess on that side, you're a little bit less impacted by the PT, I'm just curious as to, should we see a step down in EBIT from Q4 to Q1 in intermodal?
That depends. Let me give you a little more color. It really depends on how the continued acquisition integrations go. Southwest is working its way through. We made a lot of progress on Atlantic, we may have more progress coming there.
The challenge, I think, Seldon, overall, it's a high-quality problem that we see is when you do, I'm not even talking about the potentially larger acquisitions that fit the same high value, high return criteria that the tuck-in acquisitions have been playing. There may be larger ones around the corner. We definitely are putting mind share into those. Even if it's only, in quotation marks, highly accretive tuck-in acquisitions like Southwest, which is a great acquisition as Mike mentioned. There probably will be. Over the last five years, we had eight of those. There will be more of those even in 2019, more likely than not. Doing the quarter-over-quarter always will have that lag effect of partial years or partial quarters from the next acquisition starting to kick in, and then you lap it, obviously.
You know the modeling as well or better than I do. You'll have that going on. You'll have that going on most likely in 2019 also. I would call it a high-quality problem of just making the comparability a bit more difficult. On top of that, I hope you'll have the even higher quality problem at some point soon to have that same issue with a larger acquisition.
Seldon, I was pausing for a sec looking for a number on a crib sheet. Let me reference back the earlier comments I made about concerns around port and rails congestion, the flow-through effects of Chinese New Year. Those are some headwinds. I know that the recruiting discussion tends to focus on LTL, but intermodal is also seeing its owner-operator fleet down, needs to restore that. That puts some PT pressures on. Without giving you any specific guidance, Seldon, we got some good guys and some bad guys that we're going to have to see how they shake out through the course of the quarter.
Okay, that's helpful. Just a last one for me on the LTL segment. Apologies, I missed this earlier, did you give January tonnage?
I did not, it's a good question. Quarter to date, LTL January tonnage is up 1.6%.
Okay. Just given the initiatives, could you give us a sense of how revenue is trending on a per day basis? Just given the focus on yield, I feel like tonnage is kind of not as useful given the growth you've seen in yield over the last couple of quarters.
Yeah. There's a lot going on in the revenue line. It's obviously impacted by fuel. It is in line with our expectations.
Okay. I appreciate the time.
Thanks, Seldon.
Thank you.
We'll go to Kevin Sterling with Seaport Global. Please go ahead.
Thank you. Good morning, Tom and Mike.
Morning, Kevin.
Congratulations on a very nice quarter.
Thank you.
Yeah. Let me start with your intermodal growth. Obviously, that's quite impressive. Where are you seeing most of that growth? Is it mainly East Coast? Is it some of these intermodal rail spurs we see popping up in the East Coast to help relieve congestion? Can you kind of talk about some of the dynamics that we're seeing there that really help drive that growth?
Yeah. There is organic growth in terms of price and volume. We talked a little bit about to the extent there was some pull-forward effect in the fourth quarter. It's inorganic growth through the two acquisitions that we did last year. When those acquisitions come in, there tend to be cross-selling type synergies. I'm not a big fan of that word, but it's very true here, where customers of the legacy platform can't get into that Texas market with us or get into that Southeast market with us the way that they could once we make that acquisition. Atlantic, that was a huge part of Atlantic. I think you'll see more of that in Texas and vice versa. The companies that we've acquired didn't have that footprint in our Midwest locations. You see a lot of pickup coming from that.
Another aspect of the inorganic growth is the top-grading process that the CST team does when they come into an acquisition. They do a lot around rates, around charging for accessorials. As you kind of blend all this together, when you got a good macro tailwind, it's driving a lot of growth at Intermodal.
Got you. No, that makes sense. Thank you, Mike. You talked about Midwest. Do you see opportunities for maybe expanding beyond the Midwest to the West Coast in intermodal?
We're not really looking at the West Coast. We like our footprint as it is. We think there's a lot of opportunities to continue to build presence within our existing footprint. We have recently with Southwest, we've grown into the South, if you will, with Texas. Maybe that's the Southwest. Also looking further east, and maybe a little bit north in the Northeast, but we'll see how all that shakes out.
There's still open spots on the map, quite a few of them. Frankly, to be very specific about this, even in the markets where we are very present, I've just had an exchange this morning with Matt Jewell, our President over the Intermodal business. He and the intermodal team, Ron Gause and his team, they just spent some time. Just even in the markets where we have a very significant presence, there's still quite a bit of upside there. To Mike's point, if you just take the map of the U.S., Atlantic certainly has white spots or significant upside. I'm very bullish on the opportunities to grow in spaces that are hitting our sweet spot in a tremendous way.
I think I've mentioned even last time, we have This is a little machine that team, the CST and the intermodal team, basically almost drove to perfection over the last five years of knowing exactly where we can provide significant value and then capture our fair share. We have a screen, we have targets, there's quite a bit on that list that is more than worthwhile to pursue. Geographically, certainly Midwest, South, as Mike mentioned, but also, the Atlantic Seaboard still has a lot of open spots where it can actually make a lot of dent.
Great. Thank you for that, Tom, tell Matt to keep up the good work.
He just did.
Keep working him hard.
We'll go to Bruce Chan with Stifel. Please go ahead.
Yes. Good morning, gentlemen. Congrats on a really nice quarter here. Maybe just a quick one on the CapEx side. Mike, you talked about pivoting towards a little bit more IT spending or tech spending. Can you give us a little bit more flavor on where that's coming in, maybe just by division or by platform? I know you guys have had some nice success with TCG, so just a little bit more color on where you're going to be spending that CapEx.
Well, to do everything that Tom's asking us to do, my answer is everywhere. I think you're going to see a lot of internally developed capabilities, and I think you'll see us, like the TCG example, bring in outside technology where it makes the most sense, to let us stand up these operational goals and these support functional goals. I think it's going to be pretty widespread through the portfolio and not really concentrated in any particular place, Bruce.
Bruce, I'm a big fan of simplicity. This may be actually overly simple, but the way I described it before, and reinforcing, Mike, your comment about the balance or the ubiquity of that. Obviously, if you think about technology and how it impacts our business, there's quite a bit of that is in the decision-making. You mentioned just yourself, Bruce, TCG, right? Being extremely knowledgeable about customers, but also industry verticals, lanes of traffic, and kind of where goodness is more than in other places. That's obviously something that we're standing up right now. We're getting every single week more precise about what's good business for our customers and for us. That's basically in the kind of decision support office environment.
You go into the physical spaces, in the wider sense, you have buildings, terminals in each one of our businesses, and you have on the road, right? In both of those spaces, I mentioned examples before, especially in our larger facilities when it comes to dock automation. Yes, some of it is frankly, just good business, where you look at the flows inside the terminals, how can I shorten the ways and how can I simplify the flows in and out? Some of it actually is obviously automation. That, we're standing some of that up. On the road, there's a lot that we're doing with real-time monitoring of what's good practices for our drivers. It helps us actually, frankly, also with feedback and coaching.
There's a lot that we're doing in that space, making sure that we actually have a lot of on-the-road insights into how we actually operate that business. I think back to your point, Mike, in all three of those, almost in a very balanced way, also across all of our business lines, you'd say there would be technology investments in the office, in the building operationally, and on the road.
Okay, great. Thanks. That flavor is certainly helpful. Maybe just one more on TLS, since it hasn't gotten a whole lot of love here today. What are you all thinking in terms of when we start to see some of the top-line bleeding stem, and where do we stand as far as some of the reefer opportunities that I think you'd identified for that division a little while ago?
I'll start. Bruce and Tom can chime in. I think next quarter should be the first quarter in a year where revenue grows at TLS. You'll recall, I think it was actually your question, the four-act play example I gave of the actions that truckload has taken to respond to the upturn and the capacity tightening that happened in the fourth quarter of 2017. You recall we played the long game with our customers and honored our commitments and then took the opportunity to seek rate relief and the greater ability to broker. I think you'll see us turn the corner in terms of revenue growth in the first quarter of this year, having kind of fully lapped that process.
Reefer is a growth opportunity for truckload. I think as we have the strategic discussions that Tom described in his beyond 2019 comments, we'll have a better perspective about where that fits in longer term.
Perfect. Thank you.
Thank you.
Thanks, Bruce.
That does conclude Forward Air's fourth quarter 2018 earnings conference call. Please remember, the webcast will be available on Investor Relations section of Forward Air's website at www.forwardaircorp.com shortly after this call. You may now disconnect.