Bruce Campbell - Chairman, President, Chief Executive Officer Rodney Bell - Senior Vice President, Chief Financial Officer, Treasurer.

Jack Atkins - Stephens Todd Fowler - KeyBanc Capital Markets Ari Rosa - Bank of America Merrill Lynch David Ross - Stifel Nicolaus Kevin Sterling - BB&T Capital Markets Zach Rosenberg - Robert W. Baird David Campbell - Thompson Davis Vanck Zhu - Wolfe Research Bruce Chan - Stifel Nicolaus.

Ladies and gentlemen, thank you for joining Forward Air Corporation’s Third Quarter 2015 Earnings 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 a press release announcing third quarter 2015 results, which were furnished to the SEC on Form 8-K and on the wire yesterday after market close.

Please be aware this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements among others regarding the company’s expected future financial performance.

For this purpose, any statements made during this call that are not statements of historical facts may be deemed to be forward-looking statements. Without limiting the foregoing, words such as believes, anticipates, plans, expects and similar expressions are intended to identify forward-looking statements.

You are hereby cautioned that these statements may be affected by the important factors among others set forth in our filings with the Securities and Exchange Commission and in the press release issued yesterday, and consequently actual operations and results may differ materially from the results discussed in the forward-looking statements.

The company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Now I’d like to turn the call over to Bruce Campbell, Chairman, President and CEO of Forward Air..

Thank you. Good morning and thank you for joining our call. I would like to start by touching on some of our key initiatives in the third quarter and the resulting accomplishments.

First, aside from a few lingering issues, we have finished the Towne acquisition, which allows our team to now focus on achieving excellent operating and sales results as we saw during the September monthly period. Secondly, all our pricing initiatives are in place and more importantly allowing us to improve our desired yield.

Third, our recruiting team has done a terrific job bringing on new owner/operator teams, allowing us to continue our initiative to push transportation cost lower than it’s ever been, which is our single largest cost component.

On the solutions front where we had less than an acceptable result, the good news is much of this was driven by the loss of a major competitor who went out of business, and the resulting expense to us of bringing on $5 million of new business start-ups during the quarter.

In closing, we are excited about where we have positioned the company, glad to have that acquisition behind us, and looking forward to again producing the high level results that we have had in the past. Now Rodney Bell, our CFO..

Thank you, Bruce. Good morning. We’ll start with the Q3 revenue, running through that. On the same number of business days, consolidated revenues were up $45.6 million and 22.6% compared to Q3 a year ago. This was the second full quarter with the benefit of the Towne acquisition.

At this time, we believe we’ve seen the last of any meaningful revenue attrition and estimate the retention is somewhere between 60 and 65%. We are pleased to report that we were finally able to address the legacy Towne class-based pricing.

In addition, we took a rifled approach, increasing pricing out of markets where our network had become out of balance. These changes implemented in mid-September should bring approximately $3 million of increased quarterly profitability. CST intermodal and related revenues were up $7.8 million and 37%.

This was the result of two second half 2014 acquisitions, as well as solid organic growth. TQI revenues were $1.8 million and 15% less than Q3 a year ago, while solutions revenues were $1.5 million and up 5%. Like last month, I’ll cover the Forward Air Inc. expenses calling out the $3.8 million in Towne deal and integration costs.

Keep in mind, this is Forward Air Inc. and not consolidated. Purchase transportation was up $20.1 million or 28%, but was down 30 basis points as a percentage of revenue. There were no deal-related costs in PT for the third quarter.

We should see the full fourth quarter benefit of late Q3 route optimization, as well as the impact of lane-specific rate increases. These measures will enhance profitability through improved yield and reduced cost from better network balance. Salaries, wages and benefits were up $11.4 million and 34.4%.

Included in the increase was $137,000 of Towne-related severance cost. After consideration of deal cost in Q2 and Q3, salaries, wages and benefits had a sequential improvement of 130 basis points as a percentage of revenue. Also of significance was the additional headcount reductions and improvement in dock labor efficiency.

We’ll have the full Q4 quarterly benefit of approximately $3 million in annualized cost in Q4. Operating leases were $14.5 million inclusive of $2.6 million of costs associated with the closing of duplicate facilities. Inclusive of CST, we anticipate FAI operating leases to be approximately $11.8 million in Q4.

This includes the benefit of $800,000 in annualized costs that were taken out in Q3. At the end of the third quarter, we had shut down a total of 40 duplicate facilities related to the purchase of Towne. At this time, only three duplicate facilities remain, one of which is scheduled for closure in Q4.

Appreciation and amortization was up $1.2 million, most of which was related to Towne. Insurance and claims increased $900,000 with $174,000 of the increase related to Towne integration. We expect FAI inclusive of CST Q4 insurance and claims to be approximately $4 million.

Other operating expenses increased $5.5 million and included approximately $1 million of integration costs. This line item continues to be an opportunity and remains the focus of our entire team.

After factoring out the approximately $3.9 million of integration cost, our FAI operating ratio was an 87 compared to 84.9 Q3 a year ago, and compared to 87.9 for Q2 of this year.

The aforementioned yield improvements and cost reduction measures made late in the third quarter should greatly reduce the remaining OR gap between Q4 2015 and Q4 a year ago.

The following comments are related to our consolidated income per diluted share and the table at the end of our earnings release that reconciles EPS as reported to the midpoint of our guidance. Adjusted for approximately $0.08 of integration related costs, our adjusted EPS was $0.58.

Not included in our guidance was the $0.03 benefit of a technology-related tax deduction described in our earnings release, so that has been backed out. Neither solutions nor TQI performed in line with the prior year or as modeled. The result was a $0.025 and a $0.01 EPS shortfall for solutions and TQI respectively.

As mentioned in the release, solutions had start-up costs stemming from unplanned new business awards, some of which related from a competitor going out of business. Additionally, solutions’ Q3 insurance and claims expense was much worse than anticipated.

For the most part, the TQI shortfall was revenue related and we are now in the process of addressing that. Within the FAI operating segment, CST performed as expected, contributing $0.07 per share.

Related to the Towne integration, slower than modeled rate changes as well as cost reductions and efficiency achievement resulted in a $0.015 lower than expected EPS contribution. Lastly, from Q2 to Q3, the net benefit of fuel surcharges was about a penny worse than modeled.

Netting these adjustments and adding them to the adjusted EPS results in $0.61 compared to our midpoint of our guidance, which was $0.60. Now finally, let me cover our Q4 guidance. We expect revenues to increase in a range of 18 to 21%. With the Towne integration substantially complete, any costs associated with that should be minimal in Q4.

We expect income per diluted share to be between $0.62 and $0.66 compared to $0.55 in Q4 a year ago. This range of earnings is without regard to any additional benefit from our technology tax deductions, cost of integration, or any additional declines in our fuel surcharges. That concludes our comments. Now back to the operator for your questions..

[Operator instructions] First, we go online with Jack Atkins with Stephens. Please go ahead..

Morning guys. Thanks for taking my questions. So I guess, Rodney, if we could kind of go back to the comments around the savings that you guys are expecting to see in the fourth quarter on a year-over-year basis, it’s $3 million from pricing, I think $1.5 million from cost take-out, so $4.5 million on a year-over-year basis.

Can we extrapolate that moving forward into the first quarter, second quarter, and for most of the third quarter next year, or is that just really--should we just look at that on a year-over-year basis for the fourth quarter?.

You know, Jack, all things being equal, and that’s the caveat here, you should be able to extrapolate that going into 2016. Now if things change, if volumes change, that’s going to impact pricing.

Right now, we don’t--things could change that could impact the efficiency at the dock level, but as we sit here today, again all things begin equal, we should get the benefit of that going forward..

Okay, that makes sense. I guess when we look forward into next year, I guess there’s the opportunity to put in a GRI sometime in the first half of the year.

How should we think about that, and do you feel like the market overall is strong enough to support a GRI in ’16?.

You know, Jack, we did our last GRI in February of 2015, just before we closed on Towne. We had minimal pushback. We did--it was a rifled approach to certain markets in mid-September. It made sense. There wasn’t a whole lot of pushback then as well.

Our team is in the process of evaluating a 2016 GRI, and typically if we did that, you would see it coincide with the grandfathering of the one we did last year, so it would more than likely be a Q1 event..

Okay. Then you’ve had some new customer wins at Forward Air Solutions. You have the new facility that you guys just recently opened up in Rochester, the competitor leaving the marketplace.

You know, granted there have been a lot of puts and takes at solutions this year, but how should we think about the go-forward profitability level of solutions in 2016, because it seems like there is some opportunity there on a year-over-year basis..

I think, Jack, there is. We have much work--not much work, we have work left to get them exactly where we want them, but right now with the failure of the competitor, what that allows us is a revenue base to in turn allow a reasonable profit.

I don’t think the base model of solutions changes a lot in that the first quarter will always be the worst, and then we work--and hopefully this year we’ll be able to make a small profit in Q1 because of the additional business, $5 million of it which will come on in January of 2016, and improve sequentially as we have in the past..

Jack, the other meaningful thing in solutions starting in 2014 and also in 2015, for the first time since we’ve owned solutions we were able to put in general rate increases.

So we’ve got a customer base that’s seeing that it’s important to have a viable provider of transportation and that provides good service, that actually values what we’re doing, so you’ll see us look to solutions to potentially do a GRI in the first quarter as well..

Okay. Just a couple more questions from me and I’ll turn it over. You know, we’ve seen returns on invested capital take a hit over the last couple of years, Bruce, and I think historically Forward Air has operated with returns on invested capital closer to 20%.

I guess how should we think about the return potential of the business as it stands here today following all the acquisitions and things you guys have been doing over the last couple years, and what should we expect for you to get back to that high teens level ROIC, if that’s possible?.

Well, we’re hopeful that in 2016 - that’s the number we’re going after, in the higher teens. We do have a bit more investment than we’ve had in the past, but that’s now slowing down, so we’re positioned as we go into--actually into Q4 and into 2016 to concentrate back on those metrics like we have in the past..

Okay, thank you. Rodney, last question from me - what does the guidance assume for the fourth quarter in terms of airport to airport volumes on a year-over-year basis in terms of growth, and then core line haul yield? And I’ll turn it over..

Okay Jack, in terms of volumes, it’s 18 to 20%. Line haul yield - and we looked at that sequentially - should be up over Q3 about 3%, which brings it up just from a year-over-year basis up into the positive territory for the first time this year. So far into the quarter, that’s been just a little bit conservative, so we’re happy about that..

That’s great. Thanks again..

Our next question is from Todd Fowler with KeyBanc Capital Markets. Please go ahead..

Great, thanks. Good morning. Rodney, maybe just for a point of clarification on the expected cost savings, I think in the prepared remarks you talked about $3 million of annualized savings on the headcount side, and then in response to Jack’s question, it sounds like the $1.5 million coming in the fourth quarter, you can annualize that.

Is the difference between the 1.5 being annualized and the $3 million in the prepared remarks, is that the 1.5 million has more than just the headcount piece in there? Is that the difference between the two?.

That’s correct, Todd. To round out that, call it $6 million of annualized, about half of that is headcount. Just over--close to 30% of that is network efficiencies that impact purchase transportation, and the balance of it, most of it is in operating leases but a little bit on the other line as well..

Okay, that really helps. And then maybe just a little bit more color on the yield improvement initiatives, and I guess what I’m curious about is kind of your confidence that you’re not pushing yield too much, and that we don’t see some sort of impact on the volume front going forward.

My guess is that some of this was a necessary action with maybe where some of the pricing was, but can you just talk about taking up pricing in this environment and your confidence in keeping the associated volume with that?.

Sure, Todd. There were really two components of what we did in September. One, and we talked about this quite a bit for the last quarter, there was one remaining piece of Towne business that was priced on a class rate basis, and we didn’t have the systems to accommodate that.

It took us into September to get that done, and that business was woefully underpriced. We went in knowing that we would lose a slug of it, and that was okay because it was a loser. We retained more than we thought we were going to retain at our price, which was good.

We lost some of the business, which you hate to lose business but if you’re going to lose business, that’s the kind of business you want to lose, and then we took a very rifled approach to looking at areas of the country where our network was out of balance, primarily off the west coast as well as out of Florida.

To some degree, our network always has that kind of out of balance, but the Towne acquisition really exacerbated that so we went in and put some pretty meaningful rate increases there.

Again, it did cause some attrition of business, but really not that much, and we got the pricing that we needed to bring the proper level of profitability and balance into the network.

So all that said--I’m sorry, go ahead, Todd?.

I’m sorry, I didn’t mean to interrupt. Go ahead, Rodney..

All that said, and given the lack of pushback back in February when we did our last GRI, we feel pretty confident, subject to discussion by the group, which we’re currently doing that, that we can push through some level of rate adjustments in Q1..

Okay.

What I was going to ask was, so the 60 or 65% revenue retention from Towne, that incorporates the class business and kind of the adjustment to the pricing in that retention number?.

That’s correct, and keeping in mind that on the network balancing approach, that was not only Towne business but there was some legacy business that was in play there as well..

Okay, that helps.

Then I don’t know if you gave this, but where is your mix of purchase transportation between owner/operators and outside third party capacity? Where was that, I guess in the third quarter, and where do you think that that can go or is it where it needs to be?.

It’s pretty close to where it needs to be, Todd. That’s around 13% right now, going into the fourth quarter. That typically spikes up a bit, but as you will recall in Q4 a year ago, that went up to 26%. You won’t see that this year. Our recruiting and retention teams have done a fantastic job.

From a power perspective and a capacity perspective, we’re in good shape..

Okay, and then just two last quick ones, if I could.

The solutions competition who went out of business, do you have any sort of color as to what the issues were with that competitor and maybe why they were unsuccessful in what they were doing?.

I think it’s best that we don’t comment on that, Todd. If you took all the things you might imagine that could go wrong at a company, you’d probably be safe..

I can imagine a lot of different scenarios, Bruce, so I’ll leave it at that. Okay. Just a last one, just a question on the fourth quarter guidance.

Just to be clear, the $0.62 to $0.66, what’s the tax rate? You’re assuming a normalized tax rate, you’re not assuming the $0.03 of the technology tax benefit in that guidance?.

We are not, Todd. That’s kind of a complicated thing. I tried not to--I tried to make that as clear as possible, but--. You know, it’s tough, but our tax folks are in the process of amending those returns.

More than likely, we’ll get the benefit of three years of amended returns in Q4, which more than likely will result in $0.09 per share, but we’re not certain that will get done, and even if it does get done, you guys will back it out. So we went in just not addressing the benefit from the taxes in our guidance..

Okay, I just wanted to make sure from a modeling perspective when we set up our numbers versus your guidance, that we should be using kind of a high 30% tax rate..

You should. .

Okay. Thanks again for the time this morning, guys..

Yes sir..

Our next question is from Ari Rosa with Bank of America Merrill Lynch. Please go ahead..

Hey guys, good morning. Just wanted to touch on the new management team at TQI.

What is it that you guys are looking to them to accomplish, and where is the opportunity there?.

The opportunity is to expand who they market to and who they sell to. So in the past, that was very, very focused on essentially two customers and then some smaller ones in addition to that. This market is so much larger than that, so we brought in a gentlemen by the name of Steve Gilmore, has a great background in the industry.

We’ve worked very hard, and he’s very new to the job, so no miracles yet but we’ve worked very hard to position it so that we’re not a single or even a dual customer company. We need to have a really good customer base, and again the opportunity is there are those customers out there..

Okay, got it.

What was the challenge in acquiring those customers previously, or was it just not a focus area?.

It was our failure to focus beyond that smaller customer base..

Got it, so now it’s just kind of a matter of being more aggressive or more ambitious with your target?.

That’s exactly right..

Got it, okay. The only other one that I wanted to ask about was it looks like you guys have trimmed debt a little bit over the last few quarters. Just wanted to get a better understanding of if that was going to continue and what your top priorities are with any capital..

Sure. You’ll continue to see that debt come down - that’s the $125 million that we borrowed to do the Towne deal, and it’s on a two-year term, so you’ll see that continue to come down over the next six quarters and go away. But as we look at capital, there is a lot of acquisition opportunities using the CST platform.

They have a team that’s separate and beyond just the team at Forward Air that are focused on that. They did two small tuck-ins late last year that have performed well, and they have a great pipeline going into the end of the year and the first of next year. So that’s a focus.

We were also active purchasers of our stock last quarter, so when we have the ability to buy back shares, you’ll see us doing that from a stemming of dilution standpoint. Beyond that from uses of capital, we continue to pay a small dividend..

Got it. Just the last one I’ll ask - if you could maybe provide a view on the macro economy and what you’re kind of expecting for fourth quarter as you set your outlook. I would appreciate that..

Ari, sure. You know, it’s tough being an amateur economist, but right now we’re like everybody else. We see a little bit of sluggishness.

Volumes haven’t gone--you know, it’s tough for us because we have the Towne acquisition that somewhat clouds our view of what legacy tonnage looks like, but with some assumption driven work, we think volumes right now are slightly positive and we expect that to remain going into Q4..

Okay, terrific. Thank you..

Next we go to David Ross with Stifel. Please go ahead..

Yes, good morning gentlemen..

Dave..

At Forward Air Solutions new business, just to be clear, did that all come from a competitor closure, or just part of that $5 million came from a competitor closure in the quarter?.

All of it, except for probably $1 million, David..

Okay, and then you said there’s an additional $5 million to come on in January?.

That’s correct..

Alright.

So with the onboarding that you talked about kind of weighing on third quarter margins, is that finished, so should solutions margins in 4Q be up year-over-year?.

Yes, they should..

Okay. Then onto the M&A front, have you talked about which segments you’re most likely to continue the M&A path? It doesn’t seem like there’s a lot left in the airport to airport business, and CST seems like it’s growing probably best out of the rest of the bunch.

Is there any place other than CST that you might be looking to grow into?.

Our focus and our team’s focus has been to do additional acquisitions in CST. Number one, there are acquisitions available, which is not always the case in the other groups.

Number two, we have a great team at CST who can handle the acquisitions and continue to build that, so you’ll see us focused and--as you know, the world changes, but for the most part it’s to grow the intermodal, and they have delivered such wonderful results, that’s where we want to focus our energy and money..

Then this year, there has been more, I guess, issues pop up on the independent contractor front.

Is that something that you’ve seen at all at Forward Air, or is that something that’s fortunately stayed away from you guys?.

Yes, I think David, as Rodney mentioned before, our team, our recruiting team has done a terrific job. We’re in the best position in the history of the company in terms of owner/operators. We have the largest team fleet we’ve ever had, and we have the largest TLX fleet we’ve ever had.

The TLX fleet is actually double from what it was a year ago, which gives us so many more opportunities to grow, as you might imagine. So thanks to this team, we’re in really, really good shape on owner/operators. Don’t have hardly any issues..

Last question is just impact from ecommerce and its growth during the holiday season on the core line haul business.

Does that disproportionately help you guys, is that hurting in some way?.

Both is a fair answer. Some of it is really, really good business. Other of it is business that is difficult to handle. We have to isolate it so it’s handled properly, and we go through a different operating process when that type of business comes into the network.

But you know, this is probably our fourth, fifth year of dealing with it, so our team does a good job..

And is that any more, I guess, likely to go into the complete product than just the line haul?.

A portion of it does. A portion of it goes into our forwarder--into their PND network, but we do handle a portion of into Forward Air complete..

Excellent. Thank you very much..

Thank you..

Our next question is from Kevin Sterling with BB&T Capital Markets..

Thank you. Good morning, Bruce and Rodney. .

Morning..

In solutions, you’re picking up business because the competitor exited, and that’s a high quality problem.

How much more do you think there are in start-up costs, or if you continue to pick up additional business, could we continue to see start-up costs, or is this more of a one-time event?.

For the most part, that was a one-time event in Q3 because it required a different building and a different delivery network, if you will, so that was really an isolated incident. On what we should pick up in January, we will make no capital investments.

We don’t have to do anything to absorb that business, so the start-up costs, which there will be some, will be minimized..

Great. Alright, thank you, Bruce. That’s good color. Let me follow up a little bit on Jack’s question earlier.

Possibly thinking about 2016 and the opportunities, you’ve got the integration of Towne essentially complete, got the cost improvements, your yield initiatives, you’re doing a great job on your PT costs, some of these one-time costs in solutions should be behind you.

Regardless of the macro - I know Rodney said you don’t want to play amateur economist, and without asking him to - but regardless of the macro, it seems like with all your internal self-help initiatives, you’ve got an opportunity to grow earnings at a minimum double-digit percentage.

Am I thinking about that right with all the initiatives you have going on?.

I would take you back to the earlier comment, which was we think we have positioned the company to be very successful in the future, and would kind of leave it at that..

Okay, great. Gentlemen, thanks so much for your time today..

Thank you..

Next we go to Ben Hartford with Robert W. Baird. Please go ahead. .

Hi guys, it’s actually Zach Rosenberg on for Ben.

Just hoping--you’ve talked around this, but if you could talk to in retrospect, why Towne’s integration was maybe more challenging than initially expected, and does that change the one to two-year view on the ultimate accretion that Towne could bring to the company versus the initial expectations?.

It has minimal impact on what our expectations were for future accretion.

The big thing that we incurred with Towne that we kind of had to slug our way through was contracts and finding some of what I call unknowns, and it wasn’t that we didn’t know what to do in that type of situation, it was simply getting through both regulatory and legal issues that really slowed us down.

Once we got through them--and I can give you a quick example, we had to move a customs, a CFS in one of our cities into our existing terminal. Customs wouldn’t give us approval to do that for, like, four months. That cost us about $35,000 a month because we had to keep the old Towne building open. It was a litany of those things.

At times it became very frustrating, but in general our team never gave up and we kept pushing and pushing, and finally got it to where we need it to be. The regret is that it was slower and harder to do than we originally anticipated. The good thing is we’re done..

Great, thanks for that. That’s great color.

Just one more here from me - you know, you talked about it a little bit with the GRI for 2016, but what do you expect is reasonable for a growth rate in 2016, understanding that you’re still probably just entering budgeting period and haven’t formalized anything yet?.

Yes, I think we’re just too early on that. We have put in initiatives, as we’ve discussed previously, that probably will hold, so they are not going to go away; and then we will look at the balance of the business as we do every year and make a determination of where we need to go and when we need to go..

Great, thank you very much..

You’re welcome..

Next we go to David Campbell with Thompson Davis & Company. Please go ahead..

Hi, good morning Bruce and Rodney. I just wanted to ask about the business in general. You’ll usually be in the seasonal peak in your business in September, late September.

Has that occurred this year?.

Actually David, over the past few years that peak has compressed, so instead of start-up in September, although September was good, the peak is really due to hit about now. We’re starting to see some of that, especially on the solutions side.

Our opinion is peak will be okay, it won’t be anything great, and I think that’s a result of the shippers are much better at controlling their inventories and avoiding peaks, but without question knowing that more product has to move in the fourth quarter. .

What was the September growth in tonnage?.

It was up just over 20%, David..

Twenty percent, including Towne?.

That’s correct. .

And in general, have you lost more business than you expected from Towne transitioning to Forward Air yields and freights?.

In general, we’ve kept more business than we thought we would, so we’re pleased with that in most cases. There was a few cases we’re not. So we’re happy with where we are there. .

Right. Okay, thanks. I appreciate the questions..

You’re welcome..

Our next question is from Scott Group with Wolfe Research. Please go ahead..

Hi, it’s actually Vanck Zhu on for Scott. Just a few questions. A lot of my questions have been asked already. The first question I had was, I was wondering if we could go back on the line haul yields. I was wondering if we could get a little bit of additional color.

It looks like it’s ticked down--it’s worsened year-over-year relative to your last quarter and also decreased sequentially. I know last quarter, we talked about line haul yields stabilizing, and just wanted to get a little bit of additional color as to what happened there..

Yes Vanck, I’m ready for you this morning. We found an error in Q2, and it relates to the class-based pricing that I was talking about earlier. Once we had that integrated, we realized that the downward impact wasn’t being fully baked into the yield, so the Q2 line haul yield was actually 16.97 compared to 17.07 in Q3..

Okay..

So sequentially slightly better, and now quite a bit better with the impact of the two pricing initiatives we put in in mid-September. .

Okay, got it. Also, just a little bit further on the September pricing initiatives. One, I was wondering if you can provide a little bit of additional color as to what initiatives you specifically took, and also wondering about the timing, why was it implemented in September rather than earlier on in the integration process..

Sure. I’ll go back to the class-based pricing again, Vanck. It was a technology issue. We didn’t have the systems to accommodate that, so we had to do some work on our side. It was September before we got that completed and tested and ready to go, so that was as early as we could do it.

Also, we were looking at the imbalances in our network primarily off the west coast and out of Florida, and took the opportunity to adjust those markets as well. So a very rifled approach to that, and between those two pricing initiatives, sequentially we’ll see from Q3 to Q4 yield improve by over 3%..

Okay.

I was wondering if any of the, I guess weakness, particularly on the TQI side but also solutions, was any of that due to just the Towne integration being so time consuming? Going forward, is there a possibility that TQI margins will improve just as the Towne integration nears completion?.

I don’t think I would link those two things together. I certainly understand your point, but I just wouldn’t link them together. We’re hard at work at fixing those, as are the teams at each of those locations..

Okay, great. I guess just one housekeeping question.

In light of the puts and takes on the tax rate between the higher tax rate, I think, earlier this year and also the tax benefit from technology, how should we view a normalized tax rate going forward?.

Vanck, I may have to shoot that to you. I can’t--I’m thinking 37.8, Vanck, but I’m having--actually 37.4. I found it..

Okay..

That will be starting in Q1 of 2016 and with the benefit of that technology tax deduction we talked about..

Okay, great. Okay, thanks so much for your time, guys..

Thank you..

We’ll go to Bruce Chan with Stifel. Please go ahead..

Gentlemen, I’m actually all set here, so I appreciate the time..

Thank you..

With no further questions, ladies and gentlemen, thank you for joining us today for Forward Air Corporation’s third quarter 2015 earnings conference call. 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. You may now disconnect..