Forward Air Corporation Reports First Quarter 2024 Results Industry veteran Shawn Stewart appointed as Chief Executive Officer First quarter results impacted by elongated weak freight market and Omni Logistics deal closing Cost synergy realization in line with initial diligence estimates Preliminary April results providing early indication of improvement GREENEVILLE, Tenn.–(BUSINESS WIRE)–Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “Forward”, “we”, “our”, or “us”) today reported financial results for the three months ended March 31, 2024 as presented in the tables below on a continuing operations basis (Final Mile is being reported as a discontinued operations). Recently appointed Chief Executive Officer Shawn Stewart, said, “It is a privilege to be leading Forward during this pivotal time. Together, Forward and Omni have created an industry leader dedicated to delivering world-class service to customers. Forward excels at providing best-in-class premium less-than-truckload service to an attractive and broad customer base, while Omni provides custom supply chain solutions across multiple service modes to domestic and international customers. Together, Forward and Omni, provide customers a seamless partnership and flawless execution for their time-sensitive and mission-critical freight.” Mr. Stewart continued, “I see tremendous opportunity for the combined entity to maximize value for customers, employees and shareholders. I am committed to aggressively taking action to improve profitability, maximize synergy capture and drive our leadership in global supply chain and domestic transportation services. With the distractions of the deal closing behind us, our team is focused on execution. I look forward to sharing our progress along the next phase of our journey. To that end, we look forward to sharing our full year 2024 guidance and our path to achievement on our second quarter earnings call.” Rebecca J. Garbrick, Chief Financial Officer, said, “Our first quarter results did not meet our expectations. We continue to face challenging market conditions, characterized by weak freight demand, excess carrier capacity, and pressure on pricing. Omni’s first quarter results were more adversely impacted as a result of its exposure to the international freight market. While these conditions led to decreased customer demand for our intermodal, truckload brokerage and Omni lines of business, we saw momentum in our less-than-truckload line of business where we experienced positive volume trends and improved freight quality metrics. In the first quarter, our shipments per day growth was +1.4%, weight per shipment was +7.4%, and revenue per shipment excluding fuel was +0.7% over the same period in the prior year. Unfortunately, this momentum did not offset softer demand for our intermodal and truckload brokerage services, resulting in an 8% decline in revenues and 41% decline in adjusted EBITDA on a continuing operations basis over the same period in the prior year, excluding the results of Omni. From the acquisition date, January 25, 2024, through the end of the quarter, Omni contributed $225 million in revenues and $(5.9) million in adjusted EBITDA.” Ms. Garbrick continued, “Our first quarter results are not indicative of what we expect for 2024, and we are taking aggressive steps to improve profitability. One early positive indicator is the sequential growth in revenue as reflected in our preliminary April results. From the month of March 2024 to April 2024, we saw sequential revenue growth of 6% as compared to a sequential decline in revenue from March to April of (15%) over the same period in the prior year. We are also successfully executing on the cost synergies associated with the Omni transaction, which are in line with initial diligence estimates. While our first quarter EBITDA was not reflective of run-rate synergies, we expect to see a steady increase in subsequent quarters until synergies are fully realized by the end of 2025.” Three Months Ended (in thousands, except per share data) March 31, 2024 March 31, 2023 Change Percent Change Operating revenue $ 541,813 $ 357,709 $ 184,104 51.5% (Loss) income from operations $ (65,732 ) $ 47,196 $ (112,928 ) (239.3)% Operating margin (12.1 )% 13.2 % (2,530) bps Net (loss) income $ (88,794 ) $ 33,904 $ (122,698 ) (361.9)% Net (loss) income per diluted share $ (2.35 ) $ 1.27 $ (3.62 ) (285.0)% Cash (used in) provided by operating activities $ (51,719 ) $ 60,839 $ (112,558 ) (185.0)% Non-GAAP Financial Measures: 1 Adjusted income from operations $ 12,534 $ 47,196 $ (34,662 ) (73.4)% Adjusted net (loss) income $ (24,172 ) $ 33,904 $ (58,076 ) (171.3)% Adjusted net (loss) income per diluted share $ (0.64 ) $ 1.27 $ (1.91 ) (150.4)% Adjusted EBITDA $ 29,390 $ 59,568 $ (30,178 ) (50.7)% Free cash flow $ (55,840 ) $ 56,135 $ (111,975 ) (199.5)% 1 Reconciliation of these non-GAAP financial measures are provided below the financial tables. Review of Financial Results Forward Air will hold a conference call to discuss first quarter 2024 results on Thursday, May 9, 2024 at 10:00 a.m. ET. An Earnings Presentation has been posted online on the Investor Relations portion of the Company’s website at ir.forwardaircorp.com, and will be referenced during the conference call. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at ir.forwardaircorp.com, or by dialing (877) 876-9173, Access Code: FWRDQ124. A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investor Relations portion of the Company’s website to easily find or navigate to current and pertinent information about us. About Forward Air Corporation Forward Air is a leading asset-light provider of transportation services across the United States, Canada and Mexico. We provide expedited less-than-truckload (“LTL”) services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer truckload brokerage services, including dedicated fleet services; and intermodal, first-and last-mile, high-value drayage services, both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services. Forward also operates a full portfolio of multimodal solutions, both domestically and internationally, via Omni Logistics. Omni Logistics is a global provider of air, ocean and ground services for mission-critical freight. We are more than a transportation company. Forward is a single resource for your shipping needs. For more information, visit our website at www.forwardaircorp.com. Forward Air Corporation Condensed Consolidated Statements of Comprehensive (Loss) Income (Unaudited, in thousands, except per share data) Three Months Ended March 31, 2024 March 31, 2023 Operating revenues: Expedited Freight $ 273,295 $ 269,577 Intermodal 56,292 88,169 Omni Logistics 224,838 — Eliminations and other operations (12,612 ) (37 ) Operating revenues 541,813 357,709 Operating expenses: Purchased transportation 277,015 145,171 Salaries, wages and employee benefits 128,867 66,647 Operating leases 38,803 24,073 Depreciation and amortization 31,786 12,372 Insurance and claims 12,881 13,258 Fuel expense 5,246 5,686 Other operating expenses 112,947 43,306 Impairment of goodwill, intangibles and other assets — — Total operating expenses 607,545 310,513 Income (loss) from continuing operations: Expedited Freight 19,498 29,685 Intermodal 3,586 11,203 Omni Logistics (28,585 ) — Other Operations (60,231 ) 6,308 (Loss) income from continuing operations (65,732 ) 47,196 Other expense: Interest expense, net (40,753 ) (2,355 ) Foreign exchange loss (668 ) — Other income, net 9 — Total other expense (41,412 ) (2,355 ) (Loss) income before income taxes (107,144 ) 44,841 Income tax expense (18,350 ) 10,937 Net (loss) income from continuing operations (88,794 ) 33,904 Income from discontinued operation, net of tax — 2,464 Net (loss) income (88,794 ) 36,368 Net loss attributable to Non-controlling interest (27,082 ) — Net (loss) income attributable to Forward Air $ (61,712 ) $ 36,368 Net income per common share: Basic net (loss) income per share Continuing operations $ (2.35 ) $ 1.28 Discontinued operation — 0.09 Basic $ (2.35 ) $ 1.37 Diluted net (loss) income per share Continuing operations $ (2.35 ) $ 1.27 Discontinued operation — 0.09 Diluted $ (2.35 ) $ 1.37 Dividends per share: $ — $ 0.24 Net (loss) income $ (88,794 ) $ 36,368 Other comprehensive (loss) income: Foreign currency translation adjustments (151 ) — Comprehensive (loss) income $ (88,945 ) $ 36,368 Expedited Freight Segment Information (In thousands) (Unaudited) Three Months Ended March 31, 2024 Percent of Revenue March 31, 2023 Percent of Revenue Change Percent Change Operating revenues: Network 1 $ 214,493 78.5 % $ 205,931 76.4 % $ 8,562 4.2 % Truckload 37,055 13.6 41,744 15.5 (4,689 ) (11.2 ) Other 21,747 8.0 21,902 8.1 (155 ) (0.7 ) Total operating revenues 273,295 100.0 269,577 100.0 3,718 1.4 Operating expenses: Purchased transportation 127,760 46.7 125,194 46.4 2,566 2.0 Salaries, wages and employee benefits 62,553 22.9 55,918 20.7 6,635 11.9 Operating leases 14,982 5.5 15,738 5.8 (756 ) (4.8 ) Depreciation and amortization 10,290 3.8 7,626 2.8 2,664 34.9 Insurance and claims 10,652 3.9 9,219 3.4 1,433 15.5 Fuel expense 2,581 0.9 2,513 0.9 68 2.7 Other operating expenses 24,979 9.1 23,684 8.8 1,295 5.5 Total operating expenses 253,797 92.9 239,892 89.0 13,905 5.8 Income from operations $ 19,498 7.1 % $ 29,685 11.0 % $ (10,187 ) (34.3 )% 1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial and Truckload revenue. Expedited Freight Operating Statistics Three Months Ended March 31, 2024 March 31, 2023 Percent Change Business days 64 64 — % Tonnage 1,2 Total pounds 684,995 629,080 8.9 Pounds per day 10,703 9,829 8.9 Shipments 1,2 Total shipments 828 817 1.4 Shipments per day 12.9 12.8 1.4 Weight per shipment 827 770 7.4 Revenue per hundredweight 3 $ 31.32 $ 33.36 (6.1 ) Revenue per hundredweight, ex fuel 3 $ 24.15 $ 25.75 (6.2 ) Revenue per shipment 3 $ 259.14 $ 256.89 0.9 Revenue per shipment, ex fuel 3 $ 199.78 $ 198.30 0.7 1 In thousands 2 Excludes accessorial and Truckload and products 3 Includes intercompany revenue between the Network and Truckload revenue streams Intermodal Segment Information (In thousands) (Unaudited) Three Months Ended March 31, 2024 Percent of Revenue March 31, 2023 Percent of Revenue Change Percent Change Operating revenue $ 56,292 100.0 % $ 88,169 100.0 % $ (31,877 ) (36.2 )% Operating expenses: Purchased transportation 17,443 31.0 20,014 22.7 (2,571 ) (12.8 ) Salaries, wages and employee benefits 15,082 26.8 18,914 21.5 (3,832 ) (20.3 ) Operating leases 4,692 8.3 8,335 9.5 (3,643 ) (43.7 ) Depreciation and amortization 4,627 8.2 4,746 5.4 (119 ) (2.5 ) Insurance and claims 2,606 4.6 2,349 2.7 257 10.9 Fuel expense 2,361 4.2 3,173 3.6 (812 ) (25.6 ) Other operating expenses 5,895 10.5 19,435 22.0 (13,540 ) (69.7 ) Total operating expenses 52,706 93.6 76,966 87.3 (24,260 ) (31.5 ) Income from operations $ 3,586 6.4 % $ 11,203 12.7 % $ (7,617 ) (68.0 )% Intermodal Operating Statistics Three Months Ended March 31, 2024 March 31, 2023 Percent Change Drayage shipments 62,659 72,465 (13.5)% Drayage revenue per shipment $ 822 $ 1,136 (27.6)% Omni Logistics Segment Information (In thousands) (Unaudited) Three Months Ended March 31, 2024 Percent of Revenue Operating revenue $ 224,838 100.0 % Operating expenses: Purchased transportation 144,424 64.2 Salaries, wages and employee benefits 48,775 21.7 Operating leases 19,127 8.5 Depreciation and amortization 16,869 7.5 Insurance and claims 2,053 0.9 Fuel expense 304 0.1 Other operating expenses 21,871 9.7 Total operating expenses 253,423 112.7 Loss from operations $ (28,585 ) (12.7 )% Forward Air Corporation Condensed Consolidated Balance Sheets (In thousands) (Unaudited) March 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 172,270 $ 121,969 Restricted cash equivalents — 39,604 Accounts receivable, net 351,813 153,267 Other receivables 1,539 5,408 Prepaid expenses 39,512 25,682 Other current assets 4,299 1,098 Total current assets 569,433 347,028 Noncurrent restricted cash equivalents — 1,790,500 Property and equipment 591,562 508,280 Less accumulated depreciation and amortization 263,856 250,185 Property and equipment, net 327,706 258,095 Operating lease right-of-use assets 334,262 111,552 Goodwill 1,379,180 278,706 Other acquired intangibles, net 1,264,428 134,789 Other assets 84,251 58,863 Total assets $ 3,959,260 $ 2,979,533 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 130,646 $ 45,430 Accrued expenses 118,955 62,948 Other current liabilities 73,461 71,727 Current portion of debt and finance lease obligations 28,134 12,645 Current portion of operating lease liabilities 93,645 44,344 Total current liabilities 444,841 237,094 Finance lease obligations, less current portion 34,306 26,736 Long-term debt, less current portion 1,664,107 — Long-term debt held in escrow — 1,790,500 Operating lease liabilities, less current portion 246,956 71,598 Liabilities under tax receivable agreement 13,270 — Other long-term liabilities 45,536 47,144 Deferred income taxes 177,806 42,200 Shareholders’ equity: Preferred stock — — Common stock 265 257 Additional paid-in capital 508,675 283,684 Retained earnings 417,282 480,320 Accumulated other comprehensive loss (151 ) — Total shareholders’ equity attributable to Forward Air 926,071 764,261 Noncontrolling interest 406,367 — Total shareholders’ equity 1,332,438 764,261 Total liabilities and shareholders’ equity $ 3,959,260 $ 2,979,533 Forward Air Corporation Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Three Months Ended March 31, 2024 March 31, 2023 Operating activities: Net (loss) income from continuing operations $ (88,794 ) $ 33,904 Adjustments to reconcile net (loss) income of continuing operations to net cash (used in) provided by operating activities of continuing operations Depreciation and amortization 31,786 12,372 Share-based compensation expense 1,567 2,906 Provision for revenue adjustments 1,038 1,098 Deferred income tax expense 2,945 1,857 Other 4,169 (1,091 ) Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses: Accounts receivable (20,495 ) 16,397 Other receivables 5,367 — Other current and noncurrent assets (7,104 ) 10,910 Accounts payable and accrued expenses 17,802 (17,514 ) Net cash (used in) provided by operating activities of continuing operations (51,719 ) 60,839 Investing activities: Proceeds from sale of property and equipment 849 1,815 Purchases of property and equipment (4,970 ) (6,519 ) Purchases of a business, net of cash acquired (1,565,242 ) (56,567 ) Other (89 ) — Net cash used in investing activities of continuing operations (1,569,452 ) (61,271 ) Financing activities: Repayments of finance lease obligations (4,560 ) (2,086 ) Proceeds from credit facility — 45,000 Payments on credit facility (80,000 ) — Payment of debt issuance costs (60,591 ) — Payment of earn-out liability (12,247 ) — Payments of dividends to shareholders — (6,345 ) Repurchases and retirement of common stock — (54,783 ) Payment of minimum tax withholdings on share-based awards (1,328 ) — Contributions from subsidiary held for sale — 4,852 Net cash used in financing activities of continuing operations (158,726 ) (13,362 ) Effect of exchange rate changes on cash 94 — Net decrease in cash and cash equivalents from continuing operations (1,779,803 ) (13,794 ) Cash from discontinued operation: Net cash provided by operating activities of discontinued operation — 5,154 Net cash used in investing activities of discontinued operation — (270 ) Net cash used in financing activities of discontinued operation — (4,884 ) Net decrease in cash and cash equivalents (1,779,803 ) (13,794 ) Cash and cash equivalents at beginning of period of continuing operations 1,952,073 45,822 Cash at beginning of period of discontinued operation — — Net decrease in cash and cash equivalents (1,779,803 ) (13,794 ) Less: cash at end of period of discontinued operation — — Cash and cash equivalents at end of period of continuing operations $ 172,270 $ 32,028 Forward Air Corporation Reconciliation of Non-GAAP Financial Measures In this press release, the Company uses non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with GAAP. The Company believes that meaningful analysis of its financial performance requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions as well as evaluating the Company’s performance. For the three months ended March 31, 2024 and 2023, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, free cash flow, adjusted income from continuing operations, adjusted net income, and adjusted net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis. The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization) and tax impacts. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance shareholder value. The Company believes providing adjusted EBITDA, adjusted income from operations, adjusted net income and adjusted net income per diluted share allows investors to compare Company performance consistently over various periods without regard to the impact of unusual, nonrecurring or nonoperational items. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s financial results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the Company has included, for the periods indicated, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure. The following is a reconciliation of net income to EBITDA for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Net (loss) income $ (88,794 ) $ 33,904 Interest expense 40,753 2,355 Income tax (benefit) expense (18,350 ) 10,937 Depreciation and amortization 31,786 12,372 Reported EBITDA (34,605 ) 59,568 Transaction and integration costs 58,226 — Severance costs 5,769 — Adjusted EBITDA $ 29,390 $ 59,568 The following is a reconciliation of the change in operating revenues and adjusted EBITDA excluding the impact of Omni Logistics for the three months ended March 31, 2024 and 2023 (in thousands): Forward Air Corporation (excluding Omni Logistics) Three Months Ended March 31, 2024 March 31, 2023 Change Percent Change Operating revenue $ 329,565 $ 357,709 $ (28,144 ) (8 )% Consolidated EBITDA $ (34,605 ) $ 59,568 Omni Logistics – Income from Operations 28,585 — Omni Logistics – Depreciation and Amortization (16,869 ) — Reported EBITDA (22,889 ) 59,568 Transaction and integration costs 58,226 — Adjusted EBITDA $ 35,337 $ 59,568 (24,231 ) (41 )% The following is a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2024 and 2023 (in thousands): Three Months Ended March 31, 2024 March 31, 2023 Net cash (used in) provided by operating activities of continuing operations $ (51,719 ) $ 60,839 Proceeds from sale of property and equipment 849 1,815 Purchases of property and equipment (4,970 ) (6,519 ) Free cash flow $ (55,840 ) $ 56,135 The following is a reconciliation of reported income from operations, net income, and net income per diluted share to adjusted income from operations, net income, and net income per diluted share for the three months ended March 31, 2024 and 2023 (in thousands, except net income per diluted share): Three Months Ended March 31, 2024 Three Months Ended March 31, 2023 Loss From Operations Net Loss1 Net Loss Per Diluted Share1 Income From Operations Net Income Net Income Per Diluted Share As Reported $ (65,732 ) $ (88,794 ) $ (2.35 ) $ 47,196 $ 33,904 $ 1.27 Transaction and integration costs 58,226 48,076 1.27 — — — Severance 5,769 4,763 0.13 — — — Acquisition amortization 14,271 11,783 0.31 As Adjusted $ 12,534 $ (24,172 ) $ (0.64 ) $ 47,196 $ 33,904 $ 1.27 1 Net loss and net loss per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax benefit effect of the above item is $13,643. Note Regarding Forward-Looking Statements This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Contacts Forward Air Corporation Justin Moss, 404-362-8933 jmoss@forwardair.com Read full story here 133 min read The latest industry press releases from BusinessWire