Part I [Item 1. Business](index=9&type=section&id=Item%201.%20Business) Forward Air is an asset-light transportation provider with three segments, expanding globally through the 2024 Omni acquisition and initiating a strategic review in 2025 - The company operates through three reportable segments: Expedited Freight (**44% of 2024 revenue**), Omni Logistics (**47% of 2024 revenue**), and Intermodal (**9% of 2024 revenue**)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - On January 25, 2024, the company completed the acquisition of Omni Newco LLC ("Omni"), a key strategic move to expand operations domestically and internationally[27](index=27&type=chunk)[34](index=34&type=chunk) - In January 2025, the Board of Directors initiated a comprehensive review of strategic alternatives, which could include a potential sale, merger, or other strategic transaction[32](index=32&type=chunk) [Operations by Segment](index=10&type=section&id=Item%201.%20Business%23Operations) Operations cover Expedited Freight LTL, Omni Logistics global solutions, and Intermodal drayage, each with distinct service models Expedited Freight LTL Network - Average Weekly Volume | Year | Average Weekly Volume in Pounds (In millions) | | :--- | :--- | | 2022 | 54.8 | | 2023 | 52.7 | | 2024 | 54.3 | - In 2024, Expedited Freight's ten largest customers accounted for approximately **27% of its revenue**, with no single customer exceeding **10%**[50](index=50&type=chunk) - In 2024, Omni Logistics' ten largest customers accounted for approximately **41% of its revenue**, with the top two customers representing **14%** and **13%** respectively[55](index=55&type=chunk) - The Intermodal segment's transportation capacity in 2024 was sourced from Leased Capacity Providers (**62.1%**), Company-employed drivers (**33.5%**), and third-party motor carriers (**4.4%**)[60](index=60&type=chunk) [Workforce and Sustainability](index=15&type=section&id=Item%201.%20Business%23Workforce%20and%20Sustainability) The company employs 6,319 full-time staff, none unionized, and pursues an ESG strategy focused on people, customers, and environment - As of December 31, 2024, the company employed **6,319 full-time** and **267 part-time employees**, none of whom were covered by a collective bargaining agreement[71](index=71&type=chunk) - The company has established a preliminary goal to reduce absolute Scope 1 and Scope 2 GHG emissions by **2030** from a **2021 base year** and is updating its ESG roadmap to align with the newly combined operations with Omni Logistics[96](index=96&type=chunk) - The company supports veteran-related causes through its charitable organization, Operation: Forward Freedom, raising **$350,000** for Hope for the Warriors in 2024[89](index=89&type=chunk) [Risk Management and Regulation](index=19&type=section&id=Item%201.%20Business%23Risk%20Management%20and%20Regulation) Risk management involves self-insurance for liabilities and compliance with extensive U.S. and international transportation regulations Vehicle Liability Insurance Risk Retention (Policy Term 10/1/2024 to 10/1/2025) | Business/Layer | Risk Retention | Frequency | Layer | | :--- | :--- | :--- | :--- | | LTL business | $5,000 (in thousands) | Occurrence/Accident | $0 to $5,000 | | Truckload business | $5,000 (in thousands) | Occurrence/Accident | $0 to $5,000 | | Intermodal | $1,000 (in thousands) | Occurrence/Accident | $0 to $1,000 | | LTL, Truckload and Intermodal | $5,000 (in thousands) | Policy Term Aggregate | $5,000 to $10,000 | - The company maintains workers' compensation insurance with a self-insured retention of **$500,000 per occurrence**[101](index=101&type=chunk) - The business is regulated by various U.S. agencies, including the DOT, FMCSA, EPA, and OSHA, and is subject to international laws such as the Foreign Corrupt Practices Act (FCPA) for its global operations[103](index=103&type=chunk)[106](index=106&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces diverse risks including economic sensitivity, Omni acquisition integration, substantial debt, cybersecurity threats, and regulatory compliance [Risks Relating to Our Business and Operations](index=21&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Relating%20to%20Our%20Business%20and%20Operations) Operational risks include economic sensitivity, fuel price volatility, competition, capacity retention, customer concentration, and strategic review uncertainty - The business is sensitive to economic conditions that impact freight volumes, pricing, and customer solvency, with profitability vulnerable to volume declines due to a significant portion of fixed costs[112](index=112&type=chunk)[113](index=113&type=chunk)[127](index=127&type=chunk) - The top ten customers accounted for approximately **24% of revenue in 2024**, creating a concentration risk[135](index=135&type=chunk) - The Board initiated a review of strategic alternatives in January 2025, creating uncertainty that could affect the business, personnel, and customer retention[133](index=133&type=chunk) [Risks Relating to Omni Acquisition](index=31&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Relating%20to%20Omni%20Acquisition) Omni acquisition risks include integration failure, high costs, Up-C structure complexities, and a material weakness in internal financial controls - The company may not realize the anticipated benefits and synergies from the Omni Acquisition due to integration challenges, potential loss of customers or key employees, and unexpected costs[117](index=117&type=chunk)[118](index=118&type=chunk) - A material weakness in internal control over financial reporting was identified related to the accounting for the Omni business combination, its related income taxes, and the impairment process[168](index=168&type=chunk) - The company is obligated to pay Omni Holders **83.5%** of certain tax savings it may realize under a Tax Receivable Agreement, and these payments are expected to be substantial[174](index=174&type=chunk) [Risks Relating to our Indebtedness](index=33&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Relating%20to%20our%20Indebtedness) Significant post-Omni acquisition debt, including **$725 million** in notes and **$1.045 billion** in term loans, increases financial vulnerability and limits flexibility - In connection with the Omni Acquisition, the company's debt consists of **$725 million** in senior secured notes and **$1,045 million** in senior secured term loans[176](index=176&type=chunk) - The substantial debt could increase vulnerability to adverse economic conditions, limit flexibility, and require significant cash flow for payments, reducing availability for other business needs[177](index=177&type=chunk)[181](index=181&type=chunk) [Risks Relating to Regulatory Environment](index=37&type=section&id=Item%201A.%20Risk%20Factors%23Risks%20Relating%20to%20Regulatory%20Environment) Regulatory risks include potential reclassification of independent contractors, significant self-insured liabilities, and compliance with extensive domestic and international laws - A determination by regulators that Leased Capacity Providers are employees rather than independent contractors, under rules like California's AB5, could expose the company to significant liabilities and increased ongoing expenses[192](index=192&type=chunk)[193](index=193&type=chunk) - The company self-insures a significant portion of its claims exposure for vehicle liability, workers' compensation, and cargo loss, making earnings volatile and subject to rising insurance costs[198](index=198&type=chunk)[199](index=199&type=chunk) - The FMCSA's Compliance, Safety, Accountability (CSA) program could adversely impact the ability to hire qualified drivers or contract with carriers if safety scores are poor, potentially harming customer relationships and growth[205](index=205&type=chunk) [Item 1B. Unresolved Staff Comments](index=42&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments - None[216](index=216&type=chunk) [Item 1C. Cybersecurity](index=43&type=section&id=Item%201C.%20Cybersecurity) The company maintains a comprehensive cybersecurity program with Board oversight, CISO-led management, and a focus on technical safeguards and incident response - The Board of Directors has ultimate oversight for cybersecurity, delegating monitoring responsibility to the Audit Committee, with Casey O'Malley serving as the Chief Information Security Officer (CISO)[222](index=222&type=chunk) - The cybersecurity program includes technical safeguards (firewalls, encryption, MFA), a dedicated Incident Response Team, third-party risk management, and regular employee training[219](index=219&type=chunk) - Cyber incidents are evaluated for materiality based on financial impact, reputational damage, regulatory compliance concerns, and operational disruption to determine appropriate disclosure[221](index=221&type=chunk) [Item 2. Properties](index=45&type=section&id=Item%202.%20Properties) The company's headquarters are in Greenville, TN, with 259 properties, 6 owned and 253 leased, deemed adequate for current operations Principal Facilities as of December 31, 2024 | Location | Segment | Approximate Square Feet | | :--- | :--- | :--- | | Atlanta, GA | Expedited Freight | 152,000 | | Chicago, IL | Expedited Freight | 125,000 | | Dallas, TX | Expedited Freight | 223,000 | | Euless, TX | Omni Logistics | 367,000 | | Los Angeles, CA | Expedited Freight | 300,000 | | Pico Rivera, CA | Omni Logistics | 203,000 | | South Brunswick, NJ | Omni Logistics | 294,000 | | Taipei, Taiwan | Omni Logistics | 432,000 | | Hong Kong, China | Omni Logistics | 360,000 | [Item 3. Legal Proceedings](index=45&type=section&id=Item%203.%20Legal%20Proceedings) The company is defending a shareholder lawsuit challenging the lack of a shareholder vote on the Omni Acquisition and alleging fiduciary duty breaches - A shareholder complaint filed in September 2023, and subsequently amended, challenges the company's and directors' determination not to subject the Omni Acquisition to a shareholder vote, alleging violations of Tennessee corporate law and breaches of fiduciary duty[225](index=225&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[226](index=226&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities](index=46&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Forward Air's common stock trades on Nasdaq, with no dividends paid in FY2024 or anticipated, and no share repurchases in Q4 2024 - The company did not declare or pay any cash dividends on its Common Stock during fiscal year 2024 and does not anticipate paying any in the foreseeable future[229](index=229&type=chunk) - The company did not repurchase any of its equity securities during the three months ended December 31, 2024[231](index=231&type=chunk) Cumulative Shareholder Return Comparison (2019-2024) | Year | Forward Air Corporation | Nasdaq Trucking and Transportation Stocks Index | Nasdaq Global Select Stock Market Index | | :--- | :--- | :--- | :--- | | 2019 | $100 | $100 | $100 | | 2020 | $110 | $100 | $137 | | 2021 | $173 | $121 | $169 | | 2022 | $150 | $97 | $114 | | 2023 | $90 | $120 | $165 | | 2024 | $46 | $127 | $213 | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=48&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2024 results show revenue growth to **$2.47 billion** driven by Omni, but a **$1.12 billion** net loss due to a **$1.03 billion** goodwill impairment and increased expenses [Results of Operations (FY 2024 vs FY 2023)](index=52&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results%20of%20Operations) FY2024 consolidated operating revenue increased **80.5%** to **$2.47 billion**, but a **$1.03 billion** goodwill impairment led to a **$1.06 billion** loss from continuing operations Consolidated Results of Operations (in thousands) | Metric | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | | Operating revenue | $2,474,262 | $1,370,735 | 80.5% | | Total operating expenses | $3,537,198 | $1,282,525 | 175.8% | | Impairment of goodwill | $1,028,397 | $0 | N/A | | Income (loss) from continuing operations | ($1,062,936) | $88,210 | (1,305.0)% | | Net (loss) income attributable to Forward Air | ($816,969) | $167,351 | (588.2)% | - The increase in operating revenue was primarily due to the inclusion of **$1,196,841** from the newly acquired Omni Logistics segment[265](index=265&type=chunk) - The increase in operating expenses was primarily due to **$2,241,644** in expenses from the Omni segment, which includes a goodwill impairment charge of **$1,028,397**[266](index=266&type=chunk) [Segment Performance](index=54&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Segment%20Performance) Expedited Freight operating income declined **41.4%**, Intermodal income fell **25.3%**, and Omni Logistics reported a **$1.04 billion** operating loss primarily due to goodwill impairment Expedited Freight Segment Performance (in thousands) | Metric | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | | Total operating revenue | $1,115,163 | $1,096,958 | 1.7% | | Income from operations | $67,951 | $116,040 | (41.4)% | Intermodal Segment Performance (in thousands) | Metric | FY 2024 | FY 2023 | % Change | | :--- | :--- | :--- | :--- | | Operating revenue | $232,832 | $274,043 | (15.0)% | | Income from operations | $18,925 | $25,327 | (25.3)% | | Drayage shipments | 254,072 | 274,997 | (7.6)% | - The Omni Logistics segment reported an operating loss of **$1,044.8 million** for the period from January 25, 2024, to December 31, 2024, which included a goodwill impairment charge of **$1,028.4 million**[263](index=263&type=chunk)[267](index=267&type=chunk) [Liquidity and Capital Resources](index=63&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) Liquidity is supported by operations and credit, but the Omni acquisition added **$1.68 billion** in debt, leading to **$69.0 million** cash used in operations in FY2024 Summary of Cash Flows (in thousands) | Cash Flow Activity (Continuing Operations) | FY 2024 | FY 2023 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($69,015) | $199,212 | | Net cash used in investing activities | ($1,608,586) | ($83,687) | | Net cash (used in) provided by financing activities | ($163,832) | $1,790,726 | - To finance the Omni Acquisition, the company incurred significant indebtedness, including **$725 million** in **9.5%** senior secured notes due 2031 and a **$1.125 billion** senior secured term loan facility (subsequently reduced)[313](index=313&type=chunk)[315](index=315&type=chunk) - The company entered into a Tax Receivable Agreement (TRA) obligating it to pay certain former Omni holders **83.5%** of specific tax benefits realized, which could be substantial future payments[321](index=321&type=chunk) [Critical Accounting Policies and Estimates](index=60&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment for self-insurance reserves, business combinations, and the complex Tax Receivable Agreement liability - A goodwill impairment charge of **$1,028.4 million** was recorded for the Omni reporting unit in 2024, primarily due to a decrease in the company's market value and uncertainty following the acquisition[304](index=304&type=chunk) - As of December 31, 2024, self-insurance loss reserves were **$65.1 million**, determined through an estimation process involving actuarial analysis and significant judgments[298](index=298&type=chunk)[300](index=300&type=chunk) - The company recorded a Tax Receivable Agreement (TRA) liability of **$13.3 million** as of December 31, 2024, but no additional TRA liability was recorded for benefits generated in 2024 due to a valuation allowance against related deferred tax assets, as future taxable income is not considered probable[308](index=308&type=chunk)[537](index=537&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=66&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Primary market risks include interest rate fluctuations on the Revolving Credit Facility and fuel price volatility, mitigated by a surcharge program - The company's main market risks are changes in interest rates and fuel prices[327](index=327&type=chunk) - A hypothetical **150 basis point** increase in the Revolving Credit Facility borrowing rate would increase annual interest expense by approximately **$1,627 thousand**[327](index=327&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=66&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This item presents the company's audited consolidated financial statements and supplementary data as a separate section of the Form 10-K [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=66&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[330](index=330&type=chunk) [Item 9A. Controls and Procedures](index=66&type=section&id=Item%209A.%20Controls%20and%20Procedures) Disclosure controls were ineffective as of December 31, 2024, due to a material weakness in internal controls related to Omni acquisition accounting, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024[331](index=331&type=chunk) - A material weakness was identified in internal controls over financial reporting due to complexities in accounting for the Omni acquisition, specifically related to the business combination, income taxes, and the impairment process[338](index=338&type=chunk)[345](index=345&type=chunk) - The company's remediation plan includes enhancing the finance team's skill set, engaging qualified external experts for complex matters, and implementing more timely and enhanced review procedures[340](index=340&type=chunk) - The independent registered public accounting firm, Ernst & Young LLP, issued an adverse opinion on the company's internal control over financial reporting as of December 31, 2024[344](index=344&type=chunk)[382](index=382&type=chunk) [Item 9B. Other Information](index=70&type=section&id=Item%209B.%20Other%20Information) No director or officer adopted or terminated Rule 10b5-1 trading agreements during the fourth quarter of 2024 - No director or officer adopted or terminated a Rule 10b5-1 trading agreement during the quarter ended December 31, 2024[355](index=355&type=chunk) Part III [Item 10. Directors, Executive Officers and Corporate Governance](index=70&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement [Item 11. Executive Compensation](index=70&type=section&id=Item%2011.%20Executive%20Compensation) Information on executive compensation is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters](index=70&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Shareholder%20Matters) Information on security ownership is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=70&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement [Item 14. Principal Accounting Fees and Services](index=70&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information on principal accounting fees and services is incorporated by reference from the 2025 Annual Meeting of Shareholders proxy statement Part IV [Item 15. Exhibits, Financial Statement Schedules](index=70&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists the financial statements, schedules, and exhibits filed as part of the Form 10-K, including audited consolidated financial statements and notes [Financial Statements](index=77&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules%23Financial%20Statements) Audited FY2024 financial statements show total assets of **$2.80 billion**, a **$1.13 billion** net loss due to goodwill impairment, and **$1.68 billion** in long-term debt Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $472,500 | $347,020 | | Goodwill | $522,712 | $278,706 | | Other acquired intangibles, net | $999,216 | $134,781 | | Total assets | $2,802,641 | $2,979,533 | | Total current liabilities | $384,046 | $237,097 | | Long-term debt, less current portion | $1,675,930 | $0 | | Total liabilities | $2,516,773 | $2,215,268 | | Total shareholders' equity | $285,868 | $764,265 | Consolidated Statement of Comprehensive (Loss) Income (in thousands) | Account | FY 2024 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Operating revenue | $2,474,262 | $1,370,735 | $1,679,634 | | Income (loss) from continuing operations | ($1,062,936) | $88,210 | $247,591 | | Net (loss) income | ($1,131,228) | $167,351 | $193,191 | | Net (loss) income attributable to Forward Air | ($816,969) | $167,351 | $193,191 | | Diluted net (loss) income per share | ($30.63) | $6.40 | $7.14 | [Notes to Financial Statements](index=89&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules%23Notes%20to%20Financial%20Statements) Notes detail the Omni acquisition's **$2.27 billion** purchase price and **$1.03 billion** goodwill impairment, new debt structure, and income tax provisions - The Omni acquisition was completed on Jan 25, 2024, for a total purchase price of **$2.27 billion**, consisting of cash, stock, and liabilities assumed under the Tax Receivable Agreement, initially adding **$1.27 billion** to goodwill[469](index=469&type=chunk)[479](index=479&type=chunk) - A goodwill impairment charge of **$1,028.4 million** related to the Omni reporting unit was recorded in 2024[432](index=432&type=chunk)[434](index=434&type=chunk) - As of Dec 31, 2024, the company had **$1.68 billion** in long-term debt, consisting of a **$1.045 billion** term loan and **$725 million** in senior secured notes, incurred to finance the Omni acquisition[485](index=485&type=chunk) - A valuation allowance of **$72.5 million** was recorded against deferred tax assets as of Dec 31, 2024, as it was determined more likely than not that some portion of these assets will not be realized[532](index=532&type=chunk)

4Q24 Earnings Presentation Statements & Disclaimers Forward Looking Statements This presentation 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. Forward-looki ...

Financial Data and Key Metrics Changes - For the full year 2024, the company reported consolidated EBITDA of $308 million, near the top of the guidance range of $300 million to $310 million [12] - Revenue for Q4 2024 was $633 million, an 87% increase compared to the same quarter of the previous year, largely driven by the Omni transaction [28] - Consolidated income from continuing operations for Q4 was $76 million, which included a goodwill impairment adjustment of $79 million related to the Omni Logistics segment [33][34] - Consolidated EBITDA for Q4 was $69 million, representing an 11% margin [35] Business Line Data and Key Metrics Changes - Revenue in the Expedited Freight segment decreased by $13 million or 4.7% to $266 million compared to the previous year's quarter, primarily due to a 5.8% decline in revenue per hundredweight [30] - The Intermodal segment's revenue remained flat at $60 million compared to Q4 2023, with a 3.2% increase in revenue per shipment offset by a 2.8% decrease in the number of trade shipments [32] - Omni Logistics generated $326 million in revenue for Q4, but saw a sequential decrease of $9 million or 2.7% compared to Q3 2024 [33] Market Data and Key Metrics Changes - The company noted a prolonged slowdown in the freight environment, impacting the LTL market and contributing to a decrease in volume across segments [22] - The pricing strategy shift from density-rated tariffs to class-based tariffs has affected profitability, with corrective pricing actions implemented in Q4 expected to yield improvements in Q1 2025 [26][81] Company Strategy and Development Direction - The company is focused on driving profitable long-term growth by expanding synergistic service offerings and rationalizing IT systems to improve data quality and decision-making [18][20] - A global shared services organization is being established to assist in integrating and managing back-office operations [18] - The company aims to shed poorly priced freight and improve yield through a revised pricing strategy [26][100] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy and enhance shareholder value, despite the challenges faced in 2024 [49] - The company anticipates that the foundational changes made in 2024 will benefit performance in 2025 and beyond [17] - Management acknowledged the importance of maintaining high service levels to drive customer retention and growth [23] Other Important Information - The company successfully delivered on targeted integration synergies and cost savings of $75 million, with total annualized savings exceeding $100 million [15][16] - The company ended Q4 with $382 million in liquidity, including $105 million in cash and $277 million available under the revolver [40] Q&A Session Summary Question: Impact of tariff and trade disruptions at Omni - Management indicated that while it is difficult to project the impact of tariffs on freight volumes, they do not foresee a major risk to the business from current trade dynamics [54][55] Question: Competition and market dynamics - Management acknowledged the presence of competitors but emphasized the company's focus on differentiation through technology and service quality [58] Question: Cash flow and balance sheet outlook - Management expressed optimism about becoming cash flow positive, especially after overcoming transaction expenses and legacy costs [63] Question: Drivers of Omni business performance - Management noted an increase in air and ocean volumes, supported by strong warehouse operations, despite a soft pricing environment [92][93] Question: Future pricing strategy and volume expectations - Management expects to see yield improvements while shedding unprofitable volume, indicating a focus on maintaining margins even in a challenging volume environment [100][101]

Forward Air (FWRD) Q4 2024 Earnings Call February 27, 2025 03:46 AM ET Company Participants Tony Carreño - Head Of Investor RelationsShawn Stewart - CEOJamie Pierson - Chief Financial OfficerAndrew Cox - Research Associate Conference Call Participants Bascome Majors - Senior Equity Research AnalystNone - AnalystChristopher Kuhn - Senior Analyst Operator Welcome to the Forward Air Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. At this time, all participants have been I would now li ...

Financial Guidance - The Company reaffirmed its previously issued financial guidance for the fiscal year ended December 31, 2024[9]. Credit Agreement Amendments - Amendment No. 3 to the Credit Agreement increases the maximum consolidated first lien net leverage ratio to 6.75:1.00 for the quarters ending December 31, 2024, through September 30, 2025[11]. - The revolving credit commitments under the Credit Agreement are reduced from $340 million to $300 million, with a potential further reduction to $250 million if the leverage ratio exceeds 6.50:1.00[11]. - An anti-cash hoarding covenant will require the Borrower to prepay revolving credit loans if unrestricted cash exceeds $120 million at the end of any month[11]. - The financial performance covenant has been modified to allow for greater leverage during the specified period[11]. - The Company plans to restrict certain payments unless its consolidated total net leverage ratio is below 4.00:1.00[11]. Strategic Initiatives - The Company is implementing the initial phase of its transformation strategy to maximize shareholder value[12]. - The Company aims to provide additional financial flexibility to fund future growth opportunities in support of its long-term strategy[6]. - The Company is exploring strategic alternatives to enhance shareholder value[12]. Financial Advisory Services - The financial institutions involved in the Credit Agreement may perform various financial advisory services for the Company, receiving customary fees[7].

Financial Performance - The company reported operating revenue of $334.5 million for the three months ended September 30, 2024, with total operating expenses of $333.4 million, resulting in income from operations of $1.1 million, representing 0.3% of revenue [133]. - For the nine months ended September 30, 2024, the company achieved operating revenue of $871.2 million, while total operating expenses amounted to $2.0 billion, leading to a loss from operations of $1.1 billion, which is (130.1)% of revenue [135]. - Operating revenues increased by $314,961, or 92.4%, to $655,937 for the three months ended September 30, 2024, compared to $340,976 for the same period in 2023 [140]. - Operating expenses rose by $303,953, or 92.3%, to $633,240 for the three months ended September 30, 2024, primarily due to the inclusion of $333,402 from the Omni Logistics segment [141]. - Income from operations decreased by $11,008, or 94.2%, resulting in a loss of $22,697 for the three months ended September 30, 2024, compared to income of $11,689 for the same period in 2023 [142]. - Operating revenues increased by $809,109, or 78.4%, to $1,841,416 for the nine months ended September 30, 2024, compared to $1,032,307 for the same period in 2023 [175]. - Loss from operations was $1,138,791 for the nine months ended September 30, 2024, a change of $1,224,001 from income of $85,210 in the same period in 2023, driven mainly by the Omni Logistics segment [177]. - Net loss attributable to Forward Air was $780,553 for the nine months ended September 30, 2024, compared to net income of $65,607 for the same period in 2023, reflecting a decrease of $846,160 [180]. Segment Performance - The Omni Logistics segment contributed $871,232 to operating revenues, while the Expedited Freight segment saw an increase of $31,396, offset by a decrease of $41,600 in the Intermodal segment [175]. - Expedited Freight operating revenues increased by $5,832, or 2.1%, to $284,707 for the three months ended September 30, 2024, primarily due to increased Truckload revenue [151]. - Truckload revenue increased by $4,835, or 12.5%, driven by higher customer demand compared to the same period in 2023 [147]. - Intermodal operating revenues decreased by $4,771, or 7.7%, to $57,412 for the three months ended September 30, 2024, from $62,183 for the same period in 2023 [164]. - Intermodal income from operations decreased by $653, or 13.8%, to $4,091 for the three months ended September 30, 2024, compared to $4,744 for the same period in 2023 [171]. - Expedited Freight purchased transportation increased by $10,185, or 7.8%, to $140,035 for the three months ended September 30, 2024, compared to $129,850 for the same period in 2023 [152]. - Intermodal operating revenues decreased by $41,600, or 19.4%, to $173,003, primarily due to a 9.1% decrease in drayage shipments [199]. Expenses and Costs - Interest expense increased significantly to $52,770 for the three months ended September 30, 2024, compared to $2,655 for the same period in 2023, due to higher borrowings and increased interest rates [143]. - Operating expenses rose by $2,033,110, or 214.7%, to $2,980,207 for the nine months ended September 30, 2024, primarily due to $2,004,555 in expenses from the Omni Logistics segment, including a goodwill impairment charge of $1,107,465 [176]. - The average interest rate on outstanding borrowings rose to 9.56% for the three months ended September 30, 2024, compared to 6.62% for the same period in 2023 [143]. - Salaries, wages, and employee benefits for Expedited Freight rose by $2,744, or 4.8%, to $59,426 for the three months ended September 30, 2024, from $56,682 in the same period in 2023 [153]. - Depreciation and amortization for Expedited Freight increased by $1,459, or 16.2%, to $10,481 for the three months ended September 30, 2024, from $9,022 in the same period in 2023 [155]. - Insurance and claims for Expedited Freight increased by $2,139, or 22.4%, to $11,672 for the three months ended September 30, 2024, compared to $9,533 for the same period in 2023 [156]. Acquisitions and Goodwill - The company completed the Omni Acquisition on January 25, 2024, for a total consideration of approximately $100.5 million in cash and stock [130]. - The Omni Acquisition had a preliminary purchase price of $2,313,653, with $1,565,242 paid in cash [229]. - The company recorded goodwill impairment charges totaling $1,092,714 million related to the Omni Logistics reporting unit due to a decrease in market value and other factors [213]. - Cumulative goodwill impairment through the nine months ended September 30, 2024, is $1,107,465 million [213]. - The company is obligated to pay certain Omni Holders 83.5% of the total tax benefit realized from the Omni Acquisition under the Tax Receivable Agreement [225]. Cash Flow and Financing - Net cash used in operating activities of continuing operations was $45,770 million for the nine months ended September 30, 2024, compared to net cash provided of $142,120 million for the same period in 2023 [228]. - Net cash used in investing activities for the nine months ended September 30, 2024, was $1,592,878, significantly higher than $75,508 for the same period in 2023 [229]. - Net cash used in financing activities for continuing operations was $169,394 for the nine months ended September 30, 2024, up from $93,591 in 2023 [230]. - The company launched a private offering of $725,000 million aggregate principal amount of senior secured notes to finance the Omni Acquisition [217]. - The company has a New Term Loan with an aggregate principal amount of $400,000, bearing interest based on SOFR plus an applicable margin [219]. Market Conditions and Risks - The economic environment remains uncertain, with inflation and high interest rates impacting demand for transportation services, leading to declines in rates [127]. - The company anticipates challenges such as economic factors, competition, and operational efficiencies that may affect future results [237]. - As of the first quarter of 2024, there were no material changes in the company's exposure to market risk [239].

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $656 million, representing a 92% or $315 million increase compared to the same quarter last year, largely driven by the Omni acquisition [23] - Consolidated EBITDA for the quarter was $77 million, down from $81 million in Q2 2024, primarily due to challenges in the expedited segment [28][29] - Cash provided by operating activities improved to $53 million from a loss of $45 million in the previous quarter, with total cash at the end of the quarter reaching $138 million [30][31] Business Line Data and Key Metrics Changes - Revenue from the Expedited segment increased by $6 million or 2% to $285 million, driven by a 4.5% increase in weight per shipment, but offset by a 3.8% decrease in revenue per hundredweight [25] - Intermodal revenue decreased by $5 million or 8% to $57 million, primarily due to an 8.7% reduction in shipments as customers diverted freight ahead of a potential strike [26] - Omni segment revenue was $335 million, with a sequential increase of $23 million or 7% compared to Q2 2024 [27] Market Data and Key Metrics Changes - The broader transportation market remains challenging, with demand for services under pressure, but the company is preparing for future demand normalization [13] - The company opened a new warehouse and freight station in Miami, enhancing its logistics capabilities in Latin America [17][18] Company Strategy and Development Direction - The company aims to transform into a unified logistics provider, integrating various services from international freight forwarding to domestic expedited LTL ground service [10][12] - A transformation management office has been established to oversee the integration and rationalization of IT systems, aiming for a vertically integrated company [12][14] - The company is focused on maintaining best-in-class customer service while addressing pricing strategies to improve profitability [11][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving $75 million in annualized savings from the integration, tracking ahead of plan [32] - The company updated its full-year 2024 consolidated EBITDA guidance to a range of $300 million to $310 million, citing a muted macro environment [38] - Management sees more opportunities than risks ahead, despite the current challenges in the market [38] Other Important Information - The company appointed Jerome Lorrain to the Board of Directors, bringing over 30 years of experience in logistics and transportation [39] - The company is actively analyzing potential sales of non-core assets from the Omni acquisition but has not made any decisions yet [43][44] Q&A Session Summary Question: Updates on potential sale of individual pieces given current liquidity position - Management is still in the analysis phase regarding potential sales of non-core assets and will announce any decisions when appropriate [43][44] Question: Yield progression in network LTL and unwinding class-based freight program - Management is adjusting pricing to reflect the quality of service provided, moving away from traditional LTL pricing [45][46] Question: Trends in various segments and customer behavior - Management noted that while overall volume demand is down, the need for premium expedited services remains strong [52] Question: Fourth quarter EBITDA ramp and seasonality - The expected increase in EBITDA for Q4 is attributed to normal seasonal trends rather than unique factors [58] Question: Monthly tonnage trends and October updates - Management does not provide intra-quarter guidance but emphasizes the importance of completing the integration and transformation [80]

Company Overview - Forward Air (FWRD) shares increased by 6.2% to $40.16, with a higher-than-average trading volume, compared to a 3.8% gain over the past four weeks [1] - The rise in share price is attributed to reports that Forward Air has engaged two prominent investment bankers to explore the sale of the company, following pressure from shareholders like Alta Fox [1] Financial Performance - Forward Air is expected to report a quarterly loss of $0.05 per share, reflecting a year-over-year decline of 105.1%, while revenues are projected to be $656.07 million, an increase of 58.7% from the previous year [2] - The consensus EPS estimate for Forward Air has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [2] Industry Context - Forward Air operates within the Zacks Transportation - Truck industry, where another company, Werner Enterprises (WERN), saw a 1.5% decline in its stock price, closing at $37.44, with a return of 1.3% over the past month [2] - Werner's consensus EPS estimate has decreased by 11.3% over the past month to $0.22, representing a year-over-year change of -47.6% [3]

Core Viewpoint - An activist investor, Alta Fox, is advocating for the outright sale of Forward Air, which has led to a significant increase in the company's stock price by over 6% amid broader market declines [1][2]. Group 1: Activist Investor's Influence - Alta Fox holds a small 3% stake in Forward Air and has called for a change in ownership, specifically urging for a sale of the business [2]. - The activist investor criticized Forward Air's management for ignoring shareholder interests and emphasized the need for a formal sales process to maximize shareholder value [3]. - Alta Fox claims that other investors owning approximately 25% of Forward Air support exploring strategic alternatives, which often indicates a potential sale [3]. Group 2: Company Response - Forward Air responded to the activist's letter with a neutral statement, indicating that the refreshed Board and management are analyzing the business strategy to enhance shareholder value [5]. - The company has faced scrutiny regarding its recent acquisition of Omni Logistics, which has reportedly strained its finances [4].

Group 1: Ancora's Activism and Investment Strategy - Ancora is a family wealth investment advisory firm with $9.5 billion in assets under management, focusing on activist efforts in niche areas like banks and closed-end funds [1] - The firm has shifted its tactics from primarily targeting micro-cap companies to taking sub-5% stakes in larger companies in recent years [1][3] - Ancora's previous campaign at Forward Air resulted in a 58.63% return on investment, significantly outperforming the Russell 2000 [3] Group 2: Forward Air's Business and Recent Developments - Forward Air is an asset-light transportation company, with 80% of its profits generated from its core Expedited LTL business in 2023 [2] - The company announced an acquisition of Omni Logistics at a high multiple, which led to a decline in its stock price [4] - Ancora opposed the Omni deal, viewing it as a means for management entrenchment and excessive compensation [4] Group 3: Current Situation and Future Outlook - By late 2023, Forward Air's stock price had dropped significantly, with Ancora re-establishing itself as a top shareholder [4] - Ancora is advocating for the sale of Forward Air, citing the need for operational restructuring and a reduction of its over-levered balance sheet [5][6] - The involvement of private equity firm Clearlake Capital, which holds a 13.8% stake, suggests potential strategic alternatives for Forward Air [6][7]