Forward Air(US:FWRD)2024-11-08 21:08Financial 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].