Forward Air(FWRD) - 2025 Q2 - Quarterly Report

Part I: Financial Information This section presents unaudited financial statements and management's analysis of financial condition and operations Item 1. Financial Statements (Unaudited) This section presents Forward Air Corporation's unaudited condensed consolidated financial statements and related notes Condensed Consolidated Balance Sheets This section provides a comparative overview of the company's financial position at two key dates Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | Percent Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------------- | | Total assets | $2,761,235 | $2,802,641 | $(41,406) | (1.5)% | | Total liabilities | $2,544,994 | $2,516,773 | $28,221 | 1.1% | | Total shareholders' equity | $216,241 | $285,868 | $(69,627) | (24.4)% | | Cash and cash equivalents | $95,128 | $104,903 | $(9,775) | (9.3)% | | Accounts receivable, net | $335,716 | $322,291 | $13,425 | 4.2% | | Long-term debt, less current portion | $1,681,468 | $1,675,930 | $5,538 | 0.3% | Condensed Consolidated Statements of Comprehensive Loss (Three Months) This section details the company's financial performance for the three months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Loss (Three Months Ended June 30, in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Percent Change | | :------------------------------------------ | :-------------------------------------------- | :-------------------------------------------- | :-------------------- | :------------- | | Operating revenue | $618,844 | $643,666 | $(24,822) | (3.9)% | | Total operating expenses | $599,322 | $1,739,421 | $(1,140,099) | (65.5)% | | Income (loss) from continuing operations | $19,522 | $(1,095,755) | $1,115,277 | 101.8% | | Net loss attributable to Forward Air | $(12,583) | $(645,433) | $632,850 | 98.1% | | Basic and diluted net loss per share | $(0.41) | $(23.47) | $23.06 | 98.2% | - The significant decrease in total operating expenses and improvement in income (loss) from continuing operations and net loss attributable to Forward Air for the three months ended June 30, 2025, compared to the same period in 2024, was primarily due to the absence of a $1.09 billion goodwill impairment charge incurred in the prior year period[14][108][109] Condensed Consolidated Statements of Comprehensive Loss (Six Months) This section details the company's financial performance for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Loss (Six Months Ended June 30, in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | Percent Change | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | :------------- | | Operating revenues | $1,232,125 | $1,185,479 | $46,646 | 3.9% | | Total operating expenses | $1,207,840 | $2,346,966 | $(1,139,126) | (48.5)% | | Income (loss) from continuing operations | $24,285 | $(1,161,487) | $1,185,772 | 102.1% | | Net loss attributable to Forward Air | $(63,220) | $(707,145) | $643,925 | 91.1% | | Basic and diluted loss per share | $(2.09) | $(27.71) | $25.62 | 92.4% | - Similar to the three-month period, the substantial improvement in operating expenses and net loss for the six months ended June 30, 2025, was primarily due to the absence of the $1.09 billion goodwill impairment charge recorded in the prior year[16][140][141] Condensed Consolidated Statements of Cash Flows This section outlines the company's cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 (in thousands) | Six Months Ended June 30, 2024 (in thousands) | Change (in thousands) | | :------------------------------------------ | :------------------------------------------ | :------------------------------------------ | :-------------------- | | Net cash provided by (used in) operating activities of continuing operations | $14,398 | $(96,924) | $111,322 | | Net cash used in investing activities of continuing operations | $(15,124) | $(1,583,406) | $1,568,282 | | Net cash used in financing activities of continuing operations | $(9,943) | $(162,957) | $153,014 | | Net decrease in cash and cash equivalents and restricted cash | $(9,959) | $(1,847,418) | $1,837,459 | | Cash and cash equivalents, and restricted cash at end of period | $95,307 | $104,655 | $(9,348) | - Net cash provided by operating activities significantly improved in 2025, primarily due to changes in net income after non-cash items and adjustments in accounts receivable and other assets/liabilities[177][178][179] - Investing activities saw a substantial decrease in cash used, mainly because the prior year included a large cash outflow for the Omni Acquisition[177][178][179] - Financing activities also used less cash in 2025 due to the absence of debt issuance costs and earn-out liability payments from the prior year[177][178][179] Condensed Consolidated Statements of Shareholders' Equity This section presents changes in the company's equity components over the six-month period Condensed Consolidated Statements of Shareholders' Equity (Six Months Ended June 30, in thousands) | Shareholder Equity Component | Balance at Dec 31, 2024 (in thousands) | Balance at June 30, 2025 (in thousands) | Change (in thousands) | | :--------------------------- | :----------------------------------- | :------------------------------------ | :-------------------- | | Common Stock | $298 | $306 | $8 | | Additional Paid-in Capital | $542,392 | $551,845 | $9,453 | | Accumulated Deficit | $(338,230) | $(402,451) | $(64,221) | | Total Forward Air shareholders' equity | $201,728 | $151,794 | $(49,934) | | Noncontrolling interest | $84,140 | $64,447 | $(19,693) | | Total shareholders' equity | $285,868 | $216,241 | $(69,627) | - Total shareholders' equity decreased by $69.6 million from December 31, 2024, to June 30, 2025, primarily driven by an increase in accumulated deficit and a decrease in noncontrolling interest, partially offset by an increase in additional paid-in capital[23] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements 1. Basis of Presentation This note describes the accounting principles and regulatory framework used for interim financial reporting - The condensed consolidated financial statements are prepared in conformity with U.S. GAAP for interim financial information and SEC regulations, reflecting all normal recurring adjustments[25] - ASU 2023-09, effective for fiscal years beginning after December 15, 2024, expands income tax disclosure requirements but is not expected to impact the Company's financial condition or results of operations[26] 2. Acquisitions and Umbrella Partnership C Structure This note details the Omni Acquisition, its strategic rationale, and the resulting partnership structure - On January 25, 2024, Forward Air Corporation completed the acquisition of Omni Newco, LLC (Omni Acquisition) for $1.64 billion in cash and equity consideration[27] - The Omni Acquisition enables the Company to offer differentiated service, an expanded geographic footprint, and integrated global supply chain solutions, with recognized goodwill representing planned operational synergies and strategic market positioning[32] - In connection with the Omni Acquisition, the Company restructured to create Clue Opco, LLC (Opco), a Variable Interest Entity, which the Company consolidates[34][35][36] - A Tax Receivable Agreement was also established, obligating the Company to pay Omni Holders 83.5% of certain tax benefits realized from the acquisition[34][35][36] Omni Logistics Acquisition Purchase Price Allocation (January 26, 2024, in thousands) | Item | Amount (in thousands) | | :------------------------------------ | :-------------------- | | Total purchase price (fair value of consideration) | $2,274,240 | | Total assets acquired | $1,579,213 | | Total liabilities assumed | $577,376 | | Goodwill | $1,272,403 | | Customer relationships (weighted average useful life) | 14 years | | Non-compete agreements (weighted average useful life) | 4 years | | Trademarks and other (weighted average useful life) | 5 years | 3. Indebtedness This note outlines the company's long-term debt structure and available credit facilities Long-term Debt (in thousands) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Term Loan, expiring 2030 | $1,045,000 | $1,045,000 | | Senior Secured Notes, maturing 2031 | $725,000 | $725,000 | | Debt issuance discount | $(50,826) | $(54,067) | | Debt issuance costs | $(37,706) | $(40,003) | | Total long-term debt | $1,681,468 | $1,675,930 | - As of June 30, 2025, the revolving credit facility had $273 million of borrowings available with no outstanding borrowings[48] 4. Net Loss Per Share This note presents the basic and diluted net loss per share attributable to Forward Air Basic and Diluted Net Loss Per Share Attributable to Forward Air (per share) | Period | Continuing Operations (per share) | Discontinued Operations (per share) | Net Loss Per Basic and Diluted Share (per share) | | :-------------------------------- | :-------------------------------- | :---------------------------------- | :----------------------------------------------- | | Three Months Ended June 30, 2025 | $(0.41) | — | $(0.41) | | Three Months Ended June 30, 2024 | $(23.29) | $(0.18) | $(23.47) | | Six Months Ended June 30, 2025 | $(2.09) | — | $(2.09) | | Six Months Ended June 30, 2024 | $(27.53) | $(0.18) | $(27.71) | - The net loss per basic and diluted share significantly improved for both the three and six months ended June 30, 2025, compared to the prior year periods, primarily due to the absence of the goodwill impairment charge[51] 5. Income Taxes This note details the company's income tax benefit/expense, effective tax rate, and deferred tax assets Income Tax (Benefit) Expense and Effective Tax Rate (in thousands) | Period | Income Tax (Benefit) Expense (in thousands) | Effective Tax Rate | | :-------------------------------- | :---------------------------------------- | :----------------- | | Six Months Ended June 30, 2025 | $2,840 | (3.6)% | | Six Months Ended June 30, 2024 | $(193,292) | 15.5% | - The effective tax rate for the six months ended June 30, 2025, was (3.6)%, varying from the 21.0% statutory federal rate due to interest expense disallowances (full valuation allowance), noncontrolling interest, and state/local income taxes[53] - The Tax Receivable Agreement liability was revalued to $14.7 million as of June 30, 2025, an increase of $1.4 million from December 31, 2024, with an additional $5.4 million recorded for tax year 2025 attributes[54][62] - The Company maintains a full valuation allowance against net deferred tax assets, primarily related to interest expense carryforwards, due to uncertainty of recovery from future taxable income[56] 6. Fair Value of Financial Instruments This note describes the fair value measurements for the company's financial instruments Liabilities Under Tax Receivable Agreement (Level 3 Fair Value, in thousands) | Date | Amount | | :--------------- | :----- | | June 30, 2025 | $14,716 | | December 31, 2024 | $13,295 | - The fair value of the Tax Receivable Agreement liability increased by $1.4 million from December 31, 2024, to June 30, 2025, reflecting changes in expected future tax benefit payments to Omni Holders[62] - Cash, cash equivalents, restricted cash, accounts receivable, other receivables, accounts payable, and long-term debt are valued at their carrying amounts, which approximate fair value due to their immediate or short-term maturity or similar borrowing rates[63] 7. Commitments and Contingencies This note outlines ongoing legal proceedings and other contingent liabilities affecting the company - A shareholder class action complaint was filed alleging that the Company's directors violated Tennessee corporate law by not subjecting the Omni Acquisition to a shareholder vote and breached fiduciary duties[65] - The Company is involved in various legal claims incidental to its business, with accruals made for estimated losses, and believes resolutions will not materially adversely affect financial statements[66] 8. Segment Reporting This note provides financial information for the company's three reportable segments: Expedited Freight, Omni Logistics, and Intermodal - The Company operates through three reportable segments: Expedited Freight, Omni Logistics, and Intermodal, with the CEO evaluating performance based on segment profit[67] Segment Profit (Loss) for Three Months Ended June 30 (in thousands) | Segment | June 30, 2025 | June 30, 2024 | Change (in thousands) | Percent Change | | :---------------- | :------------ | :------------ | :-------------------- | :------------- | | Expedited Freight | $19,495 | $21,946 | $(2,451) | (11.2)% | | Omni Logistics | $7,186 | $(1,105,871) | $1,113,057 | 100.6% | | Intermodal | $4,415 | $5,317 | $(902) | (17.0)% | | Corporate | $(11,574) | $(17,147) | $5,573 | (32.5)% | Segment Profit (Loss) for Six Months Ended June 30 (in thousands) | Segment | June 30, 2025 | June 30, 2024 | Change (in thousands) | Percent Change | | :---------------- | :------------ | :------------ | :-------------------- | :------------- | | Expedited Freight | $35,129 | $41,444 | $(6,315) | (15.2)% | | Omni Logistics | $10,561 | $(1,134,456) | $1,145,017 | 100.9% | | Intermodal | $9,957 | $8,903 | $1,054 | 11.8% | | Corporate | $(31,362) | $(77,378) | $46,016 | (59.5)% | - Omni Logistics segment profit significantly improved in both periods due to the absence of the goodwill impairment charge from the prior year[71][73][75][77] 9. Noncontrolling Interest This note details the ownership structure of Opco and the impact of noncontrolling interests on financial results - As of June 30, 2025, the Company holds 30,426 Class A Units in Opco, while Omni Holders hold 9,423 Opco Class B Units and corresponding Company Series B Preferred Units, exchangeable into 9,423 common shares of the Company[81] Opco Class B Units and Fully Diluted Ownership | Period | Opco Class B Units | Fully Diluted Ownership (%) | | :----------------------- | :----------------- | :-------------------------- | | Outstanding at Dec 31, 2024 | 10,088 | 25.3 | | Outstanding at March 31, 2025 | 9,503 | 23.8 | | Outstanding at June 30, 2025 | 9,423 | 23.5 | - The decrease in net loss attributable to noncontrolling interest for both periods is driven by the overall decrease in net loss and the decreasing number of noncontrolling units outstanding due to conversions into common stock[113][145] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition, operational results, and critical accounting policies Overview This section introduces Forward Air Corporation's business model, service offerings, and strategic focus - Forward Air Corporation is a leading asset-light freight provider offering LTL, truckload, and intermodal drayage services across North America, with global logistics solutions through its Omni Logistics segment[84] - The Company's services are classified into three reportable segments: Expedited Freight, Omni Logistics, and Intermodal[85][86][87] - The Company focuses on increasing freight volume and revenue per pound/shipment to leverage fixed costs, grow other services like LTL pickup/delivery, and create synergies across segments, particularly in fleet resources[88] - Estimated revenue for key product groups in 2024 was approximately 70% for ground transportation, 12% for air & ocean forwarding, 9% for intermodal drayage, and 9% for warehousing/value-added services[90] Key Operating Statistics This section defines the primary metrics used to evaluate the performance of the company's operating segments - For Expedited Freight, key metrics include Tonnage (total weight), Weight Per Shipment (mix of freight), Revenue Per Hundredweight (pricing trends, influenced by fuel surcharges and freight profile), Revenue Per Shipment, and Average Length of Haul[92][93][94][95][96] - For Intermodal, the primary metric is Drayage Revenue Per Shipment, which measures intermodal revenue divided by drayage shipments, excluding warehouse and linehaul services[97] - The Omni Logistics segment is managed based on its revenue and income, without specific key operating statistics identified for external reporting[89] Trends and Developments This section discusses economic conditions, regulatory impacts, strategic reviews, and integration progress affecting the company - The business is highly susceptible to economic conditions; industry freight volumes decreased in Q1 and Q2 2025 compared to 2024, with intermodal volumes increasing and truckload spot rates remaining depressed[98][99] - U.S. government tariffs on imported goods from China, Canada, and other countries have impacted freight demand, leading to a decrease in total shipments, with the ultimate impact remaining uncertain[99][100] - In January 2025, the Board initiated a comprehensive review of strategic alternatives to maximize shareholder value, including potential sale or merger, with Goldman Sachs & Co. LLC as financial advisor[101] - Significant progress has been made on Omni integration, exceeding initial cost synergy expectations, though uncertainties remain regarding full integration of technology platforms, maximizing revenue synergies, and retaining customers/vendors[102] Factors Affecting Comparability This section explains how the Omni Acquisition impacts the comparability of financial results between periods - The Omni Acquisition, completed on January 25, 2024, significantly impacts comparability, as Omni Logistics revenues and segment income for the six months ended June 30, 2024, only include results from the acquisition date, whereas the current year period includes more days of ownership[103][104] Results from Operations (Three Months Ended June 30, 2025 vs. 2024) This section analyzes the consolidated financial performance for the three months ended June 30, 2025, compared to the prior year Consolidated Financial Data (Three Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :------------------------------------------ | :------------ | :------------ | :------- | :------------- | | Operating revenues | $618,844 | $643,666 | $(24,822) | (3.9)% | | Total operating expenses | $599,322 | $1,739,421 | $(1,140,099) | (65.5)% | | Income (loss) from continuing operations | $19,522 | $(1,095,755) | $1,115,277 | 101.8% | | Net loss attributable to Forward Air | $(12,583) | $(645,433) | $632,850 | 98.1% | - Operating revenues decreased by 3.9% due to a decline in the Expedited Freight segment, while total operating expenses decreased significantly by 65.5%, primarily due to the absence of a $1.09 billion goodwill impairment charge in the current period[107][108] - Income from continuing operations improved by 101.8%, and net loss attributable to Forward Air decreased by 98.1%, both largely driven by the non-recurrence of the goodwill impairment[109][112] - Total other expense increased by 24.0% due to a $6.86 million charge from the tax receivable agreement liability increase and a $6.22 million negative impact from foreign currency exchange[110] Expedited Freight (Three Months Ended June 30, 2025 vs. 2024) This section analyzes the Expedited Freight segment's performance for the three months ended June 30, 2025, compared to the prior year Expedited Freight Segment Performance (Three Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :-------------------------------- | :------------ | :------------ | :------- | :------------- | | Total operating revenues | $257,696 | $291,282 | $(33,586) | (11.5)% | | Income from operations | $19,495 | $21,946 | $(2,451) | (11.2)% | | Pounds per day | 9,741 | 11,155 | (1,414) | (12.7)% | | Shipments per day | 11.5 | 13.6 | (2.1) | (15.4)% | | Weight per shipment | 843 | 821 | 22 | 2.7% | | Revenue per hundredweight, ex fuel | $24.82 | $24.38 | $0.44 | 1.8% | - Operating revenues and income from operations decreased by 11.5% and 11.2% respectively, driven by a 12.7% decrease in pounds per day and 15.4% fewer shipments per day[118][122] - This decline was partially offset by a 1.8% increase in revenue per hundredweight (ex-fuel) and a 2.7% increase in weight per shipment due to denser freight[118][122] - Purchased transportation decreased by 12.7% due to fewer shipments, and salaries, wages, and employee benefits decreased by 15.5% due to reduced headcount and lower shipment volumes[119][120] Omni Logistics (Three Months Ended June 30, 2025 vs. 2024) This section analyzes the Omni Logistics segment's performance for the three months ended June 30, 2025, compared to the prior year Omni Logistics Segment Performance (Three Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :-------------------------------- | :------------ | :------------ | :------- | :------------- | | Operating revenue | $328,316 | $311,856 | $16,460 | 5.3% | | Income (loss) from operations | $7,186 | $(1,105,871) | $1,113,057 | 100.6% | | Purchased transportation (% of revenue) | 56.4% | 57.3% | (0.9)pp | | | Salaries, wages and employee benefits (% of revenue) | 18.8% | 18.4% | 0.4pp | | | Depreciation and amortization | $22,419 | $33,235 | $(10,816) | (32.5)% | - Operating revenue increased by 5.3% due to increased demand for contract logistics and value-added services[124][130] - Income from operations significantly improved by 100.6%, primarily due to the absence of the $1.09 billion goodwill impairment charge in the current period[124][130] - Purchased transportation increased by 3.6% but decreased as a percentage of revenue due to a shift towards contract logistics and value-added services, which require lower purchased transportation levels[125] - Depreciation and amortization decreased by 32.5% due to intangible amortization changes from measurement adjustments of the Omni Acquisition[127] Intermodal (Three Months Ended June 30, 2025 vs. 2024) This section analyzes the Intermodal segment's performance for the three months ended June 30, 2025, compared to the prior year Intermodal Segment Performance (Three Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :-------------------------------- | :------------ | :------------ | :------- | :------------- | | Operating revenue | $59,146 | $59,299 | $(153) | (0.3)% | | Income from operations | $4,415 | $5,317 | $(902) | (17.0)% | | Drayage shipments | 62,313 | 64,877 | (2,564) | (4.0)% | | Drayage revenue per shipment | $862 | $826 | $36 | 4.4% | | Operating leases (% of revenue) | 9.0% | 8.1% | 0.9pp | | | Insurance and claims | $3,147 | $2,619 | $528 | 20.2% | - Operating revenues slightly decreased by 0.3% due to a 4.0% decrease in drayage shipments, largely offset by a 4.4% increase in drayage revenue per shipment[132][136] - Income from operations decreased by 17.0% due to increased operating expenses with flat revenues[132][136] - Operating leases increased by 11.7% due to higher real estate lease costs, and insurance and claims increased by 20.2% due to increased losses from property damage[133][134] - Other operating expenses decreased by 19.9% due to continued cost reduction efforts[135] Corporate (Three Months Ended June 30, 2025 vs. 2024) This section analyzes the Corporate segment's operating loss for the three months ended June 30, 2025, compared to the prior year - Corporate operating loss decreased from $17.1 million in Q2 2024 to $11.6 million in Q2 2025, primarily due to a $4.07 million decrease in transaction and integration costs related to the Omni Acquisition[137] Results from Operations (Six Months Ended June 30, 2025 vs. 2024) This section analyzes the consolidated financial performance for the six months ended June 30, 2025, compared to the prior year Consolidated Financial Data (Six Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :------------------------------------------ | :------------ | :------------ | :------- | :------------- | | Operating revenues | $1,232,125 | $1,185,479 | $46,646 | 3.9% | | Total operating expenses | $1,207,840 | $2,346,966 | $(1,139,126) | (48.5)% | | Income (loss) from continuing operations | $24,285 | $(1,161,487) | $1,185,772 | 102.1% | | Net loss attributable to Forward Air | $(63,220) | $(707,145) | $643,925 | 91.1% | - Operating revenues increased by 3.9%, primarily due to Omni Logistics having an additional 24 days of ownership in 2025, partially offset by a decrease in Expedited Freight revenue[139] - Total operating expenses decreased by 48.5%, mainly due to the absence of the $1.09 billion goodwill impairment charge in 2025 and lower acquisition/integration costs, partially offset by increased operating expenses from Omni Logistics' longer ownership period[140] - Income from continuing operations improved by 102.1%, and net loss attributable to Forward Air decreased by 91.1%, both primarily driven by the non-recurrence of the goodwill impairment[141][144] - Total other expense increased by 18.3% due to a $6.86 million charge from the tax receivable agreement liability change and the impact of foreign currency exchange[142] Expedited Freight (Six Months Ended June 30, 2025 vs. 2024) This section analyzes the Expedited Freight segment's performance for the six months ended June 30, 2025, compared to the prior year Expedited Freight Segment Performance (Six Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :-------------------------------- | :------------ | :------------ | :------- | :------------- | | Total operating revenues | $507,077 | $564,577 | $(57,500) | (10.2)% | | Income from operations | $35,129 | $41,444 | $(6,315) | (15.2)% | | Total pounds | 1,234,029 | 1,398,914 | (164,885) | (11.8)% | | Total shipments | 1,466 | 1,698 | (232) | (13.7)% | | Weight per shipment | 842 | 824 | 18 | 2.2% | | Revenue per hundredweight, ex fuel | $24.79 | $24.27 | $0.52 | 2.1% | - Operating revenues decreased by 10.2% due to an 11.8% decrease in tonnage and 13.7% fewer shipments, partially offset by a 2.1% increase in revenue per hundredweight (ex-fuel) and a 2.2% increase in weight per shipment[150] - Income from operations decreased by 15.2% as lower freight volumes were not fully offset by cost reductions[151] - Purchased transportation decreased by 9.3% and salaries, wages, and employee benefits decreased by 15.7% due to lower volumes[152][154] Omni Logistics (Six Months Ended June 30, 2025 vs. 2024) This section analyzes the Omni Logistics segment's performance for the six months ended June 30, 2025, compared to the prior year Omni Logistics Segment Performance (Six Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :-------------------------------- | :------------ | :------------ | :------- | :------------- | | Operating revenue | $651,786 | $536,694 | $115,092 | 21.4% | | Income (loss) from operations | $10,561 | $(1,134,456) | $1,145,017 | 100.9% | | Purchased transportation (% of revenue) | 56.9% | 60.2% | (3.3)pp | | | Salaries, wages and employee benefits (% of revenue) | 18.2% | 19.8% | (1.6)pp | | | Depreciation and amortization | $44,649 | $50,104 | $(5,455) | (10.9)% | - Operating revenues increased by 21.4% due to increased ownership days and higher demand for contract logistics and value-added services[156][162] - Income from operations significantly improved by 100.9% due to the absence of the goodwill impairment charge[156][162] - Purchased transportation increased by 14.8% but decreased as a percentage of revenue due to a product mix shift towards services requiring lower purchased transportation[157] - Salaries, wages, and employee benefits increased by 11.3% due to increased ownership days and demand, but at a lower rate than revenue growth[158] - Depreciation and amortization decreased by 10.9% due to intangible amortization changes from Omni Acquisition measurement adjustments[159] - Other operating expenses increased by 4.8% but decreased as a percentage of revenue due to acquisition integration synergies[161] Intermodal (Six Months Ended June 30, 2025 vs. 2024) This section analyzes the Intermodal segment's performance for the six months ended June 30, 2025, compared to the prior year Intermodal Segment Performance (Six Months Ended June 30, in thousands) | Metric | June 30, 2025 | June 30, 2024 | Change | Percent Change | | :-------------------------------- | :------------ | :------------ | :------- | :------------- | | Operating revenue | $121,638 | $115,591 | $6,047 | 5.2% | | Income from operations | $9,957 | $8,903 | $1,054 | 11.8% | | Drayage shipments | 126,762 | 127,536 | (774) | (0.6)% | | Drayage revenue per shipment | $872 | $824 | $48 | 5.8% | | Purchased transportation (% of revenue) | 33.1% | 31.7% | 1.4pp | | | Operating leases (% of revenue) | 9.1% | 8.2% | 0.9pp | | - Operating revenues increased by 5.2%, primarily driven by a 5.8% increase in drayage revenue per shipment, despite a slight 0.6% decrease in drayage shipments[164][169] - Income from operations increased by 11.8% due to higher revenue per shipment[164][169] - Purchased transportation increased by 9.9% due to changes in capacity utilization, length of haul, and service provider mix[165] - Operating leases increased by 17.4% due to higher real estate lease costs[167] - Other operating expenses decreased by 14.0% due to continued cost reduction efforts[168] Corporate (Six Months Ended June 30, 2025 vs. 2024) This section analyzes the Corporate segment's operating loss for the six months ended June 30, 2025, compared to the prior year - Corporate operating loss decreased from $77.4 million in H1 2024 to $31.4 million in H1 2025, primarily driven by a significant reduction in transaction and integration costs related to the Omni Acquisition ($19.9 million in 2025 vs. $71.9 million in 2024)[170] Application of Critical Accounting Policies This section describes the company's significant accounting policies, particularly those requiring complex judgments and estimates Goodwill This note explains the company's policy for testing goodwill for impairment and recent assessment results - Goodwill is tested annually for impairment as of June 30, and on an interim basis, using a discounted cash flow (DCF) model, or a combination of DCF and market approach (guideline public company approach)[171] - As of June 30, 2025, no reporting units were impaired, but the Omni reporting unit's fair value was approximately 10.0% higher than its carrying value, indicating sensitivity to changes in underlying assumptions[174] Finite-Lived Intangible Assets and Other Long-Lived Assets This note describes the company's policy for reviewing finite-lived intangible assets and other long-lived assets for impairment - Long-lived assets are reviewed for impairment when events indicate that the carrying amount may not be recoverable; impairment occurs if forecasted undiscounted cash flows are less than the carrying value, leading to a write-down to estimated value[175] - No triggering events or impairments of definite-lived assets were identified for the three and six months ended June 30, 2025 or 2024[175] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash to meet its financial obligations and fund operations - The Company expects to finance working capital, capital expenditures, and debt service over the next twelve months using available cash, cash flows from operations, and borrowings under its $300 million revolving credit facility[176] - Significant indebtedness was incurred in connection with the Omni Acquisition, which could have important consequences for the business[176] Cash Flows This note provides a detailed analysis of cash flows from operating, investing, and financing activities - Net cash provided by operating activities was $14.4 million for the six months ended June 30, 2025, a significant improvement from $96.9 million used in the prior year, driven by changes in net income and working capital[177] - Net cash used in investing activities decreased substantially from $1.58 billion in 2024 to $15.1 million in 2025, primarily due to the Omni Acquisition cash outflow in the prior year[178] - Net cash used in financing activities decreased from $163.0 million in 2024 to $9.9 million in 2025, mainly due to the non-recurrence of debt issuance costs, long-term debt payments, and earn-out liability payments from the prior year[179] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to market risks, particularly fuel price fluctuations, and refers to the Annual Report for further details - The Company's exposure to fuel price and availability fluctuations is not expected to materially impact its results of operations, cash flows, or financial position, as changes in fuel prices are generally passed on to customers through a weekly fuel surcharge program[183] Item 4. Controls and Procedures This section evaluates the effectiveness of the company's disclosure controls and internal control over financial reporting, noting a material weakness Disclosure Controls and Procedures This section reports on the effectiveness of the company's disclosure controls and procedures - As of June 30, 2025, the Company's Chief Executive Officer and Chief Financial Officer concluded that disclosure controls and procedures are not effective due to a material weakness in internal control over financial reporting, as disclosed in the 2024 Annual Report on Form 10-K[184] Changes in Internal Control This section describes any material changes in internal control over financial reporting during the quarter - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, other than the implementation of internal control over financial reporting at Omni Logistics[185] Ongoing Remediation Plan This section outlines the company's continuing efforts to address previously disclosed material weaknesses - The Company continues to implement a remediation plan to address the previously disclosed material weaknesses, with remediation considered complete only after controls operate effectively for a sufficient period and are tested[186] Part II: Other Information This section covers legal proceedings, risk factors, equity sales, and other miscellaneous disclosures Item 1. Legal Proceedings This section details ongoing legal proceedings, including a shareholder class action, and other incidental litigation - A shareholder class action complaint (Second Amended Complaint) alleges that the Company's directors violated Tennessee corporate law by not subjecting the Omni Acquisition to a shareholder vote and breached fiduciary duties[187] - The Company is also party to other incidental litigation, primarily involving claims for personal injury and property damage, with accruals made for estimated losses, and believes these will not materially adversely affect its business or financial condition[188] Item 1A. Risk Factors This section updates key risk factors, including economic conditions, tariffs, and obligations under the Tax Receivable Agreement - Overall economic conditions, including tariffs and trade policy changes, can materially reduce freight volumes and adversely impact operating results and growth, leading to decreased revenues, pricing pressures, and potential customer payment difficulties[192][193][194] - The Company is obligated to pay Omni Holders 83.5% of certain tax benefits realized from the Omni Acquisition under the Tax Receivable Agreement, with expected payments being substantial and potentially accelerated upon a change of control, which could impair future transactions or impact shareholder value[195][196][197] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that the Company did not repurchase any of its equity securities during the three months ended June 30, 2025 - The Company did not repurchase any of its equity securities during the three months ended June 30, 2025[198] Item 3. Defaults Upon Senior Securities This item is marked as 'Not applicable,' indicating no defaults upon senior securities - This item is not applicable, indicating no defaults upon senior securities[199] Item 4. Mine Safety Disclosures This item is marked as 'Not applicable,' indicating no mine safety disclosures - This item is not applicable, indicating no mine safety disclosures[201] Item 5. Other Information This section discloses the adoption of a Rule 10b5-1 trading arrangement by a Board member for potential sales of common stock - On May 14, 2025, Michael B. Hodge, a Board member, adopted a Rule 10b5-1 trading arrangement for potential sales of up to 80,000 shares of Common Stock, expiring on December 26, 2025[202] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q, including merger plans, corporate governance documents, incentive compensation plans, and certifications - Key exhibits include the Plan of Merger, Amended and Restated Certificate of Incorporation, Bylaws, various Omnibus Incentive Compensation Plans, and certifications from the Principal Executive and Financial Officers[204] Signatures This section contains the signatures of the Chief Executive Officer and Chief Financial Officer, certifying the report on behalf of Forward Air Corporation - The report is signed by Shawn Stewart, Chief Executive Officer, and Jamie Pierson, Chief Financial Officer, on August 11, 2025[207]