Forward Air touts Q1 achievements, investors await next steps

Forward Air saw modest improvements on some financial metrics during the first quarter, but pressure from investors is mounting for the company to complete a strategic review of potential options for its business following a controversial merger with Omni Logistics.

Activist investor Ancora Holdings Group, which holds a 4.1% equity stake in the Greeneville, Tennessee-based company, advised shareholders on Wednesday to vote against three of Forward’s directors at the upcoming annual meeting.

A letter said that while both the board and the management team have been somewhat refreshed following the deal’s January 2024 closing, the targeted board members’ “egregious M&A records” and “histories of presiding over massive value destruction” warrant their removal. The letter also said the board had moved “alarmingly slowly” on its review of strategic alternatives, and it questioned the ultimate motives of the process.

Management from the company didn’t provide an update on the review other than to say the process continues and that it has had discussions with interested parties.

“The board and management team are entirely focused on taking deliberate actions to maximize shareholder value,” said Forward CEO Shawn Stewart on a Wednesday evening call with analysts. … “We firmly believe that all of our directors are vital to these efforts.”

Forward (NASDAQ: FWRD) reported a first-quarter net loss from continuing operations of $61 million, or $1.68 per share, Wednesday after the market closed.

Consolidated revenue of $613 million was up 13% year over year, but the prior-year period didn’t include a full three-month contribution from Omni. (Revenue was off approximately 2% y/y on a pro forma comparison.)

Forward said it plans to start reporting results by mode – ground transportation, air and ocean forwarding, intermodal drayage, and warehousing and value-added services – in the future. It also said it sees a path to double annual revenue to $5 billion over the next five years.

The company previously flagged 10% to 15% of last year’s revenue as being impacted by recent tariff announcements. However, it said on the call that the number is likely under 10% and that the provided range offers a bit of a buffer.

The expedited segment, which includes less-than-truckload operations, reported a 9% y/y revenue decline to $249 million. Tonnage was down 9% while revenue per hundredweight, or yield, increased 2.5% y/y excluding fuel surcharges (up 4% from the fourth quarter). Forward has been focused on increasing shipment weights (up 2% y/y in the quarter) and implementing corrective price actions.

Higher shipment weights negatively impact the yield calculation.

It said the yield actions concluded on Feb. 6, producing only a partial impact to yields in the first quarter. Yield improvements should be more pronounced in the second quarter.

The segment reported a 6.3% operating margin, which was 90 basis points worse y/y. Adjusted earnings before interest, taxes, depreciation and amortization of $26 million was $8 million higher than in the fourth quarter. A 10.4% adjusted EBITDA margin was 380 bps better sequentially.

Omni reported $323 million in revenue, which was up notably y/y. (The y/y comp was also skewed by the late-January 2024 acquisition date.) The unit reported adjusted EBITDA of $26 million (a 7.9% adjusted EBITDA margin) compared to $32 million in the fourth quarter (a 9.8% adjusted EBITDA margin).

On a consolidated basis, adjusted EBITDA increased 9% y/y to $69 million. That pushed the past 12 months’ adjusted EBITDA to $313 million. Net debt totaled $1.67 billion, resulting in a net debt leverage ratio of 5.3 times, an improvement from 5.5 times at the end of 2024.

Liquidity improved $11 million from the end of the year to $393 million.

Shares of FWRD closed Wednesday at $17.23 compared to a $110 closing price on the last trading session before the merger was announced.

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