Shares of Forward Air jumped 16% in after-hours trading on Wednesday after management from the transportation and logistics provider said that a strategic review, which may include the sale of the company, is still in progress. The stock came under pressure last month, following a report from Axios Pro, saying that a sale was longer imminent.
Forward (NASDAQ: FWRD) announced at the beginning of the year that its board would undertake a review, following criticism from investors over a contested 2024 merger with Omni Logistics. Management said on its third-quarter call with analysts on Wednesday that it is continuing to talk with interested parties and that the process has included an analysis of all potential value-maximizing opportunities.
The company reported a $16.3 million net loss (attributable to Forward Air), or 52 cents per share, for the third quarter. Consolidated revenue of $632 million was 4% lower year over year.
Consolidated EBITDA of $78 million was 10% lower y/y but 5% better sequentially.
The company’s expedited segment, which includes less-than-truckload operations, reported revenue of $259 million, a 9% y/y decline. Tonnage per day was off 14%, partially offset by a 4% increase in revenue per hundredweight, or yield, excluding fuel surcharges.
The tonnage decline was driven by a 12% decline in shipments and a 2% dip in weight per shipment. Tonnage was off 2% from the second quarter. (The yield metric benefited modestly from the lower shipment weights.)
The expedited unit reported a 7.5% operating margin, which was 70 basis points higher y/y and 10 bps lower sequentially.
Salaries, wages and benefits expenses (as a percentage of revenue) increased 20 bps y/y, but purchased transportation expenses declined 70 bps. The company has removed more than 300 full-time employees over the past year and improved labor utilization by flexing drivers across modes (truckload and LTL).
The company integrated its expedited operations in the U.S. and Canada during the quarter, which should drive further cost savings and other efficiencies. A broader plan has produced $12 million in annual cost takeouts.
The expedited segment reported $30 million in EBITDA, which was flat y/y, but the margin improved 110 bps to 11.5%.
Omni reported revenue of $340 million, a 2% y/y increase. Adjusted EBITDA of $33 million was 22% higher y/y and 10% better sequentially.
Last 12 months’ (LTM) consolidated adjusted EBITDA was $299 million at the end of the quarter (up $1 million from the second quarter). Net debt of $1.65 billion stood at 5.5 times LTM adjusted EBITDA, a decline from 5.7 times at the end of the second quarter. (The company’s debt leverage covenant steps down 25 bps each quarter to 5.5 times by the 2026 fourth quarter.)
Cash flow from operations totaled $67 million in the first three quarters of the year, a $113-million y/y increase.
Liquidity at the end of the period was $413 million, a $45-million increase from the second quarter. The company has a large semi-annual interest payment due in the fourth quarter. (The interest payment was $34 million in the second quarter.)
Shares of FWRD closed on Wednesday at $17.69, down 2.5% on the day and well below the $110 closing price on the last trading session before the merger was announced in August 2023.
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