Transportation and logistics provider Forward Air beat second-quarter adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) expectations on Monday after the market closed. A net loss, however, was worse than expected.
Forward Air didn’t provide an update on an ongoing strategic review process that could include selling the company following the fallout from its heavily contested merger with Omni Logistics. For the time being, Forward’s current leadership team is tasked with executing a marketing plan that now includes a freight forwarding business alongside its legacy linehaul operations.
Forward (NASDAQ: FWRD) reported a second-quarter net loss from continuing operations of $20.4 million ($12.6 million attributable to Forward Air, or 41 cents per share). The result was worse than the consensus estimate calling for a per-share loss of 26 cents.
Consolidated adjusted EBITDA of $74 million was $5 million higher than the first quarter result and $2 million ahead of consensus.
Revenue of $619 million was 4% lower year over year. Revenue increased 1% from the first quarter.
Forward’s management team touted “across-the-board” business wins in truckload, international airfreight and ground transportation on a Monday evening conference call. It said many of the wins came from existing customers.
Recent press releases from the company referenced the addition of 15,000 annual expedited TL shipments from a “leader in the package delivery services industry,” as well as a separate distribution services and TL contract with an athletics brand.
The company’s expedited segment, which includes less-than-truckload operations, reported a 12% y/y revenue decline to $258 million. Tonnage fell 13% y/y (up slightly from the first quarter) while revenue per hundredweight, or yield, increased 2% y/y excluding fuel surcharges (flat sequentially). The yield improvement was attributed to “pricing actions” taken earlier this year.
Forward again increased shipment weights in the quarter. Weight per shipment was up 3% y/y in the period (up less than 1% sequentially). (Higher shipment weights negatively impact the yield calculation.)
Expedited reported a 7.6% operating margin, which was 10 basis points higher y/y and 130 bps better than the first quarter.
Salaries, wages and benefits (as a percentage of revenue) declined 100 bps y/y. Purchased transportation expenses were down 60 bps.
Adjusted EBITDA of $30 million in the unit was $4 million higher than in the first quarter. An 11.6% adjusted EBITDA margin was 120 bps better sequentially.
Omni reported revenue of $328 million, a 5% y/y increase. The segment recorded adjusted EBITDA of $30 million (a 9% adjusted EBITDA margin) compared to $26 million in the first quarter (a 7.9% adjusted EBITDA margin).
Last 12 months’ (LTM) consolidated adjusted EBITDA was $298 million at the end of the period.
Net debt of $1.69 billion stood at 5.7 times LTM adjusted EBITDA, an increase from 5.3 times at the end of the first quarter.
Liquidity at the end of the second quarter was $368 million, a $25 million decline from the first quarter. However, the change included $34 million in semi-annual interest payments. Cash flow from operations totaled $14 million in the first half of the year. (The company used $13 million in cash in the second quarter.)
Shares of FWRD closed on Monday at $28.57, down 5.6% on the day and well below the $110 closing price on the last trading session before the merger was announced in August 2023. The stock was 1.3% higher in after-hours trading on Monday.
