Forward Air Corporation Reports Fourth Quarter and Full Year 2024 Results

Business Wire 26-Feb-2025 4:00 PM

Full year results near the top end of guidance range

Executed more than $100 million in annualized cost synergies in first year following Omni transaction

Transitioning from Integration to Transformation

Forward Air Corporation (NASDAQ:FWRD) (the "Company", "Forward Air", "we", "our", or "us") today reported financial results for the three and twelve months ended December 31, 2024 as presented in the tables below on a continuing operations basis, with the Company's former Final Mile business being reported as discontinued operations.

"As we turn the page on the first year operating as a combined company following the acquisition of Omni, I want to express my gratitude to our associates for their dedication to making our customers their top priority," said Shawn Stewart, Chief Executive Officer. "We kept our focus on stabilizing the Company and integrating the Forward Air and Omni's networks, and I am pleased with the pace and rigor of our work. We delivered full year 2024 Consolidated EBITDA results near the top end of our guidance range, and we more than delivered on the previously committed $75 million of integration synergies. Combining the integration synergies with additional cost saving actions and other efficiency initiatives executed throughout the year, we delivered more than $100 million in annualized savings. While we have more work to do, I am proud of what we accomplished and I expect the foundational changes and investments made in 2024, coupled with the broader transformation we are embarking on, to improve our results and benefit the Company for many years to come."

"As a combined company, we are equipped with an enhanced suite of global, vertically-integrated services to meet our customers' needs. Our integration and continued operational initiatives are creating a more efficient, nimble and unified company, which we believe better enable us to leverage both networks and provide best-in-class solutions and service to our customers."

"The team that we assembled has made significant progress over a very short period and watching how they have worked together gives me a great deal of confidence as we look ahead and with our new chief commercial officer in place we expect to be playing a lot more offense than we have been since the combination. As we move to the growth phase of our evolution, our priorities in 2025 include technology system simplification and rationalization, global shared service efficiencies and expanding synergistic service offerings for our customers both domestically and around the world," concluded Stewart.

Jamie Pierson, Chief Financial Officer added, "For the fourth quarter 2024, we reported consolidated revenue of $633 million and income from continuing operations of $76 million which includes a goodwill impairment adjustment of $79 million that favorably impacted the quarter. On a segment basis, Omni Logistics' income from operations was favorably impacted by the goodwill impairment adjustment, and it reported its best quarterly reported EBITDA since the transaction. The Intermodal segment maintained its steady performance and improved income from operations compared to a year ago. However, the Expedited Freight segment was negatively impacted by a pricing strategy put in place prior to the acquisition that focused more on growing volume than profitability. We implemented corrective pricing actions during the fourth quarter and are beginning to see results in line with our expectations. We expect to see the full run rate of these actions by the end of February.

"For the fourth quarter, Consolidated EBITDA ("Consolidated EBITDA"), a non-GAAP measure calculated pursuant to our Senior Secured Term Loan Credit Agreement (the "Credit Agreement"), was $69 million. For the full year, 2024 Consolidated EBITDA was $308 million, which resulted in an approximate $59 million cushion per the terms of the recently amended Credit Agreement's consolidated first lien net leverage ratio covenant. While we are proud of our collective accomplishments, there is more to do, and we are by no means satisfied with the results nor are we finished combining and transforming this now global opportunity.

"Liquidity at the end of the fourth quarter was $382 million compared to $460 million at the end of the third quarter. The quarter-over-quarter change was impacted by a $40 million reduction to the size of the credit facility in conjunction with the recent amendment to the credit agreement and $60 million in interest payments made in the fourth quarter. Overall, I'm encouraged by the trends in cash flow in the second half of the year as we reduced acquisition-related costs and integration expenses compared to the first half of the year. The focus on reducing these items contributed to an increase of $20 million in cash and cash equivalents from the end of the second quarter through the end of the year," concluded Pierson.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter and full year 2024 results on Wednesday, February 26, 2025 at 4:30 p.m. ET. The Company's conference call will be available online on the Investor Relations portion of the Company's website at ir.forwardaircorp.com or by dialing (800) 445-7795, Access Code: FWRDQ424.

A replay of the conference call will be available on the Investor Relations portion of the Company's website at ir.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investor Relations portion of the Company's website to easily find or navigate to current and pertinent information about us.

About Forward Air Corporation

Forward Air is a leading asset-light provider of transportation services across the United States, Canada and Mexico. We provide expedited less-than-truckload services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer truckload brokerage services, including dedicated fleet services, and intermodal, first- and last-mile, high-value drayage services, both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services. Forward also operates a full portfolio of multimodal solutions, both domestically and internationally, via Omni Logistics. Omni Logistics is a global provider of air, ocean and ground services for mission-critical freight. We are more than a transportation company. Forward is a single resource for your shipping needs. For more information, visit our website at www.forwardaircorp.com.

Forward Air Corporation Reconciliation of Non-GAAP Financial Measures

In this press release, the Company uses non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with GAAP. The Company believes that meaningful analysis of its financial performance requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions as well as evaluating the Company's performance.

For the three and twelve months ended December 31, 2024 and 2023, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization ("EBITDA"), adjusted EBITDA, free cash flow, adjusted income from continuing operations, adjusted net income, and adjusted net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.

The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization) and tax impacts. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance shareholder value. The Company believes providing adjusted EBITDA, adjusted income from operations, adjusted net income and adjusted net income per diluted share allows investors to compare Company performance consistently over various periods without regard to the impact of unusual, nonrecurring or nonoperational items.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's financial results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the Company has included, for the periods indicated, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure.

The following is a reconciliation of net income to adjusted EBITDA for the three and twelve months ended December 31, 2024 and 2023 (in thousands):

The following is a reconciliation of net cash provided (used in) by operating activities to free cash flow for the three and twelve months ended December 31, 2024 and 2023 (in thousands):

Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Forward-looking statements included in this press release relate to the Company's expectations for long-term growth; ability to achieve and expand synergistic service offerings; expectations regarding the corrective pricing actions that the Company has taken as well as the impact that may have on the business and the Company's expectations regarding the Company's financial performance, including Consolidated EBITDA, and the impact it may have on the business and results of operations.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not unduly rely on any of these forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the Company's ability to achieve the expected strategic, financial and other benefits of the acquisition of Omni Logistics, the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected, the risk that operating costs, customer loss, management and employee retention and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) as a result of the acquisition of Omni Logistics may be greater than expected, continued weakening of the freight environment, future debt and financing levels, our ability to deleverage, including, without limitation, through capital allocation or divestitures of non-core businesses, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers' transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers' compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, and as may be identified in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

We caution readers that any forward-looking statement made by us in this press release is based only on information currently available to us and they should not place undue reliance on these forward-looking statements, which reflect management's opinion as of the date on which it is made. We undertake no obligation to publicly update any forward- looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise unless required by law.

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Investors: Tony Carreño investorrelations@forwardair.com

Media: Justin Moss (404) 362-8933 jmoss@forwardair.com