Shares of Forward Air jumped 16 percent in after-hours trading on Wednesday after the transportation and logistics provider’s management said a strategic review, which may include a sale of the company, was still underway. The stock has been under pressure for the past month, following a report from Axios Pro that a longer sell-off is imminent.
Forward (NASDAQ: FWRD ) announced at the start of the year that its board would conduct a review after investors criticized its controversial 2024 merger with Omni Logistics. Management said in its third-quarter call with analysts on Wednesday that it continues to talk with interested parties, and that the process includes analyzing all potential opportunities to maximize value.
The company reported a net loss of $16.3 million (attributable to Forward Air), or 52 cents per share, for the third quarter. Consolidated revenue of $632 million was 4 percent lower than last year.
Consolidated EBITDA of $78 million was down 10% year over year but 5% better sequentially.
The company’s expedited segment, which includes less-than-truckload operations, reported revenue of $259 million, down 9 percent year-over-year. Tonnage per day was down 14 percent, partially offset by a 4 percent increase in earnings per hundredweight, or yield, excluding additional fuel costs.
The decrease in tonnage was caused by a 12% decrease in shipments and a 2% decrease in the weight of each shipment. The tonnage decreased by 2% compared to the second quarter. (The yield metric had a moderate benefit from the lower cargo weight.)
The accelerated unit reported an operating margin of 7.5%, which was 70 basis points higher year-over-year and 10 basis points lower, respectively.
Salaries, wages, and benefits expenses (as a percentage of revenue) rose 20 bps annually, but purchased transportation costs fell 70 bps. Over the past year, the company has laid off more than 300 full-time employees and improved labor utilization by shifting drivers across modes (truck and LTL).
The company consolidated its accelerated operations in the U.S. and Canada during the quarter, which could drive further cost savings and other efficiencies. A more extensive plan would cost $12 million annually.
The accelerated segment reported EBITDA of $30 million, which was flat year-over-year, but margins improved by 110 bps to 11.5 percent.
Omni reported revenue of $340 million, up 2% year over year. Adjusted EBITDA of $33 million was 22% higher year over year and 10% better sequentially.
Trailing 12-month (LTM) adjusted consolidated EBITDA was $299 million at the end of the quarter ($1 million up from the second quarter). Net debt of $1.65 billion was 5.5 times LTM Adjusted EBITDA, down from 5.7 times at the end of the second quarter. (The company’s debt leverage contract will decrease by 25 units per second every quarter and will reach 5.5 times by the fourth quarter of 2026.)
Liquidity at the end of the period was 413 million dollars, which was an increase of 45 million dollars compared to the second quarter. Cash flow from operations in the first three quarters of the year reached $67 million, an increase of $113 million year over year.
Shares of FWRD closed at $17.69 on Wednesday, down 2.5 percent on the day, well below the closing price of $110 in the last trading session before the August 2023 merger was announced.
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