Editor’s note: This story was updated at 10:53 a.m. EDT on June 18 to reflect updated information.
The dust continues to settle from numerous layoffs at Forward Air last week. Multiple people familiar with the matter told FreightWaves that the job cuts range from clerical positions to the C-suite and include many sales and technology roles.
A representative for Forward was unable to confirm the total number of positions impacted but acknowledged the layoffs on Monday. Multiple sources have said the count is approximately 150.
“As part of our previously announced efforts to improve Forward’s performance, we’ve made the difficult decision to initiate workforce changes through restructuring and reductions,” a spokesperson with Forward said. “We’re committed to supporting our affected teammates during this transition by providing severance packages, access to COBRA medical coverage, outplacement services, and other resources. We remain focused on delivering best-in-class customer service and creating value for all stakeholders.”
WARN Act notifications hadn’t appeared on the state labor department websites where Forward operates as of Monday.
Shares of Forward (NASDAQ: FWRD) remain in flux following an Aug. 10 merger announcement with freight forwarder Omni Logistics. The transaction promised to double Forward’s top line and allow it to better compete on the premium, expedited side of a roughly $60 billion less-than-truckload market. However, the approach drew immediate backlash from shareholders given the deal price and increased debt load incurred to fund it.
Some of Forward’s existing forwarding customers were also spooked by the announcement as one of their competitors, Omni Logistics, would now be presumably competing in the market from a position of advantage, with a direct link to Forward’s linehaul capacity and potentially access to their client lists. Forward has vowed all along to maintain “confidentiality and neutrality” across its wholesale (forwarding) and direct-selling channels.
Activists and other shareholders voiced opposition to the deal as did a group of former employee-shareholders. A legal action from the latter to block the deal ultimately fell short.
The deal closed in January, and Forward has been scrambling since to integrate Omni, right-size the organization and approach the market through two sales channels: its legacy wholesale model working through forwarders and a direct-sales unit where it interacts directly with shippers.
Tom Schmitt, Forward’s former chairman and CEO and architect of the merger, separated from the company two weeks after the deal closed. Former Ceva Logistics unit head Shawn Stewart was named the company’s CEO in April.
Forward also replaced its chief financial officer on an interim basis with Jamie Pierson, a restructuring and strategic planning expert. He twice helped orchestrate an overhaul of now-defunct Yellow Corp. (OTC: YELLQ), formerly YRC Worldwide. Pierson has been on the job less than one month.
The new group has numerous challenges beyond managing day-to-day operations and the integration of Omni. Activists still lurk and a shareholder class action was recently undertaken in a Tennessee court. It asks the court to rescind the merger and to award damages due to the decline in market cap.
Forward’s stock closed at $110 per share on Aug. 9 and gapped more than 40% lower in the days following the deal announcement. The stock fell as low as $11.21 in May amid the turmoil before rallying in recent weeks. Some of the rebound is tied to activist interest and rumors that the company could be taken out by private equity.
Shares of FWRD closed Monday at $21.50.
The company’s debt-heavy balance sheet — 5.5 times net debt-to-trailing 12 months’ adjusted earnings before interest taxes, depreciation and amortization — continues to garner downgrades from the ratings agencies. Forward assumed Omni’s $1.4 billion in net debt as part of the deal consideration.
Company officials said on the first-quarter call in May that they expected Forward would be able to navigate within its new debt covenants during the second quarter, but they wouldn’t commit to being cash flow-positive in the period.
The company is expected to provide a full-year outlook for 2024 in conjunction with its second-quarter report.