Forward Air takes step in right direction in Q2

Revenue per shipment (excluding fuel) was up 3% y/y.

Some LTL freight previously lost to a depressed truckload market has returned, pushing shipment weights and revenue per shipment higher.

The unit posted a 10.9% operating margin, which was 340 basis points better y/y. A 13.6% EBITDA margin was 200 bps higher y/y. Virtually every expense line moved lower y/y (as a percentage of revenue), except purchased transportation, which was 430 bps higher.

Omni reported revenue of $339 million, a 3% y/y increase. Adjusted EBITDA of $38 million was 28% higher y/y. The adjusted EBITDA margin improved 220 bps to 11.2%.

Forward announced last month that it entered a non-binding agreement with a contract logistics customer to save half, and potentially up to 75%, of a $250 million annual contract. It said on its first-quarter call in May that it could potentially lose all the business, which accounts for approximately 10% of Forward’s annual revenue. A recent memorandum of understanding keeps the current contract in place for at least the next two years.

The potential customer loss triggered a goodwill test on the carrying value of the Omni business. Forward reported a $244 million before-tax loss from continuing operations for the second quarter. However, the number included a $244 million noncash goodwill impairment charge.

The customer disruption also impeded a plan to sell the entire enterprise to private investors. (Forward commenced a strategic review at the beginning of 2025 as pressure from investors mounted following its contested merger with Omni Logistics.) 

After flagging the at-risk customer, Forward turned its focus to selling its intermodal unit and two smaller legacy Omni businesses, which generated $394 million in combined revenue last year. It sold one of the Omni businesses in the second quarter and the other Omni unit in July. It hopes to sell the intermodal business by the end of the year.

Proceeds from the sales will be used to deleverage the balance sheet.

Intermodal revenue was up 1% y/y to $60 million in the quarter. The unit reported a 16.7% EBITDA margin, which was 160 bps better y/y.

Operating cash flow of $46 million in the second quarter was $6 million lower y/y. Liquidity of $401 million was nearly flat sequentially even though the company made a $34-million semiannual interest payment in the second quarter.

Net debt of $1.66 billion stood at 5.2 times last 12 months’ adjusted EBITDA and below a 6x debt covenant. (Trailing 12 months’ adjusted EBITDA totaled $319 million.)

Shares of FWRD were up 10.7% in after-hours trading on Wednesday.

Why it matters? Forward Air is the only public company offering airport-to-airport ground transportation in an LTL configuration. Its contested merger with Omni Logistics is a cautionary tale and a high-stakes case study for the trucking and logistics industry.

More FreightWaves articles by Todd Maiden:

• Transportation capacity falls faster in July, rates remain high
• July’s 55.6% PMI highest in 4 years; LTL carriers getting bullish
• Schneider National pushes price amid market imbalance