Forward Air provided January volume trends on Monday, its first update following a controversial merger with Omni Logistics. It appears the combined company may not include several executives from Omni.
FreightWaves has learned some members of Omni’s senior leadership team separated from Forward shortly after Omni CEO JJ Schickel had “chosen not to continue as an executive at Forward.”
“One important goal of the integration process is to ensure we have the best organizational structure and right leadership team in place in order to achieve our shared ambitions,” a spokesperson from Forward told Freighwaves. “That inevitably means there will be some changes. For those who will not be continuing on the next leg of Forward’s journey, we are grateful for their contributions and wish them well as they pursue other opportunities.”
The statement said given the scale of the transaction, “those details will take time to work through” and it is “committed to keeping our team informed as we make important decisions about our company’s bright future.”
Omni’s executives, including Schickel, were still displayed on Omni’s website on Monday.
Forward (NASDAQ: FWRD) previously said it plans to provide more details on financial targets, the management team and board composition on its fourth-quarter call scheduled for Feb. 22. Analysts will likely have questions regarding the integration of Omni now that some of the individuals that ran the company’s daily operations are no longer there.
The merger was announced on Aug. 10 at a $3.2 billion purchase price with closing to occur a few weeks later. However, a group of shareholders filed for injunctive relief in September, claiming they should have been allowed to vote on the transaction. That briefly delayed the closing. Other investors also chimed in voicing concerns, seemingly making Forward’s board and management team rethink the business combination.
Among complaints from shareholders were the high debt load required to buy Omni and a perceived change in control of the company as Omni and its private equity backers would hold more than one-third of the equity, four board seats and Schickel would become president.
Omni filed suit to force Forward to the closing table at the end of October. However, before opening arguments were heard last month in a Delaware court, the parties came to terms.
In the end, the transaction closed five months after it was announced and at a roughly $2.1 billion price tag. The cash portion of the deal was reduced from $150 million to $20 million and the equity stake declined from 37.7% to 35%. A big difference in the closing price, however, was a more than 55% decline in Forward’s share price since the deal was inked.
October, November … January?
Forward’s January update showed tonnage in its expedited segment, which includes less-than-truckload operations, increased 9.2% year over year (y/y) during the month with weight per shipment increasing 9.8%. The combination implies daily shipment counts were off slightly. Revenue per ton mile increased 1.9% y/y excluding fuel surcharges.
Forward previously disclosed a 5.5% y/y increase in tonnage for the first two months of the fourth quarter, with shipment weights 11% higher. Revenue per ton mile was up 1.8% y/y in the two-month period.
Glaringly omitted from the update was the company’s metrics for December. Forward normally provides two-month updates intraquarter followed by full-quarter results one month after the period closes.
“We continue to improve on the three metrics that matter most to us — increasing tonnage, refining freight quality and maximizing revenue per shipment,” said Forward Chairman and CEO Tom Schmitt in a news release.
He also said the company is making progress on the integration faster than expected.
“We have executed the first phase of the operational synergies ahead of schedule, folding Omni linehaul into the Forward Air network, which led to higher than 20 percent year over year pounds per day increase in the most recent week,” Schmitt continued.
The company’s fourth-quarter call may also provide an update on the vacant role of president, which was previously held by Schmitt.
Shares of FWRD were under pressure again on Monday, down 3.1% at 12:49 p.m. EST. The S&P 500 was off just 0.3% in comparison.