Forward Air Corporation Reports Fourth Quarter and Full Year 2023 Results

Rhea-AI Summary

Forward Air Corporation (NASDAQ:FWRD) reported positive volume trends in less-than-truckload services, despite softer freight conditions. Revenue declined by 16% due to decreased demand for intermodal and truckload brokerage services, partially offset by growth in less-than-truckload services. Adjusted net income per diluted share exceeded expectations. The acquisition of Omni Logistics aims to enhance the company's market position and customer base.

Insights

Market Research Analyst

The reported positive volume trends and improved freight quality metrics in Forward Air Corporation's less-than-truckload (LTL) services indicate a strategic success in a highly competitive segment. The LTL market is particularly sensitive to economic fluctuations, as it involves the transportation of smaller freight loads that do not require the full space of a truck. The growth of 6% in pounds per day, coupled with an 11% increase in weight per shipment, suggests that Forward Air is effectively managing its capacity and optimizing its shipment consolidation strategies. However, the 16% decline in revenue on a consolidated basis, albeit within guidance, reflects broader market challenges, particularly in the intermodal and truckload brokerage services. This decline could be attributed to macroeconomic factors such as reduced manufacturing output or shifts in trade patterns, which may have led to decreased demand for these services.

Financial Analyst

From a financial perspective, Forward Air Corporation's performance presents a mixed picture. The above-guidance adjusted net income per diluted share of $0.81 for the fourth quarter is a positive indicator of operational efficiency and cost management, especially given the challenging market conditions. Investors might view this as a sign of the company's resilience and ability to adapt to market volatility. However, the overall revenue decline warrants a cautious outlook, as it may signal underlying vulnerabilities in the company's broader service offerings. The acquisition of Omni Logistics could be a strategic move to diversify and strengthen Forward Air's service portfolio, potentially creating synergies and accessing new markets. The long-term success of this acquisition will depend on effective integration and the realization of projected efficiencies and market expansion.

Logistics Industry Expert

From an industry standpoint, the acquisition of Omni Logistics by Forward Air Corporation is significant. It suggests a consolidation trend within the logistics sector, where companies seek to expand their capabilities and customer base. The emphasis on delivering an exceptional customer experience and becoming the premier provider for mission-critical freight transportation speaks to the industry's increasing focus on value-added services and reliability. The alignment of company cultures, as highlighted by the Interim CEO, is crucial for a smooth integration process. The combined entity's ability to leverage Omni's logistics expertise and Forward Air's established LTL network could result in a robust platform capable of addressing the evolving needs of shippers and receivers in a dynamic supply chain environment.

Less-than-Truckload Volume Trending Positive

Executing Comprehensive Efforts to Integrate Omni Logistics

Continued Strong Commitment to Delivering Exceptional Service to Customers

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”, “our”, or “us”) today reported financial results for the three and twelve months ended December 31, 2023 as presented in the tables below on a continuing operations basis (Final Mile is being reported as a discontinued operation).

Michael Hance, Interim Chief Executive Officer said, “Execution of our revenue growth strategies in the fourth quarter led to positive volume trends and improved freight quality metrics. While the softer freight conditions persisted throughout the fourth quarter of 2023, we saw momentum in our less-than-truckload line of business with pounds per day growth of +6% over the same period in the prior year and improvement in our freight quality as our weight per shipment increased +11% over the same period in the prior year. A continuation of the challenging market conditions led to decreased customer demand for our intermodal and truckload brokerage services throughout the fourth quarter. The softer demand for our intermodal and truckload brokerage services, partially offset by the positive trends in the less-than-truckload services, resulted in a 16% decline in revenue over the prior year on a consolidated, continuing operations basis, within the guidance range of a decline of 9% to 19%. Adjusted net income per diluted share on a continuing operations basis was $0.81 for the fourth quarter, above the guidance range of $0.78 to $0.80.”

Mr. Hance continued, “On January 25, 2024, we closed on the acquisition of Omni Logistics, positioning the combined entity to be the premier provider of choice for mission-critical freight transportation to a larger customer base with an expanded footprint. As I have gotten to know our new teammates from Omni Logistics, it is clear to me that Forward and Omni share a common DNA focused on the delivery of excellent customer experience. I am excited about what is ahead for our combined company.

We are taking a thoughtful approach to the integration of the two entities aimed at driving measurable value to our customers, creating opportunities for employees and generating long-term value for shareholders. We began executing our comprehensive integration plan promptly after closing on the acquisition with the first meaningful operational cost synergy realized from folding the Omni Logistics linehaul into the Forward linehaul network. We look forward to keeping shareholders updated on our progress.”

Mr. Hance concluded, “While our customer base has expanded, we remain committed to enabling our freight forwarder customers to continue to grow with us. Volumes from that channel remain strong. Our unwavering pledge is to provide a less-than-truckload service that is the best in the industry for damage-free, intact, on-time shipments, making us the most compelling choice for customers with mission-critical freight needs. For the fourth quarter, we are pleased to share our on-time service performance was 98% and our cargo claims ratio was 0.09%. I would like to thank our employees and independent contractors for their remarkable efforts to consistently provide excellent service to our customers.”

Rebecca J. Garbrick, Chief Financial Officer, said, “In the past we provided revenue and net income per diluted share guidance, with updates as deemed necessary. However, we have decided to temporarily discontinue our practice of giving earnings guidance due to the on-going integration of Omni Logistics, which we began executing on three weeks ago. Forward is dedicated to maintaining transparency and fostering open communications with its shareholders. We plan to regularly reevaluate our approach to guidance and to provide updates on key milestones and achievements.”

Continuing Operations		Three Months Ended
(in thousands, except per share data)		December 31, 2023				December 31, 2022				Change				Percent Change
Operating revenue		$	338,428			$	403,039			$	(64,611	)		(16.0	)%
Income from operations		$	3,000			$	56,330			$	(53,330	)		(94.7	)%
Operating margin			0.9	%			14.0	%		(1,310) bps
Net income		$	(14,721	)		$	39,009			$	(53,730	)		(137.7	)%
Net income per diluted share		$	(0.58	)		$	1.45			$	(2.03	)		(140.0	)%
Cash provided by operating activities		$	57,092			$	57,445			$	(353	)		(0.6	)%
Non-GAAP Financial Measures: 1
Adjusted income from operations		$	32,619			$	58,364			$	(25,745	)		(44.1	)%
Adjusted net income		$	20,927			$	40,469			$	(19,542	)		(48.3	)%
Adjusted net income per diluted share		$	0.81			$	1.51			$	(0.7	)		(46.4	)%
Adjusted EBITDA		$	50,198			$	69,494			$	(19,296	)		(27.8	)%
Free cash flow		$	48,913			$	43,476			$	5,437			12.5	%
1 Reconciliation of these non-GAAP financial measures are provided below the financial tables.
Continuing Operations		Twelve Months Ended
(in thousands, except per share data)		December 31, 2023				December 31, 2022				Change				Percent Change
Operating revenue		$	1,370,735			$	1,679,634			$	(308,899	)		(18.4	)%
Income from operations		$	88,210			$	247,591			$	(159,381	)		(64.4	)%
Operating margin			6.4	%			14.7	%		(830) bps
Net income		$	42,803			$	179,414			$	(136,611	)		(76.1	)%
Net income per diluted share		$	1.64			$	6.63			$	(4.99	)		(75.3	)%
Cash provided by operating activities		$	199,212			$	250,161			$	(50,949	)		(20.4	)%
Non-GAAP Financial Measures: 1
Adjusted income from operations		$	145,700			$	249,331			$	(103,631	)		(41.6	)%
Adjusted net income		$	102,255			$	180,704			$	(78,449	)		(43.4	)%
Adjusted net income per diluted share		$	3.92			$	6.67			$	(2.75	)		(41.2	)%
Adjusted EBITDA		$	203,105			$	292,177			$	(89,072	)		(30.5	)%
Free cash flow		$	172,228			$	213,279			$	(41,051	)		(19.2	)%
1 Reconciliation of these non-GAAP financial measures are provided below the financial tables.

The Board of Directors approved a strategy to divest the Final Mile business (“Final Mile”) and the sale of Final Mile was completed on December 20, 2023. Accordingly, the results of operations and cash flows for Final Mile have been presented as a discontinued operation and have been excluded from continuing operations in this release for all periods presented. In addition, Final Mile assets and liabilities were reflected as “held for sale” on the Condensed Consolidated Balance Sheets in the press release for the prior period.

In line with the Company’s prudent approach to capital allocation and the focus on reducing leverage, the Board of Directors has made the decision to suspend Forward’s quarterly dividend while the Company continues to execute on de-risking the capital structure. This change will begin with the first quarter of 2024 dividend that would have been paid in March. The Board of Directors and management will continue to monitor progress and will reevaluate the quarterly dividend as leverage targets are achieved.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter 2023 results on Thursday, February 29, 2024 at 9:00 a.m. ET. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, or by dialing (800) 579-2543, Conference ID: FWRDQ423.

A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investors 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 (“LTL”) 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
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, in thousands, except per share data)
	Three Months Ended								Twelve Months Ended
	December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Operating revenue:
Expedited Freight	$	279,070			$	294,646			$	1,096,958			$	1,260,121
Intermodal		59,440				108,446				274,043				419,718
Eliminations and other operations		(82	)			(53	)			(266	)			(205	)
Operating revenue		338,428				403,039				1,370,735				1,679,634
Operating expenses:
Purchased transportation		150,351				165,934				586,195				730,412
Salaries, wages and employee benefits		71,583				72,220				287,566				302,759
Operating leases		20,908				22,933				87,413				85,290
Depreciation and amortization		17,579				11,130				57,405				42,552
Insurance and claims		11,145				11,881				50,133				47,478
Fuel expense		5,271				6,557				22,004				26,956
Other operating expenses		58,591				56,054				191,809				196,596
Total operating expenses		335,428				346,709				1,282,525				1,432,043
Income (loss) from continuing operations
Expedited Freight		26,745				38,792				116,040				192,583
Intermodal		5,068				13,869				25,327				56,874
Other operations		(28,813	)			3,669				(53,157	)			(1,866	)
Income from continuing operations		3,000				56,330				88,210				247,591
Other expense:
Interest expense		(23,976	)			(1,617	)			(31,571	)			(5,138	)
Other, net		—				—				—				—
Total other expense		(23,976	)			(1,617	)			(31,571	)			(5,138	)
(Loss) Income before income taxes		(20,976	)			54,713				56,639				242,453
Income tax expense		(6,255	)			15,704				13,836				63,039
Net (loss) income from continuing operations		(14,721	)			39,009				42,803				179,414
Income from discontinued operation, net of tax		116,465				3,933				124,548				13,777
Net income and comprehensive income	$	101,744			$	42,942			$	167,351			$	193,191
Net income per share:
Basic net (loss) income per share:
Continuing operations	$	(0.58	)		$	1.46			$	1.64			$	6.66
Discontinued operation		4.51				0.15				4.78				0.51
Net income per basic share1	$	3.94			$	1.61			$	6.42			$	7.17
Diluted net (loss) income per share:
Continuing operations	$	(0.58	)		$	1.45			$	1.64			$	6.63
Discontinued operation		4.51				0.15				4.77				0.51
Net income per diluted share1	$	3.93			$	1.60			$	6.40			$	7.14
Dividends per share:	$	0.24			$	0.24			$	0.96			$	0.96
1 Rounding may impact summation of amounts.

Expedited Freight Segment Information
(In thousands)
(Unaudited)
	Three Months Ended
	December 31, 2023				Percent of Revenue			December 31, 2022				Percent of Revenue			Change				Percent Change
Operating revenue:
Network 1	$	217,279			77.9	%		$	221,763			75.3	%		$	(4,484	)		(2.0	)%
Truckload		38,538			13.8				50,320			17.1				(11,782	)		(23.4	)
Other		23,253			8.3				22,563			7.7				690			3.1
Total operating revenue		279,070			100.0				294,646			100.0				(15,576	)		(5.3	)
Operating expenses:
Purchased transportation		132,359			47.4				140,772			47.8				(8,413	)		(6.0	)
Salaries, wages and employee benefits		56,291			20.2				57,272			19.4				(981	)		(1.7	)
Operating leases		15,396			5.5				14,596			5.0				800			5.5
Depreciation and amortization		12,328			4.4				7,192			2.4				5,136			71.4
Insurance and claims		9,438			3.4				9,326			3.2				112			1.2
Fuel expense		2,906			1.0				2,762			0.9				144			5.2
Other operating expenses		23,607			8.5				23,934			8.1				(327	)		(1.4	)
Total operating expenses		252,325			90.4				255,854			86.8				(3,529	)		(1.4	)
Income from operations	$	26,745			9.6	%		$	38,792			13.2	%		$	(12,047	)		(31.1	)%
1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial and Truckload revenue.

Expedited Freight Operating Statistics
	Three Months Ended
	December 31, 2023			December 31, 2022			Percent Change
Business days		63			63		—	%
Tonnage 1,2
Total pounds		689,621			648,012		6.4
Pounds per day		10,946			10,286		6.4
Shipments 1,2
Total shipments		846			885		(4.4	)
Shipments per day		13.4			14.0		(4.3	)
Weight per shipment		815			732		11.3
Revenue per hundredweight 3	$	31.52		$	34.68		(9.1	)
Revenue per hundredweight, ex fuel 3	$	23.99		$	26.07		(8.0	)
Revenue per shipment 3	$	256.90		$	253.83		1.2
Revenue per shipment, ex fuel 3	$	195.52		$	190.84		2.5
1 In thousands.
2 Excludes accessorial and Truckload products.
3 Includes intercompany revenue between the Network and Truckload revenue streams.

Intermodal Segment Information
(In thousands)
(Unaudited)
	Three Months Ended
	December 31, 2023				Percent of Revenue			December 31, 2022				Percent of Revenue			Change				Percent Change
Operating revenue	$	59,440			100.0	%		$	108,446			100.0	%		$	(49,006	)		(45.2	)%
Operating expenses:
Purchased transportation		18,073			30.4				25,215			23.3				(7,142	)		(28.3	)
Salaries, wages and employee benefits		15,243			25.6				18,695			17.2				(3,452	)		(18.5	)
Operating leases		5,512			9.3				8,337			7.7				(2,825	)		(33.9	)
Depreciation and amortization		5,251			8.8				3,938			3.6				1,313			33.3
Insurance and claims		2,398			4.0				2,448			2.3				(50	)		(2.0	)
Fuel expense		2,365			4.0				3,795			3.5				(1,430	)		(37.7	)
Other operating expenses		5,530			9.3				32,149			29.6				(26,619	)		(82.8	)
Total operating expenses		54,372			91.5				94,577			87.2				(40,205	)		(42.5	)
Income from operations	$	5,068			8.5	%		$	13,869			12.8	%		$	(8,801	)		(63.5	)%

Intermodal Operating Statistics
	Three Months Ended
	December 31, 2023			December 31, 2022			Percent Change
Drayage shipments		65,776			74,532		(11.7	)%
Drayage revenue per shipment	$	821		$	1,369		(40.0	)%

Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
	December 31, 2023			December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	121,969		$	45,822
Restricted cash equivalents		39,604			—
Accounts receivable, net		153,267			188,229
Other receivables, net		5,408			—
Other current assets		26,780			35,322
Current assets held for sale		—			34,942
Total current assets		347,028			304,315
Noncurrent restricted cash equivalents		1,790,500			—
Property and equipment, net		258,096			246,329
Operating lease right-of-use assets		111,552			131,097
Goodwill		278,706			257,987
Other acquired intangibles, net		134,789			115,582
Other assets		58,862			51,739
Noncurrent assets held for sale		—			101,027
Total assets	$	2,979,533		$	1,208,076
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	45,430		$	50,094
Accrued expenses		62,948			49,918
Other current liabilities		71,727			3,944
Current portion of debt and finance lease obligations		12,645			9,315
Current portion of operating lease liabilities		44,344			42,266
Current liabilities held for sale		—			13,861
Total current liabilities		237,094			169,398
Finance lease obligations, less current portion		26,736			15,711
Long-term debt, less current portion and debt issuance costs		—			106,588
Long-term debt held in escrow		1,790,500			—
Operating lease liabilities, less current portion		71,598			92,903
Other long-term liabilities		47,144			59,044
Deferred income taxes		42,200			51,093
Noncurrent liabilities held for sale		—			6,095
Shareholders’ equity:
Preferred stock		—			—
Common stock		257			265
Additional paid-in capital		283,684			270,855
Retained earnings		480,320			436,124
Total shareholders’ equity		764,261			707,244
Total liabilities and shareholders’ equity	$	2,979,533		$	1,208,076

Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Three Months Ended
	December 31, 2023				December 31, 2022
Operating activities:
Net (loss) income from continuing operations	$	(14,721	)		$	39,009
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations:
Depreciation and amortization		17,579				11,130
Change in fair value of earn-out liability		—				—
Share-based compensation expense		2,938				2,417
Provision for revenue adjustments		1,065				1,888
Deferred income tax expense		(11,092	)			5,724
Other		(135	)			(1,019	)
Changes in operating assets and liabilities, net of effects from the purchase of acquired companies:
Accounts receivable		9,588				26,077
Other receivables		(5,408	)			—
Other current and noncurrent assets		27,061				(19,700	)
Accounts payable, accrued expenses and other long-term liabilities		30,217				(8,081	)
Net cash provided by operating activities of continuing operations		57,092				57,445
Investing activities:
Proceeds from sale of property and equipment		466				949
Purchases of property and equipment		(8,645	)			(14,918	)
Purchase of businesses, net of cash acquired		—				(25,672	)
Net cash used in investing activities of continuing operations		(8,179	)			(39,641	)
Financing activities:
Proceeds from credit facility		25,000				—
Payments on credit facility		(147,375	)			(375	)
Proceeds from long-term debt held in escrow		1,790,500				—
Repayments of finance lease obligations		(2,660	)			(1,876	)
Payment of debt issuance costs		—				—
Proceeds from issuance of common stock upon stock option exercises		—				—
Payments of dividends to shareholders		(6,197	)			(6,404	)
Repurchases and retirement of common stock		—				(14,997	)
Proceeds from common stock issued under employee stock purchase plan		379				409
Payment of minimum tax withholdings on share-based awards		(25	)			(37	)
Contributions from subsidiary held for sale		224,695				4,452
Net cash provided by (used in) financing activities of continuing operations		1,884,317				(18,828	)
Net increase (decrease) in cash of continuing operations		1,933,230				(1,024	)
Cash from discontinued operation:
Net cash (used in) provided by operating activities of discontinued operation		(35,135	)			4,831
Net cash provided by (used in) investing activities of discontinued operation		259,863				(410	)
Net cash (used in) provided by financing activities of discontinued operation		(224,728	)			(4,421	)
Net increase (decrease) in cash and cash equivalents		1,933,230				(1,024	)
Cash, cash equivalents, and restricted cash at beginning of period of continuing operations		18,843				46,846
Cash at beginning of period of discontinued operations		—				—
Net increase (decrease) in cash, cash equivalents, and restricted cash		1,933,230				(1,024	)
Less: cash at end of period of discontinued operation		—				—
Cash, cash equivalents, and restricted cash at end of period of continuing operations	$	1,952,073			$	45,822

Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
	Year Ended
	December 31, 2023				December 31, 2022
Operating activities:
Net income from continuing operations	$	42,803			$	179,414
Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations:
Depreciation and amortization		57,405				42,552
Change in fair value of earn-out liability		—				(294	)
Share-based compensation expense		11,508				10,670
Provision for revenue adjustments		5,091				6,426
Deferred income tax expense		(8,893	)			7,686
Other		(1,180	)			(1,279	)
Changes in operating assets and liabilities, net of effects from the purchase of acquired companies:
Accounts receivable		30,555				(2,588	)
Other receivables		(5,408	)			8,097
Other current and noncurrent assets		30,670				(13,289	)
Accounts payable, accrued expenses and other long-term liabilities		36,661				12,766
Net cash provided by operating activities of continuing operations		199,212				250,161
Investing activities:
Proceeds from sale of property and equipment		3,741				2,372
Purchases of property and equipment		(30,725	)			(39,254	)
Purchase of businesses, net of cash acquired		(56,703	)			(66,105	)
Net cash used in investing activities of continuing operations		(83,687	)			(102,987	)
Financing activities:
Proceeds from credit facility		70,000				—
Payments on credit facility		(178,500	)			(49,000	)
Proceeds from long-term debt held in escrow		1,790,500				—
Repayments of finance lease obligations		(9,500	)			(6,108	)
Payment of debt issuance costs		—				—
Proceeds from issuance of common stock upon stock option exercises		—				206
Payment of earn-out liability		—				(91	)
Payments of dividends to shareholders		(24,995	)			(25,865	)
Repurchases and retirement of common stock		(93,811	)			(62,771	)
Proceeds from common stock issued under employee stock purchase plan		800				783
Payment of minimum tax withholdings on share-based awards		(4,340	)			(3,330	)
Contributions from subsidiary held for sale		240,572				7,508
Net cash provided by (used in) financing activities of continuing operations		1,790,726				(138,668	)
Net increase in cash and cash equivalents of continuing operations		1,906,251				8,506
Cash from discontinued operation:
Net cash (used in) provided by operating activities of discontinued operations		(17,824	)			8,929
Net cash provided by (used in) investing activities of discontinued operation		258,525				(1,475	)
Net cash used in financing activities of discontinued operation		(240,701	)			(7,454	)
Net increase in cash and cash equivalents		1,906,251				8,506
Cash, cash equivalents, and restricted cash at beginning of period of continuing operations		45,822				37,316
Cash at beginning of period of discontinued operations		—				—
Net increase (decrease) in cash, cash equivalents, and restricted cash		1,906,251				8,506
Less: cash at end of period of discontinued operations		—				—
Cash, cash equivalents, and restricted cash at end of period of continuing operations	$	1,952,073			$	45,822

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, 2023 and 2022, 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, 2023 and 2022 (in thousands):

		Three Months Ended								Twelve Months Ended
Continuing Operations		December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Net income		$	(14,721	)		$	39,009			$	42,803			$	179,414
Interest expense			23,976				1,617				31,571				5,138
Income tax expense			(6,255	)			15,704				13,836				63,039
Depreciation and amortization			17,579				11,130				57,405				42,552
Reported EBITDA			20,579				67,460				145,615				290,143
Vehicle liability reserve			—				1,500				—				1,500
Due diligence, integration and transaction costs			29,619				534				57,490				534
Adjusted EBITDA		$	50,198			$	69,494			$	203,105			$	292,177

The following is a reconciliation of net cash provided by operating activities to free cash flow for the three and twelve months ended December 31, 2023 and 2022 (in thousands):

		Three Months Ended								Twelve Months Ended
Continuing Operations		December 31, 2023				December 31, 2022				December 31, 2023				December 31, 2022
Net cash provided by operating activities		$	57,092			$	57,445			$	199,212			$	250,161
Proceeds from sale of property and equipment			466				949				3,741				2,372
Purchases of property and equipment			(8,645	)			(14,918	)			(30,725	)			(39,254	)
Free cash flow		$	48,913			$	43,476			$	172,228			$	213,279

The following is a reconciliation of reported income from operations, net income, and net income per diluted share to adjusted income from operations, net income, and net income per diluted share for the three and twelve months ended December 31, 2023 and 2022 (in thousands, except net income per diluted share):

		Three Months Ended December 31, 2023												Three Months Ended December 31, 2022
Continuing Operations		Income From Operations				Net Income1				Net Income Per Diluted Share1				Income From Operations				Net Income2				Net Income Per Diluted Share2
As Reported		$	3,000			$	(14,721	)		$	(0.58	)		$	56,330			$	39,009			$	1.45
Due diligence, integration and transaction costs			29,619				20,786				0.81				534				383				0.01
Interest expense			—				14,862				0.58				—				—				—
Vehicle liability reserve			—				—				—				1,500				1,077				0.04
As Adjusted		$	32,619			$	20,927			$	0.81			$	58,364			$	40,469			$	1.51
1 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effect of the above item is $15,149.
2 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effect of the above item is $574.
		Twelve Months Ended December 31, 2023												Twelve Months Ended December 31, 2022
Continuing Operations		Income From Operations				Net Income1				Net Income Per Diluted Share1				Income From Operations				Net Income2				Net Income Per Diluted Share2
As Reported		$	88,210			$	42,803			$	1.64			$	247,591			$	179,414			$	6.63
Due diligence, integration and transaction costs			57,490				43,447				1.67				534				396				0.01
Interest expense			—				16,005				0.62				—				—				—
Vehicle liability reserve			—				—				—				1,500				1,112				0.04
Change in the fair value of the earn-out liability			—				—				—				(294	)			(218	)			(0.01	)
As Adjusted		$	145,700			$	102,255			$	3.92			$	249,331			$	180,704			$	6.67
1 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effect of the above item is $19,217.
2 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effect of the above item is $451.

Note Regarding Forward-Looking Statements

This press release contains “orward-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: “nticipate,”“ntend,”“lan,”“oal,”“eek,”“elieve,”“roject,”“stimate,”“xpect,”“trategy,”“uture,”“ikely,”“ay,”“hould,”“ill”and similar references to future periods. Forward-looking statements included in this press release relate to expectations regarding customer demand for the Company’ services as well as the performance of the Company’ LTL services; the Company's ongoing commitment to provide excellent service to its customers; ability to achieve the intended benefits of the acquisition of Omni Logistics, including any revenue and cost synergies; expectations regarding the Company's ability to execute on its plan to integrate Omni Logistics in order to generate long-term value for shareholders; expectations regarding the Company's ability to grow its customer base, including the expected volumes from freight forwarder customers; the future expected use of earnings guidance; expectations regarding the Company's revenue growth strategies, including with respect to capital allocation and leverage; and the future declaration of dividends.

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 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, including the realization of expected synergies and the achievement of deleveraging targets within the expected timeframes or at all, 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 noncore 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, 2022, 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240228837823/en/

Forward Air Corporation

Justin Moss, 404-362-8933

jmoss@forwardair.com

Source: Forward Air Corporation

FAQ

What were Forward Air Corporation's (FWRD) financial results for the fourth quarter of 2023?

Forward Air Corporation reported financial results for the three and twelve months ended December 31, 2023, with a 16% decline in revenue on a continuing operations basis.

How did Forward Air Corporation's less-than-truckload line of business perform in the fourth quarter of 2023?

Forward Air Corporation's less-than-truckload line of business saw positive volume trends with a +6% growth in pounds per day and an 11% increase in weight per shipment over the same period in the prior year.

What was the impact of market conditions on Forward Air Corporation's revenue in the fourth quarter of 2023?

Market conditions led to decreased customer demand for intermodal and truckload brokerage services, resulting in a 16% decline in revenue over the prior year, partially offset by growth in less-than-truckload services.

What was Forward Air Corporation's adjusted net income per diluted share for the fourth quarter of 2023?

Forward Air Corporation's adjusted net income per diluted share on a continuing operations basis was $0.81 for the fourth quarter, exceeding the guidance range of $0.78 to $0.80.

When did Forward Air Corporation acquire Omni Logistics?

Forward Air Corporation closed on the acquisition of Omni Logistics on January 25, 2024, aiming to enhance its market position and customer base.