Forward Air (NASDAQ: FWRD) reported its strongest quarterly performance since its January 2024 merger with Omni Logistics, with consolidated second-quarter revenue of $673 million, up 9% year over year, and adjusted EBITDA of $93 million, up 18%, according to FreightWaves.
Operating results improve across all segments
The results, reported Wednesday, follow a "messy merger" with freight forwarder Omni Logistics in January 2024, FreightWaves reported. Operating results improved in all segments in the second quarter, with Expedited Freight leading the way. The company reported a $244 million before-tax loss from continuing operations, but that figure included a $244 million noncash goodwill impairment charge triggered by a potential customer loss.
| Segment | Q2 revenue | Y/Y change | Key margin |
|---|---|---|---|
| Expedited Freight | $319 million | +24% | 10.9% operating margin |
| Omni Logistics | $339 million | +3% | 11.2% adjusted EBITDA margin |
| Intermodal | $60 million | +1% | 16.7% EBITDA margin |
| Consolidated | $673 million | +9% | $93 million adjusted EBITDA |
Expedited Freight leads on returning LTL volume
Forward's expedited segment, which includes less-than-truckload (LTL) operations, posted revenue of $319 million, a 24% year-over-year increase, according to FreightWaves. Tonnage increased 7% as shipments rose 2% and weight per shipment rose 5%. Yield (revenue per hundredweight) declined 2% year over year excluding fuel surcharges; FreightWaves reported that heavier shipment weights were a drag on the yield metric, partially offset by an undisclosed increase in length of haul.
Revenue per shipment excluding fuel was up 3% year over year. 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, 340 basis points better year over year, and a 13.6% EBITDA margin, 200 basis points higher. Nearly every expense line moved lower year over year as a percentage of revenue, except purchased transportation, which was 430 basis points higher.
Omni Logistics and the $250 million contract risk
Omni Logistics reported revenue of $339 million, a 3% year-over-year increase, and adjusted EBITDA of $38 million, up 28%, FreightWaves reported. Adjusted EBITDA margin improved 220 basis points 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. FreightWaves noted that Forward 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.
Divestitures and balance sheet
The customer disruption also impeded a plan to sell the entire enterprise to private investors, according to FreightWaves. Forward commenced a strategic review at the beginning of 2025 as pressure from investors mounted following its contested merger with Omni Logistics. It turned its focus to selling its intermodal unit and two smaller legacy Omni businesses, which generated $394 million in combined revenue last year.
Forward sold one of the Omni businesses in the second quarter and the other in July, FreightWaves reported, and 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% year over year to $60 million in the quarter, with a 16.7% EBITDA margin, 160 basis points better year over year.
Operating cash flow of $46 million in the second quarter was $6 million lower year over year. Liquidity of $401 million was nearly flat sequentially even though the company made a $34 million semiannual interest payment. Net debt of $1.66 billion stood at 5.2 times last 12 months' adjusted EBITDA, below a 6x debt covenant; trailing 12-month adjusted EBITDA totaled $319 million. Shares of FWRD were up 10.7% in after-hours trading Wednesday.
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.
Watch list
- Sale of the intermodal unit, targeted by the end of the year, and use of proceeds to reduce the $1.66 billion net debt position.
- The status of the $250 million annual contract logistics agreement, now covered by a memorandum of understanding for at least two years.
- Whether returning LTL freight from the depressed truckload market continues to support tonnage and revenue per shipment in the Expedited Freight segment.
- Any further strategic moves following the sale of two legacy Omni businesses in the second quarter and July.
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