In recent months, I have been expanding coverage in the freight and logistics industry and with this report, I am adding Forward Air to my coverage list. My main areas of coverage are aerospace & defense, as well as airport infrastructure and airlines. Covering companies in the freight and logistics industry, however, is not a remote area to cover as air freight plays an integral part in the freight and logistics chain. Furthermore, coming out of the pandemic, we are seeing passenger airlines as well as freight service providers battling similar trends.
What Does Forward Air Do?

Forward Air
Forward Air has an annual revenue of $2 billion that the company generates via expedited less-than-truckload or LTL services, full truckload services as well as intermodal and final mile solutions and brokerage services. The company has more than 15,300 daily LTL shipments making use of 6,700 trailers. What I like about the company is its extensive coverage for LTL, full truckload and intermodal across the US. There is some exposure to Canada and Mexico as well, and perhaps the nearshoring trend that favors manufacturing in Mexico could drive the results.
Why Did Forward Air Stock Tank?
Forward Air stock has tumbled nearly 80 percent over the course of the past year, and I would say that that is not a major surprise. There is a freight recession, which is a very tough one to navigate for any company. On top of that, Forward Air has acquired Omni, which is a company that is roughly the same size as Forward Air. According to the transaction agreement, Omni shareholders would hold around 37.7% of the pro forma equity, as the transaction was mainly financed with stock. The business combination also was not one that went smoothly. Omni shareholders questioned the initial deal, which led to a litigation between Omni and Forward, with the latter seeking a way out of the deal. In times when there is a lot of turbulence for the company’s results but also for investor sentiment, having an ongoing litigation was not desired, and I believe that for many Forward Air shareholders that was a reason to sell their shares, thereby generating selling pressure.
Forward Air Results Show The Ugly Truth Of The Freight Recession

Forward Air
The most recent results show a 51.5% increase in revenues, but that was driven by the addition of $224.8 million in revenues from Omni, partially offset by lower Intermodal revenues. Operating expenses nearly doubled to $310.5 million, driven by $253.4 million in operating expenses from the Omni operations as well as $58.2 million in integration costs. So, what we are essentially looking at is top line and cost growth due to the Omni acquisition and for the operating income in the current environment, Omni is another loss element while intermodal operating income declined 68% to $3.6 million and Expedited Freight income declined by more than a third to $19.5 million. Overall, operating income declined from $47.2 million to a $65.7 million loss and $7.5 million loss when adding back the transaction and integration costs. Excluding Omni, the operating income would have been $21.1 million, which still would be a 45% decrease in profits. So, we are looking at a business that is already seeing the freight recession impacting its results, and then added the loss-making Omni operations to it.
What Are Analysts Expecting For Forward Air Q2 Earnings?
The first quarter results missed analysts expectations by $0.49 cents and on estimate of -$0.15 that is a very big miss. Forward Air is estimated to report earnings on the 5th of August, and analysts are expecting $651.4 million in revenues and a loss of $0.21 per share. The company has a disastrous track record, missing revenue estimates 7 out of 8 times in two years and missing EPS estimates 5 out of 8 times and beating estimates three times.
What Is Forward Air Stock Worth?

The Aerospace Forum
Looking at Forward Air, there is not a lot I like. The results are really going to depend on stabilization in the freight market and achieving synergies with Omni. I added the forward projections for Forward Air to the evoX stock screener, and Forward Air stock does not look extremely attractive. Against its elevated company median there is upside for 2025, but for 2024 we see that the stock is valued fairly. Given the uncertainties in the freight market, the suspension of dividends and stock repurchases to focus on debt reduction, I do not see a compelling investment angle.
Conclusion: Omni Acquisition Has To Pay Off For A Better Investment Angle
As for many companies in the freight and logistics industry, the results are not pretty. For Forward Air, things are looking even more rough as the company has added debt to acquire Omni and that business is also not really generating any value at this point in time. The Omni M&A drama has distracted management from actually operating the business day to day in a very complex and depressed environment and so the big question becomes when the company can see the benefits of a laser focused approach on managing the business and how Omni and the debt that needs to be serviced feather into that plan.
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