Quick Overview

  • Forward Air's third-quarter operating profit fell nearly 34% year-over-year to $15 million, according to earnings released Wednesday.
  • The "Other Operations" segment recorded a loss of nearly $18.3 million, a significant widening from the nearly $1.8 million loss in that category in the third quarter of 2024. This segment excludes the company's expedited freight, Omni Logistics, and intermodal divisions.
  • CEO Shawn Stewart said in the earnings report: "Optimizing our cost structure to improve operational efficiency remains a top priority, and in the third quarter we implemented additional cost reduction measures, primarily including right-sizing our business to align with current freight demand and our ongoing transformation strategy."

In-Depth Analysis

Executives said pricing gains and shifting owner-operators from LTL to truckload services helped stabilize profitability.

The report showed third-quarter consolidated EBITDA (a non-GAAP metric) was $78 million, with the metric at $299 million over the trailing twelve months.

Additionally, CFO Jamie Pierson said on Wednesday's call that cost reduction initiatives are expected to save approximately $12 million annually.

Forward Air acquired Omni Logistics in January 2024, following a turbulent process that included a lawsuit filed by Omni against the company. Executives said Wednesday they are still considering strategic alternatives, such as a potential sale, merger, or other transaction, to maximize long-term value for the company.

Stewart said that as part of the integration process of the two companies, they are unifying operations except for sales channels. Forward Air is also consolidating three enterprise resource planning software systems into one.

Amid a prolonged freight recession, mergers and acquisitions offer transportation service providers the potential to find further efficiencies and cost savings while they grapple with rising operating costs and weak demand. Similar to Forward Air, DSV is seeking to divest its USA Truck business, and Landstar is also considering selling its Landstar Metro business in Mexico.

"We are working toward selling Landstar Metro by the end of 2025 or early 2026, and there is currently considerable market interest in the company," Landstar President and CEO Frank Lonegro said on an October 28 earnings call.