Forward Air Corporation Q2 FY2025 earnings call

Management Statement and Operational Highlights:

• Awards: Omni Logistics was honored as International and Domestic Forwarder of the Year by doTERRA; GLT Logistics named Forward Air Carrier of the Year; Omni Logistics Asia team recognized by AMD for agility during demand surge.
• Quarterly Results: Consolidated EBITDA was $74 million, adjusted EBITDA was $74 million. Expedited Freight improved EBITDA and margin after pricing actions. Omni Logistics saw revenue and EBITDA growth. Intermodal remained consistent.
• Cash Flow: Cash used by operations improved, with $14 million of cash provided by operations in the first half of 2025. Liquidity ended the second quarter at $368 million.
• Strategic Review: Progressing, but no updates on details of the process.
• Network Optimization: Focus on lean operations, improving quality of operations and service standards, with ongoing efforts to right-size expense base.

Segment Performance:

• Expedited Freight: Revenue decreased $34 million (11.5%) to $258 million year-over-year. Reported EBITDA grew from $18 million in the fourth quarter of 2024 to $30 million in the second quarter of 2025, and the margin improved from 6.6% to 11.6%.
• Omni Logistics: Revenue increased $16 million to $328 million year-over-year. Reported EBITDA went from $20 million in the second quarter of last year to $30 million this year, with the margin improving from 6.4% to 9%.
• Intermodal: Revenue was $59 million, flat year-over-year. Reported EBITDA was $9 million, generally in line with the $9 million to $10 million reported in each of the last 4 quarters.

Guidance:

• Improved earnings quality as historical quarterly pro forma and synergy savings roll off.
• Focus on cash generation and conversion, with consistent operating cash flow of approximately $40 million to $50 million per quarter.
• Continued focus on network optimization and service to drive growth once the freight environment normalizes.

Risks:

• Macroeconomic uncertainties, including tariffs and their potential impact on consumer confidence and global freight flows.
• Market volatility affecting transportation volumes and visibility.

Question and Answer: Q: Provide an update on specific commercial synergy efforts taking place at Omni?

A: Hired a new Chief Commercial Officer, team is laser-focused on synergy selling of products worldwide, enabling the sales team and focusing on growth for the combined organization.

Q: Thoughts on the timing of the strategic review process?

A: Can't share specific timing, the process is ongoing and will provide updates when there is substance to report.

Q: Volume trends in Q3 and GRI plans?

A: No intra-quarter guidance, focus on SRIs (strategic rate increases) with customers rather than GRIs, working directly with customers on lane pairs for adjustments.

Q: Transition from integration to transformation and revenue growth?

A: Winning new business across truckload, international airfreight, etc., with both existing and new customers, with incremental revenue from various sources.

Q: Pricing actions and future pricing outlook?

A: Pricing fixed, ongoing assessment of freight, with focus on accurate cost and pricing modeling for operations.