Airline company Forward Air surpasses Q2 EBITDA expectations, sparking speculation among investors about a potential sale of the company
In the second quarter of 2025, Forward Air reported its financial results, showcasing a mix of positive operational improvements and lingering financial challenges.
The expedited segment, which accounts for a significant portion of the company's revenue, reported a 7.6% operating margin, a 10 basis points improvement year-over-year and 130 basis points better than the first quarter. Despite this, the segment experienced a 12% year-over-year revenue decline to $258 million. Tonnage fell 13% year-over-year, although this was an improvement from the first quarter.
On the other hand, the Omni segment, a result of the Omni Logistics merger, reported a 5% year-over-year increase in revenue, totalling $328 million. The segment's adjusted EBITDA was $30 million, equating to a 9% adjusted EBITDA margin, a 120 basis points improvement sequentially.
Consolidated adjusted EBITDA was $74 million, $5 million higher than the first quarter result and $2 million ahead of consensus. However, the company reported a net loss from continuing operations of $20.4 million, or 41 cents per share.
Despite the financial challenges, Forward Air beat second-quarter adjusted EBITDA expectations, a testament to the company's operational improvements and cost management efforts. Management remains optimistic about future earnings and cash flow improvements once the freight market normalises.
The company used $13 million in cash in the second quarter, with cash flow from operations totaling $14 million in the first half of the year. Liquidity at the end of the second quarter was $368 million, a $25 million decline from the first quarter. Net debt of the company stood at $1.69 billion, 5.7 times last twelve months' adjusted EBITDA.
In terms of new business, Forward Air announced "across-the-board" business wins in truckload, international airfreight, and ground transportation. The company also added 15,000 annual expedited TL shipments from a leader in the package delivery services industry and secured a separate distribution services and TL contract with an athletics brand.
The strategic review process, initiated in early 2025, is actively progressing with potential outcomes including a sale or merger of the company. Several private equity firms, including Clearlake Capital, Apollo Global Management, Platinum Equity, and Blackstone, have submitted bids to acquire Forward Air, with a second round of takeover bids expected in early September 2025. Despite these bids, no agreements have been reached, and Forward's board is still evaluating options to maximise shareholder value.
In conclusion, Forward Air remains in an active strategic review phase, working to stabilise and improve its financial and operational performance in the aftermath of the Omni Logistics merger. The company continues to face challenges, but operational improvements and cost management have led to EBITDA beating expectations and some margin improvements. The future remains uncertain, with potential outcomes including a sale or merger, but management remains optimistic about the company's prospects.
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