The new management team at Forward Air continues to plot a path to profitability following the closing of a messy acquisition a little more than a year ago. A still-tough demand backdrop during the fourth quarter impeded those efforts, but the company touted some wins on a Wednesday evening call with analysts.

Forward (NASDAQ: FWRD) reported a net loss from continuing operations of $35.4 million, or $1.23 per share. That compared to a consensus expectation for a 12-cent-per-share loss, but it’s tough to discern what analysts baked into that figure. Full-year adjusted earnings before interest, taxes, depreciation and amortization of $308 million came in at the top end of management’s guidance range.

Importantly, the company ended the year with $382 million in liquidity, a decline from $460 million in the third quarter but a much more stable debt structure given a recent amendment to its credit facility. The revolving facility was lowered $40 million to $300 million but provides more room on the debt covenant (6.75 times net debt leverage versus the 4.5 times level that would have been required later this year).

Forward ended the fourth quarter at a 5.5 times net leverage ratio, up from 5.4 times in the third quarter but it now has a $59 million cushion to the new covenant. It isn’t required by the new agreement to meet the 5.5 times threshold until the fourth quarter of 2026.

Cash flow from operations was nearly cut in half to $42 million in the period, but Forward paid outsize debt service and professional fees that it won’t fully contend with moving forward. The company generated $20 million in positive cash flow in the second half of 2024 versus a cash burn of $97 million in the first half.

Forward faces no maturities on its long-term debt until the end of 2030.

“While we could have performed better financially in the fourth quarter, we absolutely killed it in the transformational changes we made to the business that should serve as the foundation of stability in 2025 and growth in ’25 and beyond,” said CFO Jamie Pierson on the call.

Pierson said the company faces $170 million annually in interest payments moving forward, but “it doesn’t take a lot to be free cash flow-positive” when excluding the overhang from deal costs.

He also noted that the company delivered more than the $75 million in annualized integration synergies initially anticipated. It now has achieved more than $100 million in annual cost savings after reductions in head count, the terminal footprint and reliance on third-party providers.

The network integration with Omni Logistics will be completed by the end of the first quarter.

Forward’s expedited segment, which includes less-than-truckload operations, reported a 5% year-over-year decline in revenue to $266 million.

Tonnage per day was off 4% y/y as shipments fell 9%, partially offset by a 5% increase in weight per shipment. Revenue per shipment was down 1% y/y (up 4% excluding the impact of fuel). The unit posted a 2.7% operating margin, which was 690 basis points worse y/y.

The current leadership team is undoing a prior strategy “focused more on growing volume than profitability.” It’s working to increase shipment weights, and recent corrective pricing measures should be fully in place by the end of February.

Revenue per hundredweight, or yield, was down 6% y/y in the quarter (off 1% excluding the impact of fuel). Yields are expected to inflect positively by the second quarter.

Management pushed back on a question about customers and competitors trying to replicate Forward’s airport-to-airport network. Following the merger announcement with Omni Logistics – a freight forwarder and competitor to some of Forward’s legacy customers – some entities across the industry, sensing an opening in the market, joined forces to stand up linehaul capacity networks.

“Not much has changed. Our legacy freight forwarder customers … they’re entrepreneurs. Where they need and have the ability to build density lanes, they’re going to continue to do that,” said CEO Shawn Stewart. “It’s not like we’re losing confidence with them.”

Stewart said the revenue decline in its expedited business has come as volumes are down at many of its legacy customers.

Pierson said Forward runs a better network and has better service than its competitors, which he believes translates to a meaningful margin opportunity.

Omni reported $326 million in revenue, a 3% decline from the third quarter. (Prior-year results were not provided.) The unit generated $1.2 billion in revenue during 2024 compared to the $1.64 billion annual revenue run rate it had prior to the August 2023 deal announcement.

Forward didn’t provide any update on the strategic review process, which may include selling the company or merging with another entity.

Shares of FWRD were up 4.9% in after-hours trading Wednesday after closing the day off 6.1%. Shares of FWRD are off roughly 77% since the merger with Omni was announced.

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