Forward Air Reports 82% Earnings Drop During Q3
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Forward Air Corp. reported an 82.2% drop in earnings during the third quarter of 2023 as revenue declined amid a weak freight environment, the company reported Oct 30.
The Greeneville, Tenn.-based ground transportation and logistics services provider posted net income of $9.29 million, or 99 cents a diluted share, for the three months ending Sept. 30. That compared with $52.1 million, or $1.93 a share, the previous year. Total operating revenue fell by 18.9% to $413.4 million from $510 million.
“Market demand continues to be challenged for our intermodal and truckload brokerage services as both lines of business are navigating an extended weak freight environment,” Chief Financial Officer Rebecca Garbrick said in the company’s earnings release.
The results were below the expectations of Wall Street analysts, who were looking for $1.10 per share and quarterly revenue of $419.77 million, according to Zacks Consensus Estimate.
“On our last earnings call, I did say that this freight recession is tricky, and I did talk about [how] intermodal and truckload were lagging the LTL recovery,” Forward Air CEO Tom Schmitt said during a call with investors Oct. 31. “That was still the case for our third quarter. [For] LTL itself, we had a weak July, and we were still showing negative year-over-year volume trends.”
He added, “Over the past couple of years and especially in the past few months, you gave us a lot of feedback around our LTL focus and around corporate clarity. We are listening, and we are stepping up. Our Grow Forward program is all about LTL.”
Schmitt said the Grow Forward initiative is focused on expanding high-value freight offerings to a larger customer base while staying focused on operating efficiency and pricing discipline. The initiative was launched by the carrier earlier this year, and Schmitt said more details about the program will be released over the next few weeks.
“It’s about rigorous focus on high-value freight, priced appropriately with industry-leading service in a cleansed operating environment and accessing a larger customer and revenue base,” Schmitt said.
Schmitt also discussed the outlook for his company’s announced merger with Omni Logistics. The pair announced Aug. 10 a definitive agreement to combine in a cash-and-stock transaction Aug. 10. He said Forward Air has seen its average daily volumes with domestic freight forwarders increase by more than 14% since announcing the proposed acquisition, and it has grown its LTL direct shipper customer count by more than 33%.
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“The acquisition of Omni, that was all about going after more of that $15 billion high-value freight LTL market,” Schmitt said. “First and foremost, growing with the core — that’s the most important part. Our domestic forwarders have been our core partners since our beginning, and we’re growing with them again.”
For Q3, Forward Air’s expedited freight segment saw revenue decrease 11.2% to $351.3 million from $395.6 million during the same time last year. Income from operations decreased 35.4% to $36.4 million from $56.3 million. The segment includes network, truckload and final-mile operations.
- Network decreased 9.8% to $217 million from $240.5 million.
- Truckload decreased 30.2% to $38.8 million from $55.6 million.
- Final-mile decreased 5.7% to $72.5 million from $76.8 million.
The intermodal segment saw revenue fall 45.7% to $62.1 million from $114.4 million. Income from operations fell 71.4% to $4.74 million from $16.6 million.
Stephens investment analyst Jack Atkins in a report expressed disappointment that Forward Air’s results missed expectations but was encouraged that the company managed to post a 20% increase in adjusted earnings before interest and taxes sequentially in its expedited freight segment.
“With the Omni merger currently in flux, the company reiterated its focus on LTL and noted it is accelerating its strategic portfolio review,” Atkins said.
Forward Air ranks No. 27 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 1 on the Air/Expedited sector list.
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