Forward Air Corporation Aktie

Welcome to Forward Air's First Quarter 2026 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Tony Carreño, Senior Vice President of Treasury and Investor Relations.

Thank you, operator, and good afternoon, everyone. Welcome to Forward Air's first quarter earnings conference call. With us this afternoon are Shawn Stewart, President and Chief Executive Officer; and Jamie Pearson, Chief Financial Officer.

By now, you should have received the press release announcing Forward Air's first quarter 2026 results, which was also furnished to the SEC on Form 8-K. We have also furnished a slide presentation outlining first quarter 2026 earnings highlights and a business update. Both the press release and a slide presentation for this call are accessible on the Investor Relations section of Forward Air's website at forwardair.com. Please be aware that certain statements in the company's earnings release announcement and on this conference call may be considered forward-looking statements. This includes statements which are based on expectations, intentions and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts, including statements regarding our fiscal year 2026.

These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the SEC and the press release and slide presentation relating to this earnings call. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

During the call, there may also be discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP. Management uses non-GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in today's press release and slide presentation.

I will now turn the call over to Shawn.

Good afternoon, everyone, and thank you for joining us. I appreciate your interest in Forward Air Corporation. There are 3 main topics that I'd like to cover on today's call. First, I will provide an update on the customer transition and our strategic alternatives review that we announced in our press release. Second, I will share some thoughts on our first quarter results and the logistics market in general. Third, I will comment on recent awards earned by our team before turning the call over to Jamie.

Let me start with the customer transition. While no formal notices have been delivered, we are in discussions with one of our largest customers to transition a significant portion of their business to other business will be transitioned and the timing thereof are still being discussed, but we are currently anticipating that the majority of what will ultimately transition will start in early 2027 and take place throughout the balance of the year. It is important to note that we believe this has little, if anything, to do with the impeccable level of service that we provide them and more about their own internal diversification strategy. We are still in active discussions to retain as much of the business as possible, and we are doing everything we can to minimize the impact to our company.

I want to reiterate that we believe the customer's decision is entirely related to their own operation and supplier diversification initiatives and has nothing to do with the exceptional service we provide them during our long-term partnership. And this leads me to an update on our strategic review and the new actions we are now pursuing to enhance value and help offset this potential impact.

As you know, in January 2025, the Board initiated a comprehensive review of strategic alternatives to maximize shareholder value negotiations and discussions with multiple parties. However, due to a variety of factors, including the developments that I just mentioned, no actionable proposals for sale of the company were received. We continue to consider all opportunities to enhance shareholder value, and we are now pivoting our focus to pursue a sale of noncore assets, including our Intermodal segment and 2 of our smaller legacy Omni businesses, which in aggregate represent approximately $394 million of our 2025 revenue. These targeted sales are intended to advance our efforts to delever the balance sheet and further focus our services around the core of what we do every single day, which is providing service-sensitive logistics to our customers around the world in air, ocean, ground and contract logistics markets.

With that, let's turn to the second topic, our quarterly results. In the midst of an incredible complex integration, a fairly weak industry backdrop, changing tariff regulations and the disruption in the Middle East, our team continues to make progress executing our transformation plan, overhauling operations and improving the quality of our earnings results, which is reflected in our results. For the first quarter, we reported operating income of $20 million compared to $5 million last year and consolidated EBITDA, which is calculated pursuant to our credit agreement, was $70 million compared to $73 million a year ago. Regarding the overall logistics market, domestic transportation supply has continued to tighten, driven in large part by increased regulatory and enforcement actions over the past year. These dynamics have accelerated carrier exits, particularly among smaller operators while limiting capacity additions.

A tightening supply environment is a component in rebalancing the freight market and supporting a return to a more favorable market dynamics after years of prolonged freight recession. However, supply is only one side of the equation. Improvement in demand will ultimately determine the pace and sustainability of a recovery. Encouragingly, early indicators suggest that the industrial economy, which is weighed on freight demand may be approaching an inflection point. Manufacturing PMIs have now remained in expansion territory for 4 consecutive months. Readings above 50 have historically served as a leading indicator for increased freight volumes as rising manufacturing activity typically drives higher shipment of raw materials. Additionally, the ratio of inventory sales continues to decline.

Outside of the post-COVID destocking, the current levels are at or slightly below the 10-year average with shippers operating with conservative inventory levels amid ongoing tariff uncertainty and evolving trade policy. While this has suppressed freight demand in the most recent past, it also creates the potential for a restocking cycle, which could serve as a meaningful tailwind for the freight volumes when demand improves. Also, do not lose sight of the recent increase in truckload spot rates and corresponding spike in tender rejection rates.

That said, while the VIX may have settled, macroeconomic risks remain. Ongoing geopolitical tensions in the Middle East and the associated rise in fuel prices introduce a key source of uncertainty. Sustained increases in energy costs could pressure manufacturers and consumers, raising input costs, compressing margins and ultimately dampening demand. Outside of this week's announcement and subsequent sell-off in oil, if elevated fuel prices persist, they could lead to tempered demand, offsetting some of the positive momentum emerging in the industrial economy and delaying a recovery in the freight markets. While we are optimistic about the improving freight dynamics, we remain focused on prioritizing customer service and thoughtful cost management. We have been operating as one company for over 2 years now, and I am proud of what our team has accomplished and even more excited about our future.

Finally, it gives me a great deal of pride for our team of dedicated logistics professionals to be recognized for their hard work, diligence and commitment to our customers. Forward Air was recently named the 2026 Surface Carrier of the Year by Air Forwarders Association, whose members are freight forwarders that rely on our expedited ground network to maintain the integrity of their airfreight schedules. This recognition reflects the strength of our network, our team's performance and our commitment to delivering exceptional service on a consistent basis. Forward Air was also recently named to Newsweek's list of the most Trustworthy Companies in America 2026.

The annual ranking recognizes companies across the industries that have earned strong trust among customers, employees and investors. This award follows the company's selection to Newsweek's list of most Responsible Companies in 2025. This recognition underscores the significant transformation our team has achieved over the past 2 years in optimizing operations, improving performance and enhancing customer relationships. Both of these honors are a reminder of the high service standards that we are known for. They reflect the dedication of our people whose efforts continue to drive our reputation for excellence.

With that, I will now turn the call over to Jamie to go through the detailed results of the first quarter.

Thanks, Shawn, and good afternoon, everyone. As you heard from Shawn, we reported consolidated EBITDA of $70 million in the first quarter compared to $73 million in the first quarter of '25. As a reminder, the comparable results attributable to a year ago were favorably impacted by $4 million of annualized cost reduction initiatives that were actioned in the second half of 2025. The credit agreement allows for the inclusion of the unrealized and pro forma savings from these actions to be included in our historical consolidated EBITDA and required that they be spread back in time to the period in which the expense would have occurred.

On an LTM basis, consolidated EBITDA was $304 million. Like we normally do, we have detailed the information used to reconcile the adjusted and consolidated EBITDA results on Slide 30 of the presentation. On an adjusted EBITDA basis, we reported $70 million in the first quarter compared to $69 million in the first quarter of last year.

Turning to the segments. Expedited Freight's reported EBITDA improved to $28 million compared to $26 million a year ago, with the exact same margin of 10.4%. The Expedited Freight segment's first quarter results also improved sequentially when compared to the $25 million of reported EBITDA and a margin of 10.1% in the fourth quarter of 2025. At the Omni Logistics segment, reported EBITDA of $25 million in the first quarter of this year was in line with the $26 million we reported a year ago. The margin improved from 8.3% to 7.9% last year, driven by an increase in contract logistics volume with a higher margin compared to a decrease in air and ocean volumes that have lower margins.

At the Intermodal segment, we continue to see a challenging market, especially from reduced port activities. International trade-related softness among several core customers contributed to the decline in shipments and revenue per shipment compared to a year ago. In the first quarter, the Intermodal segment's reported EBITDA and margin were $5 million and 10.1%, respectively, compared to $10 million and 16.4% a year ago. Externally and going back into the back half of the year, we expect to see capacity tighten as JIP supply chains for our BCO customer base loosens as tariffs stabilize, and as additional capacity exits the market due to financial difficulties and bankruptcies of smaller drayage carriers. Internally, we have a strong pipeline and have recently enacted strategic rate increase to several key accounts.

Turning to cash flow, cash and liquidity. Net cash provided by operating activities in the first quarter was $46 million, an improvement of $18 million or more than 60% compared to $28 million in the first quarter of last year. As for liquidity, we ended the first quarter with $402 million, which is an increase of $35 million compared to the end of the fourth quarter of '25 and about a $10 million increase from last year's comparable $393 million. The $402 million is comprised of $141 million in cash and $261 million in availability under the revolver.

And as usual, I'd like to leave you with a couple of additional thoughts. The first of which is liquidity and how we manage the business, especially in uncertain times. As you heard earlier, our ending liquidity included $141 million in cash, which is the highest ending cash balance in the past 8 quarters. When compared to our publicly traded peers, we are at the upper end of the spectrum when calculating liquidity as a percent of both total assets and LTM revenue. And on Slide 22 of the earnings presentation, you'll also see on a non-GAAP basis, we generated $58 million in operating cash flow in the first quarter, which is approximately $12 million better than last year's comparable results.

Secondarily, as you heard from Shawn, we are cautiously optimistic about improvements in freight demand, especially in the most recent past. However, there are numerous cross currents, including potential continued improvements in the freight demand, counterbalanced by ongoing headwinds from inflation, subdued consumer confidence and macroeconomic risks will need to play out to see if the improvement in demand is sustainable. Regardless of when we see the market fully turn in a positive direction, we plan to continue focusing on the customer, increasing sales and tightly managing expenses.

I will now turn the call over to the operator to take questions. Operator?

[Operator Instructions] Our first question is coming from Bruce Chan with Stifel.

This is Andrew Cox on for Bruce. I just wanted to touch on the customer loss or customer transition here. We understand that nothing is set in stone, but we are talking about 10% of total revenue. I would just like to get some more details on maybe what segment it is in and what maybe the margin profile is and how much fixed or structural costs are associated with this customer and how fast do you guys expect to be able to backfill the revenues?

Andrew, it's Shawn. So, thanks for the question. Yes. So it's quite diverse and dynamic of what service offerings we provide them. It's mainly in contract logistics and some transportation. So margins are different depending on what area -- what segment of that -- that I just said is in. But we're still in conversations, so it's very fluid. Obviously, we want to be transparent today. But we are still in heavy negotiation -- not negotiations, but conversations. And it's a very good relationship. So, it's not a situation of anything other than what we understand and believe to be diversifying their overall supply chain portfolio between providers.

Yes. If I can add on there, Andrew. I mean we're positioning ourselves to hold on to as much of this business as possible. Shawn said it perfectly, which is it's our belief that this isn't about service. It's about their growth and their concentration with this. It's just a simple diversification play. I think it's important to note that we don't see any meaningful impacts to the current year. And as you noted, it's ongoing. And to date, the conversations have been positive.

Okay. That's helpful. Let's -- I guess, let's move on to strategic review. It seems like we've got a conclusion here, and that's positive. And we appreciate the background on the total revenue between the 3 businesses you guys are looking to sell. But is there any kind of time line we can expect here or any more details on the sale process?

Yes. I'll jump at that first and then let Shawn back clean up. Yes, in terms of the timing, the 2 smaller legacy Omni ones, I think we anticipate 60 to 90 days. On the larger intermodal, we're just kicking that off. I think we'll be done by the end of the year, at least that's our expectation. So, I'd say small proceeds in the next 60 to 90 days. And then the expectation again is being able to sell the intermodal business by the end of the year.

Our next question comes from Stephanie Moore with Jefferies.

I guess maybe going back to the situation with the customer. Maybe I'll ask this a little more direct than the prior question. I guess I'm trying to understand how much leeway or time you saw this coming? Like has this been a conversation that's been going on for some time. I think it's hard to believe for a customer of this size to kind of make these changes so quickly. If you could give a little bit of color on maybe what services this customer provides or end market, just to get some color there. Maybe a little history on maybe other customer losses if it's not due to service and it just diversification, it's obviously having a really large impact this year. So if you could just touch a little bit more about when this started kind of happening? And then at the same time, what can be done on your end to hopefully try to retain this as possible?

Yes. Stephanie, Jamie here. I'll jump in there first. In terms of the timing, it's still happening. I think Shawn said it, I certainly did is the dialogue to date is active. I mean it's on an ongoing basis. And I'd say it's constructive. We're putting ourselves in the best possible spot to hold on to as much of the business as we can. And if it was a service-related issue, I might feel differently. But if we look at our service KPIs with this customer, we're incredible. In my opinion, it's my opinion, these are my words seething nobody else's. We're incredible. So, it's more about their concentration with us. They've grown with us. They've been a long-term partner with us. So, I think it's more about a risk management perspective on their behalf than anything else.

In terms of how quickly -- it's May, at the beginning of May, it's going to take some time. The best as we can tell is there's not going to be any impact to 2026. It won't be until early '27 that we see anything meaningful and material, if at all. I mean, we're -- again, we're not throwing in the towel, but we felt it was the right thing to do to let you guys know that we're in these discussions as quickly as we possibly could.

Well, I guess my question on this, too, is, I guess, you worded it today in the release that part of maybe the strategic alternative review process was impacted by this development with this customer. So, as we think about this, how much does this weigh on maybe that strategic process? And then once there is some definitive maybe decision here, whether it is bad or this customer does decide to walk away, what does that mean in terms of ongoing strategic processes once this is cleared up?

Yes. I don't know -- I can't answer that second question about how -- what will happen after it's cleared up. In terms of the impact, any time you've got a large customer concentration like this, it's going to weigh in either positively or negatively. I mean you get one or the other, right? So, in terms of its impact on the Strat, the fact that you look at a customer that is approximately $250 million plus or minus in revenue, it is going to have an impact.

Yes, absolutely. I guess one last one for me. just sorry, some of that was a clarification. But just on the core business itself, I wanted to get a sense of just the ongoing pricing environment. I mean I think this is good -- there's some -- certainly some green shoots and some positives in the underlying freight environment. So, if you could just talk a little bit about just pricing across your business and just your level of comfort given we are seeing what appears to be a bit of an uptick in the underlying freight market.

Steph, it's Shawn. So pricing, we feel really strong about. We had the hiccups in a prior period, and I feel strongly that we are extremely solid in all of our revenue streams, whether it be in the global freight forwarding market and/or the ground LTL business in truckload and what we're doing both on a cost management basis and on a revenue generation basis. And as you can see, the consistency in our margins and profitability. So, it's a proof that we learned a lot and we've continued to enhance our sales from there on forward.

And if I can jump in a little bit. If you look at the spot, which I know you do, it's up, I think, by 40% since late last year. Tender rejections are up almost 2x or up 100%. ISR continues to lean out. So, I think all of the macro indicators and PMI is positive for 4 months in a row. I think the macro indicators are pointing in our direction. If you my experience in the space is it generally takes 3 to 6 months for it to really take effect. And we're kind of in that third or 6 months now. So, we're not pricing for yield. We're not pricing for volume. We're pricing for profitability.

Our next question comes from Scott Group with Wolfe Research.

So just to follow up on the business trends. Tonnage was down about 2% and yields ex fuel down about 1%. So, what are you -- maybe are you seeing as the quarter progresses so far in Q2? Are things accelerating? I know you said you feel good about the price, but yield ex fuel down a little bit, just A little bit more color would be great.

Yes. Scott, I'm going to let Jamie go because I know he just wants to say he's not going to give you guidance, but great, great question. But let's see if he's nicer today.

Well, that's actually funny. You beat me to the punch at the risk of not giving guidance. But I'd say over the last 2 weeks of the quarter, and I'd say even kind of going into April, we've seen a strong volume environment, at least from our perspective. I don't want to preordain that the recovery here. I stick by what I said about the spot, the tender NSR and the PMI, there's a lag there. But I'd say that the last couple of weeks of the quarter and going into April, we've seen a fairly -- I don't want to say too verbally, but a fairly strong volume environment.

And then, Jamie, I just want to clarify that you said the business that you're selling is $390 million of revenue. That's Intermodal plus the 2 smaller omni businesses, right? All combined? What are the 2 smaller Omni businesses? And you have any sense of -- can you share any sense of profitability there?

Yes. No, there are 2 small legacy Omni entities, Scott. I'm not going to disclose because there's some confidentiality as you can imagine with the buyers that we preclude us from giving you the names. But you can see of the $390 million, $230 million is intermodal, you're talking about $160 million that's remaining, it's not that much.

And then your intermodal business, are there containers here? Or is it all asset-light?

So what's your question again, sorry?

What is -- what exactly is your intermodal business? Like I don't think it's like a J.B. Hunt Intermodal business, but maybe I'm wrong.

So Scott, I'll take that. So, it's mainly port and rail drayage with what we call COI or container yard management. So, storage of containers on chassis and mainly port and railhead drayage to the final customer.

And this is where you own trucks or you have owner operators. We have owned and leased chassis.

And then maybe just one more for you, Jamie, if I can. With this customer loss, I know the leverage metrics start -- leverage threshold as the year plays out, start to get a little bit harder. I guess maybe this customer is more '27. But any like conversations with you thinking about this?

Yes, sure. It's the right question to ask, Scott. So, we ended the quarter with $40 million in cushion. Is a small step down from where we ended the year. But we ended the year -- ended the quarter with the highest cash balance we've had in 2 years and over $400 million in liquidity. And I know you've done this math. I mean, you all have is if you look at a liquidity as a percent of total assets or liquidity as a percent of LTM total revenue, we're at the upper echelon of that spectrum of our publicly traded peers. And $40 million cushion is a place that I can certainly live in, $400 million in liquidity is a very good place to be.

[Operator Instructions] Our next question comes from Harrison Bauer with Susquehanna.

One quick follow-up on the omni businesses that you're selling. Of that $160 million, is there any crossover of the potential lost business of the $250 million?

Not that I can think of Harrison. If it is, it's certainly not material, no.

And then just maybe taking a step back, just general competitive dynamics. Obviously, with the announcement of Amazon Supply Chain Services week, I mean is there any relation to that and the loss of this business at all? And are there other areas of your business that are potentially exposed to what Amazon is trying to lay out there and some of their maybe aggressive pricing actions that they may take?

Yes, I'll take that one, Harrison. So, no correlation between Amazon and our customer. Obviously, the news of Amazon is fairly new, but we know them extremely well over the years. And so not surprised necessarily by their announcement. But I also don't think we need to let this thing evolve a little bit and see where it goes. But ultimately, we're not so susceptible to this announcement by our volumes, et cetera. But respect what they're doing, respect Amazon a lot, and it's something that we'll continue to keep an eye on and not be naive with it, but not overly concerned today as we sit around the impact to us at all on this announcement.

And then maybe last one for me. In the retaining or existing Omni business that you have left, now that you have a handful of capacity that you need to backfill, how are you thinking about pricing for that going forward and maybe the trade-off of volume and price around your business, not just for Omni, but maybe also in the core Expedited LTL as well?

I would say, Harrison, we're not going to get in any kind of desperate situation here. We have a great organization, great solutions. A fantastic product, and we'll continue to price aggressive, but also keeping profitability in mind. So, we'll get strategic where it makes sense in a given customer or a given origin destination pair, but not at the detriment of the company and our overall margin. So, we will -- you will see us and you have seen us pick up new logos and new businesses, and we'll continue on that mantra. But I'm not someone that gets over worried or in a situation because we're great, and we just need to continue to stick to what we do, and we'll move forward with replacing that potential loss in different areas as we see fit.

Our next question comes from Christopher Kuhn with Stone.

Sorry, I just wanted to qualify. So that customer loss is $250 million, that's the total amount of the customer's business with you, and you may or may not lose all of it. You're in negotiations for that right now. Is that the case?

It is total 2025 revenue of $250 million. So, we're giving you holistic of what the revenue is. That does not, by any means, Chris, state that we're losing $250 million. That was the total spend in 2025.

All right. So, it may be less than that.

It will be less than that.

Okay. And then if you do -- I mean, the negotiation, is it on price because the service seems pretty solid there. So, what is -- what would be the issue aside from just diversification?

That's it. I mean you got to think about what we do for some of our customers. We handle an incredible amount of their supply chain and is honestly it's incumbent, incumbent is probably the wrong word, but it is wise in a fiduciary duty for them not to put too much of a percentage in any one particular supplier's hands. And throughout the years, we've grown with them, we provided that level of service. And it is, in our opinion, simply a diversification play and understandable.

And then if you lost some of this, would that change the margin profile? I guess, is it within the Omni business? Or is it relatively similar to where your EBITDA margins are?

Yes. We don't talk about margins on any one particular customer. We're going to see how this thing shakes out here in the near future. But we're -- again, Chris, I think the takeaway is threefold. One, the conversations have been both active and constructive. Two, no impact that we can see that's going to occur in 2 what we do for our customers. And then lastly, they've been fairly positive to date. So, we're continuing to have the conversations, and we're going to continue to do so.

And is there sort of a way to -- if you lost any of it to backfill it with another customer? Is there a plan for that? Or you'll just wait and see?

That's a plan every day, Chris, whether you're losing customers or downtrading customers. Growth is the #1 strategy of our combined organization. And so, it's obviously been -- we've been in a tough market. But at the same time, you've seen us be very sustainable over the last 2 years. And so, we need this market to turn. But absolutely, we're not changing anything because of this announcement, but we may run a little faster with already sprinting going on as the way we run our organization.

The only thing I'd add to that, Chris, as best as I can tell and -- I don't know, what is it 23 months that I've been here is going back and looking at history is that we are a fairly high beta performer. We do better in times of volatility and especially when capacity gets tight. We all do good when capacity gets tight. We seem to do better than our peers when that occurs. So that is certainly part of the plan.

And then just last one. You guys have talked about this in the past. But I mean, have you seen any truckload back to LTL conversions in your business?

We've heard, yes, because the rising and I don't want to get too ahead of ourselves, back to Scott's question. We're seeing volumes. So it could be, but we don't have enough information to say that. And as you guys have probably been watching the true domestic intermodal market, you're seeing a lot of diversions from over the road onto the domestic intermodal, but you're also seeing slowly an influx of the ocean containers coming back in. So, there's going to be a point of inflection there where a lot of things are going to shift as the demand comes through. But it could be the early stages, but don't quote me on that because that's just -- we're watching it. But we have heard from certain customers that, that transition is starting just because of the overall price of the truckload.

At this time, there are no further questions in the queue. Let me turn it over to Mr. Stewart for any final remarks.

All right. Thank you guys so much for your time and attention and interest in our organization. In closing, in recent quarters, we've really navigated the challenging environment with discipline and focus while taking actions to strengthen our company and our overall business. We're extremely confident in the foundation we are building and the steps we are taking to improve our performance. So again, really appreciate your time today. And as usual, if you have any follow-up questions, please reach out to Tony directly. Thank you.

This concludes Forward Air's First Quarter 2026 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful evening.

Good afternoon, everyone. Welcome to Forward Air's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Mr. Tony Carreno, Senior Vice President of Treasury and Investor Relations. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Welcome to Forward Air's Fourth Quarter and Year-End 2025 Earnings Conference Call. With us this afternoon are Sean Stewart, President and Chief Executive Officer; and Jamie Pearson, Chief Financial Officer. By now, you should have received the press release announcing Forward Air's fourth quarter 2025 results, which was also furnished to the SEC on Form 8-K. We have also furnished a slide presentation outlining fourth quarter 2025 earnings highlights and a business update. Both the press release and slide presentation for this call are accessible on the Investor Relations section of Forward Air's website at forwardair.com. Please be aware that certain statements in the company's earnings release announcement and on this conference call may be considered forward-looking statements. This includes statements which are based on expectations, intentions and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts, including statements regarding our fiscal year 2026. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the SEC and the press release and slide presentation relating to this earnings call. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law. During the call, there may also be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP. Management uses non-GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in today's press release and slide presentation. I will now turn the call over to Sean.

Good afternoon, everyone, and thank you for joining us. I really appreciate your interest in Ford Air Corporation. There are 3 main topics that I would like to cover on today's call. First, I will provide an update on our strategic alternatives review process. Second, I will review some key achievements in 2025. Third, I will share some thoughts on our 2026 priorities before turning the call over to Jamie. Regarding the strategic review, we have continued to make progress since our last update in November and believe we are nearing the conclusion. As we have said from the onset, this has been an extremely comprehensive review in an incredibly difficult logistics environment and broader economic backdrop, which has contributed to the length of the process. When we have updates to share on the review, we will. Beyond that, we are going to remain focused on operating the company, preparing for the cycle to turn so we can take advantage of when it does and keep today's comments focused on the actual results. With that, let's turn to the second topic. For the full year 2025, we reported consolidated EBITDA, which is calculated pursuant to our credit agreement of $307 million compared to $311 million in 2024. As we mentioned last year, we expected the quality of our earnings to continue to improve as historical pro forma and synergy savings roll off, and that is exactly what has happened. To that point, adjusted EBITDA in 2025 improved $40 million year-over-year to $293 million compared to $253 million in 2024. I am proud of our team for holding serve and focusing on what we can control and delivering these results while actively transforming the company and in the face of a multiyear freight recession. We remain focused on the customer and use this time to completely rebuild the management team, consolidate duplicative real estate and reduce expenses to position the company to take advantage of the tailwinds in the industry when the broader market improves. Operationally, in 2025, we unified our U.S. domestic operations with the creation of our One Ground network, aligning our business into a more cohesive, agile and scalable operating model. This initiative consolidated all U.S. domestic ground operations under a single leadership structure and integrated key service lines, line haul, pickup and delivery, truckload brokerage and expedited services into one streamlined organization. Importantly, our sales channels will continue to operate independently, delivering the outstanding solutions, service and customer relationships we always have. At the same time, our operations remain channel-agnostic, executing consistently across the platform and delivering best-in-class on-time performance and industry-leading claims results. In 2025, we also unveiled our new Latin America regional structure, marking a significant step in strengthening our global logistics network. This regional platform spans Mexico, Brazil, Peru, Colombia and Chile and is anchored by our international freight station in Miami. The Miami Gateway connects Latin America to global markets and enables us to deliver industry-leading import and export security, reliability and service to our customers. During the year, we completed the corrective pricing actions at the Expedited Freight segment and shed some unprofitable freight from our network as a result. Following these actions, the improvement in yield, along with aligning our cost structure with less volume in the network, this segment's full year reported EBITDA margin improved by 110 basis points from 9.8% in 2024 to 10.9% in 2025. As we move into 2026, we expect the volume declines to begin moderating as we lap the corrective pricing actions. In closing out my comments on 2025, -- in pursuit of continuing to enhance the transparency of our business, we provided detail on revenue by product, foreshadowing how we plan to go to market and transition away from reporting by legacy and legal reporting structure. During the year, we also provided insight to our revenue by region around the world. More to come as we work out the reporting nuances, but I'm extremely excited about this additional transparency. Moving to the third topic. As we enter 2026, our strategic focus remains on profitable long-term growth through the expansion of synergistic service offerings that enhance customer value and revenue quality. Our growth is contingent upon having the right team in place, including rounding out our leadership team. In late 2025, we added Fabio Mindankas as the President of Latin America. Fabio brings over 30 years of experience in the business development and operations throughout Latin America and North America. Just last month, we added Joanna Zhu to the leadership team as our President of Asia Pacific. Joanna brings a wealth of knowledge and 34 years of experience to the company, including working with 2 of the world's largest logistics companies. And most recently, we announced that Lance Sons has joined the company as our new Chief Information Officer. With nearly 30 years of experience, Lance has held progressive leadership roles at a few of the largest tech-forward supply chain companies. I could not be more excited about the talent and industry experience Fabio, Joanna and Lance bring to the company. I am confident that they will drive growth and success across the global enterprise as we enter 2026. A priority in 2026 is to continue the progress in upgrading our tech stack as part of our broader transformation. A key component of this effort is the one ERP initiative, which will consolidate multiple financial systems into a single integrated platform. By bringing these systems together, we should achieve standardized reporting, consistent processes and a single source of financial data, driving greater efficiency and effectiveness across the company. The project is planned as a phased rollout with the first phase successfully completed earlier this month and the final phase to be completed by the end of this year. During the year, we also plan to consolidate a very decentralized global HRIS system across multiple countries into one worldwide system. This is a transformative step as we continue to rationalize our IT systems, improve the quality of our data and decision-making. By prioritizing customer service, strong leadership and careful cost management, we believe we are positioning the company for long-term success. As most of you are aware, we have made a great deal of progress and believe we are well positioned once the freight environment improves. We are optimistic about a recovery and are committed to building on the momentum of our transformation that we have created. With that, I will turn the call over to Jamie to go through the detailed results of the fourth quarter and full year 2025.

Thanks, Sean, and good afternoon, everyone. For the fourth quarter of 2025, we reported another solid $75 million consolidated EBITDA quarter. Actually, to be very specific, it was a $77 million quarter, and that is compared to $72 million in the fourth quarter a year ago. As you heard from Sean, for the full year, consolidated EBITDA was $307 million, which was in line with the $311 million for 2024. As usual, we have detailed the information used to reconcile the adjusted and consolidated EBITDA results on Slide 31 of the presentation. And before you ask, should I note that you will, in the fourth quarter, our operating expenses were negatively impacted by a $20 million charge for the impairment of software implementation costs. Being a noncash charge, as you would expect, the credit agreement allows us to add these costs back. Regarding consolidated EBITDA for the prior 3 quarters, we've adjusted the previously reported amounts by the actions we took in the fourth quarter to improve our cost structure. If you will remember, the credit agreement also allows us to add back pro forma savings from these actions to be included in our historical consolidated EBITDA and requires that we spread back in time to the period in which the expense would have been incurred. As such, we have appropriately adjusted the prior quarters to reflect the impacts of the cost savings. If you would, please reference Page 12 of the slide presentation issued today, and you will be able to see what we reported in the past and updated for the most recent cost-out and pro forma actions. Turning to the segments. Expedited Freight fourth quarter reported EBITDA improved to $25 million compared to $18 million a year ago. We also saw a significant improvement in year-over-year margin which increased by 350 basis points to 10.1% in the fourth quarter of '25 compared to 6.6% in the fourth quarter of '24.

For the full year, despite a challenging freight environment and a decline in tonnage, we focused on charging the optimal price for freight moving through our network and actively managing expenses. As you heard from Shawn, this strategy to focus on what we can control contributed to an improvement in Expedited Freight free reported EBITDA margin of more than 100 basis points to 10.9% for the year compared to 2024. At the Omni Logistics segment, we continue to reach new heights. In the fourth quarter, this segment achieved the highest revenue the highest reported EBITDA and the highest reported EBITDA margin, excluding the impairment of goodwill since the acquisition in January of '24.

Reported EBITDA in the fourth quarter of '25 improved to $36 million compared to $32 million a year ago. The reported EBITDA margin for the fourth quarter of 2025 improved to 10% and compared to 9.8% in the fourth quarter of 2024.

Looking at the Omni Logistics segment's full year results. Reported EBITDA, again, excluding the impact of goodwill almost doubled, increasing to $124 million and $25 million compared to $67 million in 2024. Additionally, the margin increased significantly as well. Increasing 360 basis points to 9.2% in 2025 compared to 5.6% in 2024. At Intermodal, the market, especially port activity, remained challenging in the fourth quarter. Trade-related softness among several core customers, along with typical seasonality contributed to declining shipments and revenue per shipment compared to a year ago.

In the fourth quarter, the Intermodal segment's reported EBITDA and margin were $7 million and 14.2%, respectively, compared to $10 million and 17.5% a year ago. On a full year basis, the Intermodal segment's 2025 reported EBITDA of $35 million was in line with the $37 million we reported in 2024. The margin remained stable as well with a 15.1% margin in 2025 compared to 16% in 2024.

Turning to cash flow, cash and liquidity. Cash used by operating activities in the fourth quarter was $23 million, which was the exact same amount last year. For the full year of '25, we generated $44 million of cash from operating activities compared to consuming $69 million of cash used in operating activities last year which is a $113 million year-over-year improvement. As for liquidity, we ended the year with $367 million comprised of $106 million in cash and $261 million in availability under the revolver. This compares to $105 million in cash and $382 million of liquidity at the end of '24. And as usual, I'd like to leave you with a few additional thoughts. The first of which is our very consistent performance in the midst of the current backdrop. On a consolidated basis, we have been bouncing around between $73 million to $79 million in consolidated EBITDA every single quarter of this year, which in turn leads to the continued strength of our liquidity position.

When compared to our peers as a percent of total assets and as a percent of total LTM revenue, we are above the industry average on both metrics, ending the year with $367 million in liquidity and no meaningful maturities for almost 5 years gives us a ton of cushion and a ton of time to continue improving operations. As for my second point, given the current amount of excess capacity in the domestic ground network and the cost-out initiatives put in place last year, every single additional shipment added to the system should have a disproportionate positive contribution to the bottom line, and that has nothing to do with the increase in pricing that we're starting to see in the broader market. That is a long way of saying there is a significant amount of operating leverage in the domestic ground network.

And the final point is the continued prioritization and maniacal focus on cash generation. As you heard earlier, cash provided by operations improved $113 million in '25 compared to '24 million. On Page 23 of the earnings presentation, you will see that on a non-GAAP basis, we generated $32 million in operating cash flow in the fourth quarter and $209 million for the full year of 2025.

In closing, I would say for the continued and highly speculated industry recovery, I am not an economist nor am I a speculator. As we ended '25, I did not see any meaningful positive signs. That being said, since the end of the year, the recent spike in TL spot rates and the same on the tender rejections do give me hope that we're reaching an inflection point. Before we're going to need to see sustained PMI above 50 and continued increase in spot rates and rejections.

I will now pass the call back to Shawn for closing comments before Q&A.

Thank you, Jamie. In closing, we finished the year with momentum despite economic headwinds and a significant ongoing organizational transformation. Performing under these conditions underscore the resilience of our business and the strength of our team. I am incredibly proud of their unwavering commitment to our customers and their disciplined execution. Their ability to operate with precision while maintaining rigorous cost control has meaningfully strengthened our performance and enhanced our flexibility.

This focus has not only delivered results in a challenging environment, but also position us well to capture opportunities as the market conditions improve. I am highly confident in the foundation we are building. We are entering the next phase of the business from a position of strength, well equipped to drive sustainable, long-term growth and to continue delivering meaningful, measurable value to our shareholders. We believe we are well positioned to benefit as freight markets stabilize and recover. As we move into Q&A, we ask that the questions focus on the state of the industry and the business. Thank you in advance.

I will now turn the call over to the operator to take questions. Operator? .

[Operator Instructions] We'll go first today to Bruce Chan with Stifel.

Thanks, operator, and congrats on all the progress that you've seen so far to start here. It's been a while since we've had an up cycle, and you've obviously had a lot of change to the Expedited Freight segment since then. So -- maybe you can just remind us of how your model performs in a recovery scenario, especially if there's a big truckload supply element as you talked about, Jamie. Just trying to get a sense here of how we should be thinking about maybe gross margin squeeze and expedited -- and then in brokerage versus truckload and maybe where you're at in terms of third-party PT linehaul miles?

Bruce, that was about 5 questions in 1 tenant. So let me -- it's good to hear from you, Bruce. Yes, again, we put those for. Let me see if I can start on the top down. So in terms of how we perform in I guess, a squeezed environment, I would say if you go back and look at the last probably 5, maybe going on 6 or 7 years, we outperform the space given the flexibility of our operating model. And I say this because we are fixing the terminal side incredibly variable on the PT, which is one of your questions. So we can add capacity that being defined by drivers, tractors and trailers, probably faster than about anybody in the space. So if I went back and looked at it on a quarterly, maybe even on an annual basis, we might positively comp to the industry average EBITDA margin but not by much.

We don't. So -- but there is a time of volatility to where, at least on the ground side, we will probably outperform that isn't anything about warehouse, which is probably pretty flat, air and ocean, which is given today's announcement to anybody's guess -- but I think that given where we are right now at 10% EBITDA margins relative to the industry's '20, I would suspect that we would make up a lot of that ground. [indiscernible] A lot of that go it was a double Antara. It was not intended.

That's a good one. Okay. That's super helpful. And maybe for my, I guess, second or sixth question here. Omni obviously performing a lot better than expected. Can you maybe just help us to get a sense of what an appropriate midterm margin should look like there and what seasonality should look like there?

Yes. So Bruce, as you know, it's a pretty diverse portfolio. So when you look at whether it be obviously ground feeding into the network or the contract logistics, air and ocean, customs brokerage. So it's really our focused growth in all of those areas and really play into the advantages of that diversification so that when one is up or one is down, the other one is up, et cetera. So that's really what we've seen in the success of 2025 and what we really intend to continue to push through 2026 and beyond. We've got the right leadership with the right experience, with the right focus in each one of those areas moving forward. And the other complement, I would say is, I call it synergy selling but it's looking at customers that have a wallet share in one of those areas, but not in the others. And we have a very robust team focused on that wallet share across the product offerings to continue to had the organic growth in further diversifying customer portfolios across those offerings. So that's really what's happening here within the Omni area.

Okay. But there's nothing in customs brokerage or bonded warehousing or something that should lead us to believe that you were over earning in this period or something like that?

No, not significantly. I mean obviously, duty drawback on the customs brokerage side is huge right now with all the tariff stuff, but it's not significant revenue streams. It's just an uptick. But no, nothing in particular to your point, other than just growth and organic growth across the portfolio of those customers.

Yes, if you look at page earnings presentation, Bruce, you'll see our margins in the Omni segment are pretty strong. So what Shawn said about growth, it couldn't be more spot on.

We'll go next now to Stephanie Moore with Jefferies. Stephanie.

Great. Good afternoon. Thanks, everybody. Appreciate all the color. I appreciate maybe the commentary you provided on the state of the underlying market as the year has progressed thus far. So maybe it would be helpful for -- if you could provide any additional commentary in terms of what your customers are saying, especially with this most recent ISM print inflecting positive for the first time in a long time. I mean, our customer is actually founding more upbeat. And obviously, any differentiation you can make amongst whether it's the LTL or Omni customers or like would also be helpful.

Thanks, Stephanie. From me, and I'll let Jamie chime in here. I think from our customers' experience with us on a consistent basis has given them comfort, whether you're talking about the legacy Forward Air, Freight Ford or 3PLs. We've been very consistent with them and very active and transparent with them. And then the consistency on the Omni side of our solutioning and cross-functional service offerings over the last 2 years with all the changes we made. And to me, it's no differently than any of us when we were buying the service -- we want to go to the best and very consistent, and that will keep us coming back for more. And that's really our recipe that's working for us. And so no real secret other than that. That's what we're seeing.

And I think I said it in my comments, looking at the ISM print, and especially focus on new orders that I think everyone gets super excited about seeing the new orders pop. But if you look at it, I mean, it's been 3 months over the last 36 that it's been even marginally positive over obviously, doesn't make a trend. We're going to see a consistent trend, at least a report over 50 for at least 2, if not 3 or more months to see that, that's sustainable, and it's not an operation in the actual results.

Absolutely. I think that's helpful. And then maybe sticking with Omni, I think the performance, as you noted, and we could all see has been very strong. Do you find that this is more so a function of your own kind of company-specific actions? And -- or do you think that you're seeing some green shoots within the underlying market? Maybe just any kind of parsing out of that there as well. And then my third question, just to throw it out there, and then Doug, I promised would be, do you think you're starting to see any of the synergies of us kind of offering the two services or in the form in 2026?

I wouldn't say any green shoots other than our commercial organization has been rebuilt by Eric Brent. I would say we've got our swagger back -- we've got a detailed focus. We know what we want to do and how we perform well, and we know what we're not and we're not going to offer that -- those offerings. So we're seeing really laser-focused on selling solutions that are in our wheelhouse. And I would say, to your second point, Stephanie, we're really not offering the two. The two are really one. And although we have an indirect and a direct channel on the sales side, but operationally and what I mentioned in my openings around on ground, that is the legacy Ford network. Everything in ground on the omni side has rolled over into the legacy forward side, if you will. And I don't even like to use the legacy this or legacy that. But for this call, we will. But we just talk about really focused on the customer experience with our assets and solutions holistically, but always respecting the sales channels and making sure we don't have conflicts.

We'll go next now to Scott Group with Wolfe Research.

So I know you don't want to say too much on the process. I just want to make sure we're getting the message right. I think last quarter, you said it's taking a while, and there's maybe a turn of interested parties, maybe less interest from some and new interest from others, if I understand what you were trying to say last quarter. Maybe just an update on that. Are we still seeing that churn? Or is there some other reason why this is taking so long?

Yes, Scott, I can't say any more than I said. But we're -- I feel confident that we are coming to conclusion here and more to come as that rounds it up out.

I guess we're now -- Jamie, in your comment, we're getting more optimistic since the year started, I guess we're about 2/3 of the way through Q1 now. Can you give us some update on sort of what you're seeing in the business like LTL tonnage, I think, was down 10%, 11% per day in Q4, what are you seeing in January, February?

Yes. Scott, we don't give guidance on that. I always appreciate you asking as there's one consistency amongst the calls. But what I would say is it's probably just normal seasonality. We're not going to comment on change in tonnage or price at this point in time. But if you just look over the last probably 2 years, it's probably not that much different in the first quarter than what you would have anticipated.

Okay. Maybe I'll ask one more, maybe we can -- maybe an answer here. Give us some puts and takes on cash flow for this year, how you think what's -- how should we think about CapEx? And then I think the leverage covenant starts to get a little bit tougher each quarter this year. Just any thoughts on where you think you'll end the year or how you're thinking about progress on deleveraging this year.

Yes. So what's great about 2025, Scott, is we reached that inflection point. So if you look at the statement of cash flow, when we file the K, you're going to see that we spent about $166 million in interest, another $25 million plus or financing leases and another is it $27 million in -- so once we reach that inflection point, every incremental dollar over that amount actually starts to fall straight to the bottom line in terms of cash. So we reached that point in '25. We generated -- I know it sounds like small, but it's not the fact that it's only $1 million in increasing cash from '24 to '25 it's the fact that we dug out one hell of a hole in '24 to actually accomplish that in '25. So we're going to continue to focus on improving or increasing sales while actually holding the operating leverage that the team has built over the last 18 months.

So -- but similar in terms of CapEx and all that for this year?

Yes, we might have a little bit more in CapEx. But as a percent of revenue, I don't see it's going to be that demons different than the past. .

We'll go next now to Harrison Bauer with Susquehanna.

Great. You emphasized the importance of volume driving incremental margins this year in your expedited business. It sounds like you view volume as having a higher profit contribution rather than your price cost outlook for 2026. Can you maybe speak to the directional outlook particularly within expedited freight for pricing this year as you begin to lap prior pricing actions as weight per shipment improves, would you expect any mix-related pressure on net yields?

Again, Harrison, probably 3 different questions in there. But I think what you're getting at is incremental shipments and having a disproportionate positive contribution, if I'm following that correctly. Is that right?

Yes, you got it. And just generally, what pricing within that business, what you expect if you expect claims to be a bigger contributor to incrementals.

Yes. Well, right now, we're focused more about increasing and improving the density of the network and the following profitability margin that comes out of it. And I'd say that as everybody knows on this call, including you, that there is a trade-off between price and volume. And given the decrease in tonnage that we've seen over the last 1 or 2 years, we've created excess capacity within the ground network. And with all the cost-out actions, all the synergies, all the closings of the facilities and the headcount rationalization, we have created an incredibly strong model with operating leverage, whereby all else being equal, assuming prices the same, if you drop in one incremental shipment into the network, it is much more profitable than the previous shipment. So we've got probably -- it's hard to say because capacity is defined by the low common denominator of 4 or 5 different metrics, whether it be terminals, doors, drivers, tractors, trailers, -- but you add one more shipment on that trailer that's already dispatched.

You've already incurred the cost for it. It's going to be much more accretive than the prior shipment, again, all else being equal. Obviously, if price takes off, and that's free margin for all intensive purposes Shawn, anything to add to that.

And then maybe just a follow-up on the -- sticking with pricing. Intermodal in your drayage business. Can you maybe help us understand the driver behind the notable change in the revenue per shipment this quarter and that inflected negative pretty different from the recent trends that you had in that business.

Yes. This one is an easy one here. So I think this is the simple supply and demand. The port volumes are down somewhere between 5% to 10%. And -- and it's not like the ground or the LTL network. It's much more, I guess, volatile in terms of the supply falling off which is to say that it's much more elastic pricing in intermodal than it is probably in the line haul business.

And I would say, Harrison, there's two major revenue streams there. We have quite a few storage depots, what we call depots around the country. And so you have the dray move lesser to the intermodal over the rail and your other major revenue stream outside of just normal Port dredge or rail dredge is the storage of the container in our depot yard. So it just depends on what that mix is per quarter. And I would say that also helped us with the slowdown of the Port ridge in Q4, we had some decent revenues on the storage side. So that's what supports the margin as well.

[Operator Instructions] We'll take a follow-up question now from Bruce Chan at Stifel.

I appreciate the follow-up guys. Looking through the deck, I'm reminded that you have some nice data center exposure in contract logistics through 1 of the legacy Omni OpCos. Can you just -- maybe give us a sense of what that looks like as a percent of revenue and maybe what growth has looked like there recently?

I think 1 of the slides to fix the. Yes. Vintage Yes, it shows hold on a second, Bruce. If you look at Page -- it breaks what we're -- when Shawn said, hey, we're going to be cutting the then in terms of our products. We've updated this slide to show the percentage of the revenue in terms of the total for the entire fiscal year of 2025. So you'll see the contract logistics is about 15%. That's global.

But Bruce, the major concentration is in North America and Asia Pacific. So that's the majority were of our contract logistics revenue come from.

Okay. So fair to a good question of that data center and high-tech exposure in there? .

Say it again, Bruce?

So it's fair to assume that there's a good chunk of data center and high-tech exposure in there?

It's in there, but I wouldn't say it is a good portion of our business, obviously, but it's not the only thing in there. You're going to see textiles in there. You're going to see tech outside of data center, you're going to see some automotive. So it's I would say it's not just in that area. .

Yes. And I know you haven't had a chance to read it yet, Bruce. We've been talking about under that vertical being tech data, medical and then kind of a complex high-value end market.

Okay. Great. And then what does the growth look like in that data center business? Has that been scaling with all the activity that we've been seeing in that space?

Yes, for sure. I mean we're scaling with it. there's a lot of players in the space, but we're there, and we're taking every wallet share we can grab. We're pretty good at it. And with the high-value, high-risk area of this business going from our world-class warehouses on the contract logistics side into our trucks into the clean rooms of the data centers. We're very good at this service, and we continue to gain momentum here.

Thank you. And gentlemen, it appears we have no further questions today. Mr. Stewart, I'd like to turn things back to you, sir, for any closing comments.

All right. Well, thank you so much, and we really appreciate your interest and your support of us. It was a great year, and we remain extremely confident in our strategy and look forward to updating on our progress next quarter or something happens between them. So I appreciate the time today. And if you have any follow-up questions, please reach out to Tony, and we'll be in touch. Thank you. Have a great week.

Thank you, gentlemen. Again, ladies and gentlemen, this concludes Forward Air's Fourth Quarter and Full Year 2025 Earnings Conference Call. Please disconnect your lines at this time, and have a wonderful day. Goodbye.

Welcome to the Forward Air Third Quarter 2025 Earnings Conference Call. [Operator Instructions]

I would now like to turn the call over to Tony Carreño, Senior Vice President of Treasury and Investor Relations.

Thank you, operator, and good afternoon, everyone. Welcome to Forward Air's Third Quarter 2025 Earnings Conference Call. With us this afternoon are Shawn Stewart, Chief Executive Officer; and Jamie Pierson, Chief Financial Officer. By now, you should have received a press release announcing Forward Air's third quarter 2025 results, which was also furnished with the SEC on Form 8-K. We have also furnished a slide presentation outlining third quarter 2025 earnings highlights and the business update. Both the press release and slide presentation for this call are accessible on the Investor Relations section of Forward Air's website at forwardair.com.

Please be aware that certain statements in the company's earnings release announcement and on this conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This includes statements, which are based on expectations, intentions and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts, including statements regarding our fiscal year 2025. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the SEC and the press release and slide presentation relating to this earnings call.

Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

During the call, there may also be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles or GAAP. Management uses non-GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in today's press release and slide presentation.

I will now turn the call over to Shawn.

Good afternoon, everyone, and thank you for joining us. Today, there are 3 main topics that I'd like to cover. First, I will provide an update on our strategic alternatives review process. Second, I will provide an update on the progress we are making on our transformational journey, and I will close with a few comments on the third quarter results before turning the call over to Jamie.

Beginning with the strategic alternatives review, we are aware of the rumors in the market over the last several months. I want to be clear that the strategic alternative review process is ongoing. I also want to acknowledge the length of the process to date and emphasize a few critical points.

Over the course of this review, we have had discussions with multiple interested parties and discussions are continuing. We conducted appropriate proactive outreach to interested parties. Along the way, other parties have also initiated dialogue with us at different points in time. Obviously, we welcomed inbound inquiries the timing of which was out of our control and has contributed in part to the length of this review.

The review to date has been a thorough and inclusive process to explore all available opportunities to maximize value. The process has and continues to include the evaluation of a potential sale, merger or other strategic or financial transactions relative to the long-term value potential of the company on a stand-alone basis, as well as a review of the components of our portfolio to ensure there is a long-term strategic fit.

Our Board is taking the time it needs to be methodical, thoughtful and comprehensive to ensure that we pursue the best possible outcome for the company and all of our shareholders.

With all that said, we do not intend to disclose further developments relating to the process until we determine an update to be appropriate or necessary. And when we do, we will let you know. Our policy is not to comment on rumors and that will continue to be our policy.

On a commercial and leadership basis, the good news is that we did not recognize that the outset is how much this process would bring our team together. We are more aligned and more in tune and more connected beyond what I would have ever thought.

And as you will see when Jamie previews the results, we are focused on running the business and are continuing to deliver positive period over-year results in 1 of the most challenging markets in years. As for my second point, and our continued transformation, I am pleased that we are also continuing to execute our plan to become a unified company as discussed on previous calls.

Over the past several quarters, as we work to transform the operations of our U.S. and Canadian businesses, we have focused on a clear and strategic goal, which was to unify our operations under a new regional structure and harmonizing our blueprint.

The goal laid the foundation for the creation of our One Ground Network, a positive step forward in aligning our business for the long-term success under a single leader, Tim Osborne, President of U.S. and Canada operations. The One Ground Network brings together the operations of our businesses to form a more cohesive and agile organization. It includes the unification of our U.S. domestic ground operations and brings together key service lines: line haul, pickup and delivery, truckload brokerage and expedited services into a single streamlined structure.

By doing so, we are removing silos, simplifying how we work and unlocking new efficiencies. However, it is important to note that we expect our sales channels to continue to function separately providing the same solutions and service that they always have, while our operations remain fully agnostic across the network, delivering the same best-in-class on-time service and one, if not the best industry claims results. Our team handles every shipment with the same discipline, precision and care, keeping our focus where it belongs, on service, sensitive, freight and operations excellence.

For our customers, it means the same seamless and reliable experience that they have been accustomed to and expect from us. For our employees, it means clear priorities enhance collaboration and more opportunities to grow within a connected network. For our business and future results, it positions us to accelerate and leverage growth.

We are also continuing to rationalize our tech stack, including upgrading and minimizing the number of systems across the company. We expect these changes to enhance efficiencies, improve real-time data-driven decisions and drive cost savings as a result.

Regarding the quarterly financial results, we reported a consolidated EBITDA, which is calculated pursuant to our credit agreement of $78 million, in line with the $77 million reported in the second quarter of this year. I am extremely proud of our team for focusing on what they can control and delivering a solid quarter as we navigate through an extended freight recession, a strategic alternatives process and continued transformation of the company.

We are focused on delivering industry-leading quality of service with our world-class leaders while tightly managing costs and prudently managing the business. We are optimistic that market conditions will eventually rebound, and our focus is on continuing the progress we have made over the past year and keeping that momentum over the long term.

With that, I will now turn the call over to Jamie to go through the detailed results for the third quarter.

Thanks, Shawn, and good afternoon, everyone. As you heard from Shawn, we reported consolidated EBITDA of $78 million in the quarter. The third quarter and LTM results were favorably impacted by cost reduction initiatives that we enacted equating to approximately $12 million on an annualized basis. The initiatives primarily included rightsizing our business to align with the current freight demand and on our ongoing transformation strategy that Shawn discussed earlier.

On an adjusted EBITDA basis, we are cranking out very consistent performance, reporting $75 million in the third quarter of this year compared to $74 million in the second quarter of this year and $76 million in the third quarter of last year.

At the Expedited Freight segment, third quarter reported EBITDA was $30 million with a margin of 11.5%. The margin is the second highest since the fourth quarter of 2023 and is in line with the $30 million reported EBITDA and 11.6% margin in the second quarter of this year. In the third quarter, a year ago, reported EBITDA was also $30 million with a margin of 10.4%.

Despite a challenging freight environment and a decline in tonnage, we have significantly improved pricing programs and actively manage discretionary expenses. Our focus has been on maintaining the right freight mix in our network at optimal prices, which has resulted in an improvement in reported EBITDA as it has grown from $18 million in the fourth quarter of 2024 to $30 million in both the second and the third quarters of 2025, and the margin has improved from 6.6% to 11.6 and 11.5%, respectively.

At the Omni Logistics segment, we're excited with the steady progress that we're seeing. In the third quarter, we see the highest revenue and reported EBITDA, excluding the impact of goodwill since the transaction in the first quarter of last year. Sequentially, from the second quarter to the third quarter of this year, revenue increased by $12 million to $340 million and reported EBITDA increased from $30 million to $33 million. The margin also improved sequentially by 60 basis points to 9.6%.

On a year-over-year basis, reported EBITDA improved from $27 million in the third quarter last year compared to $33 million this year, which is a 22% increase. The margin also improved by 160 basis points, up from 8%. Relative to the challenges in the broader market and especially port activity, the Intermodal segment and the drayage business we service continues to deliver solid results. This management team perseveres and performs well in both good and challenging market environment. In my opinion, they are the best team in the drayage space.

In the third quarter, this segment reported EBITDA of $8 million, which was in line with the $9 million in the second quarter of this year and the third quarter a year ago. Rolling up all of the segments and on an LTM basis, consolidated EBITDA was $299 million. As usual, we have detailed the information used to reconcile the adjusted and consolidated EBITDA results on Slide 31 of the presentation. And as a quick heads up regarding consolidated EBITDA for the prior 3 quarters, you will see that we have adjusted the previously reported amounts by the actions we took in the third quarter to improve our cost structure.

The credit agreement allows for the inclusion of unrealized and pro forma savings from these actions to be included in our historical consolidated EBITDA and requires that they be spread back in time to the period in which the expense would have occurred. As such, we appropriately adjusted the prior quarters to reflect the impacts of the cost savings. If you would, please reference Page 12 in the slide presentation issued today, and you will be able to see what we reported in the past and updated for the most recent cost-out and pro forma actions.

Turning to cash flow, cash and liquidity. We reported $53 million in cash provided by operations in the third quarter which is a $2 million increase compared to the $51 million in cash provided by operations a year ago. For the first 3 quarters of 2025, we've reported $67 million of cash provided by operations, which is a $113 million improvement compared to the same period a year ago.

As for liquidity, we ended the third quarter with $413 million in total liquidity, comprised of $140 million in cash and $273 million in availability under the revolver. This is a $45 million increase compared to the $368 million at the end of the second quarter.

And as usual, I'd like to leave you with a few additional thoughts for the quarter. The first of which is, as you've heard from Shawn in his opening remarks, we are making progress upgrading our tech stack as a part of the broader transformation. This includes the 1 ERP initiative to move from multiple ERP systems to 1. This project will unite all company financial systems on a single streamlined platform. With all financial data in 1 place, standardized reporting and uniform processes, we expect our team will be more efficient and more effective. The projects will have a phase rollout and with a completion expected by the end of next year.

Point two, in a tough market, we continue our focus on controlling expenses and adjusting to demand by rightsizing our cost structure commensurate with the support needed to continue serving our customers at the highest level. And the level they are accustomed to receiving from us. It is important to note that the focus on our cost structure did not impact our service levels and still led to another solid quarter and sequential improvement in consolidated EBITDA.

The final point is prioritization and focus on cash generation. As you heard earlier, cash provided by operations significantly improved by more than $100 million in the first 9 months of this year compared to a year ago. On Slide 23 of the earnings presentation, you will see that on a non-GAAP basis, we generated $79 million in operating cash flow in the third quarter and $176 million year-to-date through the third quarter.

I will now pass the mic back to Shawn for his closing comments before Q&A.

Thank you, Jamie. In closing, I want to express my deep pride in our team for their unwavering dedication and consistent focus on the customer. Their ability to execute operationally with precision while maintaining rigorous control over cost has been truly exceptional. This disciplined approach not only strengthens our day-to-day performance, but also positions us well for the challenges and opportunities ahead.

Despite the uncertainty in today's macroeconomic environment, I remain confident in the strength of our team. We have built a solid foundation that is well equipped to drive sustainable long-term growth. Our team's commitment to excellence ensures that we continue to deliver meaningful and measurable value to our customers and are positioned very well for when the freight stabilizes.

As we go into Q&A, I would like to focus our comments on the state of the industry, the business and not on the strategic alternatives review process, as you know, we cannot further comment. Thanks in advance for your understanding.

I will now turn the call over to the operator to take questions. Operator?

[Operator Instructions] Our first question comes from Bruce Chan with Stifel.

Maybe I just wanted to start with Omni, that business has certainly come a long way, and it looks like you're finding some stability here with EBITDA margins but the segment has also gone through a lot of change, especially given the volatile environment. So maybe as you think about that business longer term, if you could just remind us what your longer-term margin targets would be there? What kind of earnings power do you think you can see in that business? And then how do you maybe think about that in the context of seasonality as we move into Q4 in 2026?

Bruce, it's Shawn. So yes, I would say we've done a really good job of turning this business around really driving the synergy selling where we had segments of customers' revenue in 1 of our many diversified offerings and spreading that more into the other offerings. And that's really where the growth is coming from. I would say it's rather hard to say right now what that optimal margin is because it's suppressed right now just because of the overall market.

But Jamie, you want to comment at all on margins or...

Yes. Bruce, if you look at Page 28 in the slide deck, one of my favorite pages because it has a couple of different interpretations. I might go right to left. And I might answer your question on Omni specifically because that's what you're asking. If you look at the Intermodal, the drayage business continues to be at the highest end of the publicly traded peers. I mean -- and there is no pure comp. We all know that. but they continue to be a market leader in terms of margin in the Intermodal side.

And then on the Omni, we've got a collection here of private comps, you've already done the analysis, you know who they are. But we're at the upper end of the margin already in our collection of assets. And the real upside is on the LTL, the expedited side of the business. So we've got -- that's where I'd say the greatest opportunity is.

And the one thing that I think it's lost here on this page, even talking to you specifically on the -- or answer your question specifically on Omni is that when you buy 1 share of stock in Forward Air, you're buying a portfolio or a collection of logistic assets. And Omni is but 1 of those, and it actually is performing very well, especially on the contract logistics side of the equation.

So I think we've exceeded, in my opinion, in many different people out there can argue with me. I think we've exceeded most people's expectations in a way that this particular segment has performed since the acquisition. So I'd say that's an incredibly long-winded answer to your question that we're at the upper end of the margins already.

No, that's really good color. So I guess if I could just follow up on that. It sounds like we're at the point now where we can start to think about maybe some more seasonality in this business and other businesses. And if I could expand on that a little bit. Any kind of commentary on how you're thinking about fourth quarter? I know you all tend to have a little bit more retail exposure, for example, than some of your peers.

Yes. So are you talking about Omni specifically or the portfolio?

Yes. First part, Omni, and then if you want to broad that up to the rest of the portfolio.

Yes. So if you look at omni, it's not going to be as seasonal as I think you would otherwise would surmise that it would be only because of the warehouse side of the business, right? So that's a pretty stable business. It doesn't have a real seasonal trend to it as much as it does the air and the ocean.

I'm looking forward, Bruce, to the day soon in the next probably a couple of quarters. that we're going to be able to break that -- those segments into their different services. But I'll tell you right now, on the Omni basis, it's going to be a little bit more muted than you would otherwise anticipate because it doesn't have the seasonality.

Now on intermodal, if you see the port volumes as they're forecasted in the next 3 months, by month, is going to be continued what I would say, malaise. Not a great port read. But I'll tell you what, this team continues to stoke out $8 million to $10 million in EBITDA every single quarter irrespective of the environment in which they operate.

And then lastly, on the LTL side is what we're noticing is no different than what our peers, our competitors said on their calls, is more of the same of what we have right now. I'm not seeing a seasonal leg down nor am I seeing a -- it's not going to be increasing, obviously, now in November being an 18-day month. But I'm just seeing a little -- I'm seeing more of what we've experienced over the last couple of quarters.

Our next question comes from the line of Stephanie Moore with Jefferies.

I wanted to follow up on the LTL side. Look, I think in previous calls and in our conversations, you talked a lot about really fine-tuning the organization on the LTL front and really just getting I guess, adjusting operating costs to revenue, and it clearly remains a really weak environment.

So maybe you could give us a little bit of an update on the progress on kind of realigning costs and maybe kind of bifurcate what's just been a function of this is a weak environment and what is something that we think is sustainable that really speaks to the actions that you've made over the last year?

Stephanie, it's Shawn. So I'll take the first part of that, I'll let Jamie add in. So the one thing that -- especially to our peer group on comps, the 1 thing that we want to make sure to constantly remind the analysts, especially is that we are not a fixed cost network. We're a variable cost network, and a majority of our fleet is owner-operators. And so 1 of the things that the team does extremely well is they adjust their purchase transportation cost based on volume. So when volume is down mainly, what we do is we move those drivers from an LTL segment to the Truckload segment. And right now, Truckload is booming. And so we're not letting go of any drivers. We're just moving on from LTL to TL, and we've really capitalized by doing so. And so that brings down the purchase transportation cost.

And then a couple of internal initiatives that we've done is obviously, we've dramatically improved the operating team, our productivity measures on the floor as well as we've introduced and we've been running for several quarters now, 2 different optimizers looking at the miles that we run and the service that we offer and how do we do that with less miles and still not jeopardizing our service. And we've -- Tim and team have now decided on 1 optimizing tool that we will use moving forward. It's not a tool that was here at least when I got here, and they've done a fantastic job. So that's more of not just removing the drivers from LTL over to TL, but at the same time, drawing down miles and being more optimal as we manage through this time. But it's something you should do anyways, even in the high seasons as well as these low season. So hopefully, that helps with I'll be quiet and see if you have any questions to what I just said.

Steph, let me add on it real quick with a little bit more specificity. If you think about a year-over-year basis in terms of improved operating performance, we took out a little more than 300 FTEs on a year-over-year basis. And over that same period of time, we actually improved safety, arguably improve quality held claims flat in 1 of the best rates in the entire industry, and we have fewer labor hours per shipment.

So operationally, pretty damn good. And then to build on Shawn's point about it being more of a variable versus a fixed solution, certainly helps us flex down in times such as this. But if you look at Page 13 of the earnings presentation on a reported basis, even though we've got a slightly lower revenue, we're still cranking out $30 million in reported EBITDA in the mid-11% EBITDA margin.

Yes. No, absolutely. I think -- and Shawn, I think that's crystal clear. Maybe just as a follow-up question. I appreciate that you really can't and don't want to speak in terms of anything on the process or the like. But maybe asked a different way. Is there any update on when you might be able to speak on the process?

I would say, Steph, if I had that, I would. So look, it's a very detailed process that the Board is running. And as soon as we can, we will update you.

[Operator Instructions] Our next question comes from Scott Group with Wolfe Research.

So I just want to -- I know you can't say much, but I just want to make sure I'm understanding what you were trying to communicate in your prepared comments about the duration of this process is the point you were trying to make that not that there is a lack of interest or the interest was dropping is that -- there was incremental new interest and that is what's slowing down the process. Is that the point you were trying to make?

So Scott, this is Shawn. No, I think it was pretty clear in the point I was trying to make. There was a good interest, obviously, in our organization. and where different periods of times where interested parties came in. I'm not blaming wholeheartedly that that's what's elongated it. But between interested parties and other parties coming in at different times is where we are today.

Okay. You made a comment a minute ago that Truckload is booming. I have not heard that from anyone. And then Jamie, you made a comment, LTL was not really -- is stable and not really dropping off. And a lot of the other guys have talked about LTL really dropping off. So those were just 2 interesting comments I haven't heard from others. So maybe if you could just add some color on those 2 things.

Well, to be clear, our Truckload is booming. There's a lot of high-tech moving, and that high tech requires asset only companies, of which we are and a lot of security, and that is something that we're really great at. And so our Truckload is booming.

Yes, I can say that's the circle lot stuff for us. So when I say LTL is stable, volumes down, but that volume is being -- modality is shifting from LTL to TL. So we're picking up some of the volume that we're losing on the LTL side, on the TL side of the house to support Shawn statement. And then in terms of LTL being stable, look, I don't -- I'm not trying to say that our volume is stable. That's not what I'm saying. It's clearly not. Volume is down, but there's 2 other things that we're doing in order to deliver stable earnings. And that is an increase in pricing and an absolute maniacal focus on operating more efficiently. So the stability of my comment is more on the $30 million of reported EBITDA for last quarter, this quarter and the quarter a year ago.

Okay. And then maybe just lastly, Jamie, just give us an update how you're thinking about cash flow going forward into Q4? I know seasonally, there's the interest ramp in the debt payments. And then just remind us that the calendar of when the credit, the covenants start to get a little tougher.

Yes. Scott, you're all over it. So the semiannual senior secured note payments gets made in April and October. So the quarter that is in between is when we make for the money, then we generally lose a little bit in the quarter that we make that payment. Were going to make more in the quarter that we don't. And that's exactly what we did this quarter. I'd say we did very well in terms of not only managing the operations, but also managing the balance sheet, which then increased cash by $45 million this quarter as a stand-alone period.

And then in terms of the covenant step down, we're at 6.75 this quarter next quarter, it starts to tighten by a quarter of return and does so every single quarter into the fourth quarter of 2026. At what point it levels out at 5.5x and it stays there through maturity.

Our next question comes from Christopher Kuhn with Benchmark.

I think in the past, you talked about the benefit of the combined company and given us some examples. I mean, just wondering if you have an update on that.

Run that past me one more time, Chris. Sorry.

Yes. I think in the past, you've talked about winning business as a combined company with Omni and the LTL business, and some of the other businesses within Omni. So I don't know if -- obviously, you still feel that way, but if you have any sort of thoughts on that?

Yes. I mean, look, we -- on the omni side, we win business regardless. And obviously, we want to put that into the, I'll say, the legacy Forward Air LTL. But if there's a solution that's better to get it to gain that business then outside of our network, we'll gain the business on the omni side. But I would say in a lion's share, we put the majority of -- if it's a ground or a domestic sale only. We really focus on if we can't find a way initially via the network, we figure out a way eventually to put it in the network. So the combination of the 2 organizations really support the growth. But at the same time, we're still able to handle the legacy, what we call the indirect market with our fantastic freight forwarders and 3PLs and do that in a proper mannerism to help them continue to grow with very minimal to none of conflict between our organizations.

I'm not going to say there's none, but there's very minimal and we manage those through our partners. So it's working and it's working well. And I'm really pleased with what we are able to do as a combined company, especially compared to the onset of everybody thought this was going to be a disaster at least when I got here. So I think we're in a good place.

And then I think you've talked about the LTL to TL conversion. I mean, obviously, any updates on that? Is that still going on? I guess, what do we need just TL saw the spot prices to start going back off to get that reversed?

Yes. You've got a couple of things there that we need the spot rate to go up. The team moves our assets, LTL, TL, back and forth, depending on volumes in LTL and depending on need on the TL side. And so that's a pretty constant move back and forth on a weekly or daily basis. But yes, going back to when you look at overall volumes with the spot market the way it is as low as it is, when you look at LTL volumes, they're in the Truckload capacity. And if an organization is able to trap and put it in a Truckload at a lower per pound rate basis than a traditional LTL, whether it be us or anybody else, that's what they're doing.

But as that rate moves up, that shift from TL will start to slowly come back into LTL. And that's really what we -- that's the majority of where the volume is today. That's not in LTL today. Jamie, you want to add?

So you think that shift occurs over time. It's not like they're going -- it takes a while for them to go back from TL to LTL or...

But -- just depends on what their procure rate is and the longevity of that contract with those Truckload providers.

Yes, I would actually say it's not an event.

Yes, it's not a onetime event, it's over time.

Yes. So if you look at the cash and the cash in experience, $1.25 a mile it would probably have to creep back up over to the $1.50 a mile before you see something meaningful, but it's going to happen along the way. Anything above $1.50 to $1.60 per mile on the cash, I would say it's getting back to what I would term is a more normalized balanced LTL market.

Our next question comes from Bascome Majors with Susquehanna.

I wanted to go to the mix detail that you kind of broke out for us a bit more functionally earlier this year on Slide 7. I mean, that's 2024. I know we can do some of this with your reported revenues, but we don't have a lot of breakdown on Omni. If we looked at that 9.9% split you laid out for '24. How would that look different today for kind of where we're exiting '25 as we think about the business and sort of cyclical views into '26?

Yes. We don't best then to be direct. We pick this is a point in time to show -- give an indication or tip of the hat, where we're going to start reporting the business in 2026. So it's more of a lift than you would ever imagine. But this is how we intend to report the business starting next year. But in terms of how that's changed since last year, I wouldn't say meaningfully, but it does change. It changes every single day, but it's a $2.5 billion battle shift. So it takes -- it would have to take a seismic change to move these numbers materially.

Maybe if I ask you just directionally another way. Within Omni, has the air and ocean side of the business from a profit perspective, outgrown or undergrown, the warehousing and value-added piece?

Yes. We don't break out that level of detail. At least today, we don't -- you will see it next year in a little detail that you want. Right now, we consider all 3 of those still in a single segment. I know you're asking, Bascome, but I'm not saying.

No, understood. Well, as we look into next year and kind of think about the business, just directionally from your opportunity to improve the bottom line further versus either cyclical or other risks you want to flag like -- what are the 1 or 2 biggest upside potential drivers that you see for EBITDA in the next year and the 1 or 2 biggest risk across the entire portfolio?

You want me to go first?

Yes, go ahead.

Yes. So in terms of the biggest upside right now is just operating leverage in the Expedited segment, whether that be in the form of additional volume or price I'm not going to say that I'm indifferent because I am very different. I'd rather have the price and the volume. But right now, we've got this network at a level that any incremental shipment, just 1 shipment has a disproportionate positive impact to the bottom line. So I'd say that's going to be just increased density on the expedited side.

And then on the downside, I mean, this is I don't want to say that we've been operating in this environment for the last 3 years, but we've been operating in this environment for the last 3 years. If you think about ISM below 50 for the last 34 out of 36 months tonnage in the space is down 21 out of 22 months and cash is negative for 33 months. That's about 3 years any way you want to slice and dice it. So I think that we are bound at least from my perspective, the bottom. Can it get worse? Absolutely, can always get worse. So I guess the biggest risk would be further macro deterioration. And if that happens or not, Bascome, you know better than I do.

It appears there are no further questions at this time. Let me turn it over to Mr. Stewart for any final remarks.

All right. Thank you, Angela. Listen, we really appreciate your interest and support. We remain extremely confident in our strategy and look forward to updating you at the next quarterly earnings call. So if you have any questions, please follow up directly with Tony, and we look forward to talking to you soon. Take care.

This concludes today's Forward Air Third Quarter 2025 Earnings Conference Call. Please disconnect your line at this time, and have a wonderful day.

Welcome to the Forward Air Second Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Tony Carreno, Senior Vice President of Treasury and Investor Relations.

Thank you, operator, and good afternoon, everyone. Welcome to Forward Air's Second Quarter 2025 Earnings Conference Call. With us this afternoon are: Shawn Stewart, Chief Executive Officer; and Jamie Pierson, Chief Financial Officer.

By now, you should have received a press release announcing Forward Air's Second quarter 2025 results, which was also furnished to the SEC on Form 8-K. We have also furnished a slide presentation outlining second quarter 2025 earnings, highlights and a business update. Both the press release and slide presentation for this call are accessible on the Investor Relations section of Forward Air's website forwardair.com.

Please be aware that certain statements in the company's earnings release announcement and on the conference call are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. This includes statements which are based on expectations, intentions and projections regarding the company's future performance, anticipated events or trends and other matters that are not historical facts, including statements regarding our fiscal year 2025. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.

For additional information concerning these risks and factors, please refer to our filings with the Securities and Exchange Commission and the press release and slide presentation relating to this earnings call. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by law.

During the call, there may also be a discussion of financial metrics that do not conform to U.S. Generally Accepted Accounting Principles or GAAP. Management uses non-GAAP measures internally to understand, manage and evaluate our business and make operating decisions. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in today's press release and slide presentation.

I will now turn the call over to Shawn.

Good afternoon, everyone, and thank you for joining us. I would like to begin today's call by recognizing recent awards that highlight our team's outstanding customer service, operational excellence and unwavering commitment to our partners. Omni Logistics was honored as the 2024 International and Domestic Forwarder of the Year by doTERRA International. This marks the first time a single logistics partner has received both distinctions from doTERRA, underscoring Omni's leadership and performance across the board. GLT Logistics selected Forward Air as the commitment to excellence Carrier of the Year for 2024. This award underscores Forward's performance, service and commitment to customer success and highlights the trust built within the strong business relationship.

Our Omni Logistics team in Asia was recognized with an award from advanced micro devices for their agility and responsiveness during a significant demand surge in late 2024. The team successfully managed and overflow while maintaining the high service standards that we are known for. These honors are a reminder of the belief that and trust that our customers have in our company. They reflect the dedication of our people whose efforts continue to drive our reputation for excellence.

As our global presence grows, it's clear that our focus on service, speed and reliability is making a lasting impact. While managing through the challenges of the current freight recession, we plan to continue demonstrating our unwavering commitment to our customers by strengthening relationships and consistently delivering value-added services that matter. We believe this approach will benefit our customers, employees and investors over the long term.

Turning to the quarterly results. We had another solid operational quarter with consolidated EBITDA, which is calculated pursuant to our credit agreement, of $74 million compared to $69 million in the first quarter of this year. Consolidated EBITDA in the second quarter of last year was $89 million. Going forward, the quarterly results will be more comparable as the historical quarterly pro forma and synergy savings roll off, the quality of our earnings should also continue to improve.

To that point, adjusted EBITDA in the second quarter was also $74 million compared to $69 million in the first quarter of this year. On a year-over-year basis, adjusted EBITDA improved by $1 million compared to $73 million in the second quarter of last year.

At the Expedited Freight segment, we continue to make progress. As previously communicated, one of the first steps our management team took to improve financial performance was to take corrective actions on the pricing. After concluding the necessary diligence, we implemented those actions in the fourth quarter of 2024 and completed them in the first quarter of this year.

Following these actions, although tonnage is down, we have significantly improved reported EBITDA and margin at the Expedited Freight segment. Reported EBITDA has grown from $18 million in the fourth quarter of 2024 to $30 million in the second quarter of 2025, and the margin has improved by 500 basis points from 6.6% to 11.6%. The 11.6% is the highest this segment has reported since the fourth quarter of 2023. We were able to achieve these operating efficiencies and margins in a down market by optimizing pricing and tightly managing all discretionary expenses, rationalizing every dollar and focusing on having the right type of freight in our network at the right price.

We believe the variable nature and flexibility of our network positions us incredibly well for when the market normalizes. Based on actual past results, we know there is an additional opportunity to improve the Expedited Freight segment's margin. We also know that we need to grow volume in the network. As with most LTL networks, our network thrives in a tighter market. There is always more we can do to reduce cost. However, we are not willing to compromise the high quality of service that we are known for and our customers have come to expect from us. The Expedited Freight network includes one of the largest expedited LTL networks in North America and is an industry leader in serving time critical and high-value freight. In conditions such as this, it takes discipline not to sacrifice service, and we believe the quality of service we provide will be the driver of growth and ultimately pricing and profitability in the future.

At the Omni Logistics segment, we continue to build momentum, and I am excited about the progress that we are seeing. On a year-over-year basis, we grew revenue $16 million to $328 million in the second quarter. Sequentially, from the first quarter to the second quarter of this year, reported EBITDA increased from $26 million to $30 million [Technical Difficulty][ 110 ] basis [ 9% ].

On a year-over-year basis, reported EBITDA improved from $20 million in the second quarter of last year to $30 million this year, which is a 47% increase. The margin also improved from 6.4% to 9% compared to the same period a year ago.

The Intermodal segment remains a consistent performer in a turbulent and unpredictable market. Reported EBITDA in the second quarter of 2025 was $9 million and generally in line with the $9 million to $10 million of reported EBITDA in each of the last 4 quarters.

In closing, as we begin the second half of the year, the logistics industry remains in a state of flux, shaped by macro risk, chiefly surrounded tariffs and their potential impact on consumer confidence as well as ensuing demand on resulting global freight flows. Overall, transportation volumes remain muted as the uncertainty cloud visibility for the rest of 2025 and as long as the global uncertainty lingers.

Regardless of the macro environment, we remain focused on continuing the progress we have made over the last year. We remain committed to our strategy and are on the path to transform the company into a world-class logistics organization. This includes streamlining and simplifying our global structure as it positions us for future growth. We are incredibly excited about what the long-term future holds for our company and we believe we are well positioned to outgrow the market once the freight environment normalizes.

With that, I will turn this call over to Jamie to go through the results for the second quarter.

Thanks, Shawn, and good afternoon, everyone. Before jumping into the script, I just want to note that this quarter marks our first clean quarterly year-over-year comparison since closing the transaction of last year. It has been an absolutely crazy year, but we have accomplished a ton. And going forward, we at least will have the ability to more cleanly compare year-over-year results.

Beginning with the consolidated revenue, in the second quarter, we reported $619 million compared to $644 million in the prior year. The 3.9% decrease is primarily attributable to a decrease in revenue at the Expedited Freight segment partially offset by an increase in revenue at the Omni Logistics segment. On a sequential basis, second quarter consolidated revenue increased 1% compared to the $613 million in the first quarter of the year.

As for the revenue at our 3 reporting segments, Expedited Freight, Omni Logistics and Intermodal, revenue at the Expedited Freight segment decreased $34 million or 11.5% to $258 million from the previous year's comparable quarter of $291 million. The decrease was driven by a 12.7% decrease in year-over-year tonnage per day that was partially offset by a 1.8% increase in the revenue per hundredweight, excluding fuel.

At the Omni Logistics segment, revenue in the second quarter increased by $16 million to $328 million compared to the $312 million a year ago. The increase was driven by an increase in demand for our services, specifically in the contract logistics area.

Revenue in the Intermodal segment of $59 million was flat compared to a year ago, an increase in revenue per shipment of 4.4% was largely offset by a 4% decrease in the number of trade shipments. As you heard from Shawn, adjusted EBITDA was $74 million or an 11.9% margin in the second quarter of this year compared to the $73 million or 11.3% margin a year ago.

Solidated EBITDA as defined in our credit agreement was $74 million or again an 11.9% margin compared to $89 million or 13.8% margin a year ago. On an LTM basis, consolidated EBITDA was $298 million. As usual, we have detailed the information used to build up adjusted and consolidated EBITDA results on Page 29 of the presentation.

Turning to cash flow, cash and liquidity, we reported $13 million in cash used by operations in the second quarter which was a $32 million improvement compared to the $45 million in cash used by operations a year ago. For the first half of 2025, we reported $14 million of cash provided by operations, which is in $111 million improvement compared to the $97 million used by operations in the same period a year ago.

As for liquidity, we ended the second quarter with $368 million in total liquidity, comprised of $95 million in cash and $273 million in availability under the revolver. The $25 million sequential decrease in total liquidity from $393 million in the first quarter included a $34 million semiannual interest payment on our senior secured notes that we paid in April and October of each year.

And as usual, I'd like to leave you with a few additional thoughts for the quarter. And the first one, you can follow under the header of beating a dead horse, but as Shawn stated in his intro, the quality of earnings is continuing to improve the further we get away from the noise of the transaction. We haven't had any pro forma synergy or performance savings add-backs in either the last 2 quarters.

As the historical add-backs in the transaction continue to roll off, we expect the difference of what you would normally define as adjusted EBITDA and consolidated EBITDA that we had been reporting to continue to narrow. The add-backs that we anticipate going forward will be more of a normal nonrecurring and noncash tax that you would expect under a non-GAAP definition of adjusted EBITDA.

Moving to the second point, which will largely lead us to the third is our sequential quarter-over-quarter improvement in margins and consolidated EBITDA. Our recently enacted pricing strategy, combined with our stringent cost and expense control efforts, especially at the Expedited Freight segment have led to a sequential increase in consolidated EBITDA. The logical extension of increased consolidated EBITDA leads us to 0.3, which is our continued focus on cash generation and conversion thereof.

Cash provided by operations has significantly improved in the first half of the year compared to a year ago. If you'll refer to Page 20 of the earnings presentation, you will see that on a non-GAAP basis, we are consistently generating approximately $40 million to $50 million a quarter in unlevered operating cash flow.

Next is our unwavering commitment to service even in a soft market. When you invest in Forward, you are investing in a very unique portfolio of logistics and transportation assets, all unified by a shared dedication to customer service. We believe if you provide the world-class service that we do, financial results will follow, providing excellent service is a significant investment, often costly and time-consuming. However, the good news is, we have already made that investment. It is in our DNA and it is in the core of everything that we do. We have continued to optimize our LTL network which is known as North America's leading expedited network. With a more optimized network and with all things being equal, each incremental shipment that we drop into the network has a higher margin than the previous one. And ultimately, as we've shared with you in prior calls, the integration of the network is complete, and we over delivered on the previously committed synergies.

As we have also shared with you, we are transitioning from integration to the more longer-term transformation of the combined companies, which we anticipate to be complete by the end of next year. To that end, we will continue to tightly manage all expenses, inclusive of the rationalization of the systems and support that we will need once the transformation is complete. More to come in the future, but just wanted everyone to be aware of our continued effort to rightsize the expense base commensurate with the support needed to continue to serve our customers.

And finally, the strategic alternative review launched earlier this year is progressing. As such, before you ask, and I hope you're listening, we do not plan to update the market on the details of the process as it advances. If and when there is anything of substance to report, we will let you know. More importantly, we do not expect the process to take away from our commitment and focus on running the business. Our goal is to continue delivering the same award-winning services and solutions to our customers as we have in the past.

I will now turn the mic back over to Shawn for closing comments before Q&A.

Thank you, Jamie. In closing, I am proud of our team for their continued commitment and focus on the customer, executing operationally and tightly managing cost. Amidst an uncertain macroeconomic landscape, I am confident that we possess a robust platform poised to drive sustainable growth. Together, we remain steadfast in our commitment to deliver tangible value for our customers, fostering opportunities for our team and creating lasting value for our shareholders.

As Jamie said earlier, and I want to reiterate, when investing in Forward Air, you are investing in a unique portfolio of logistics assets.

I will now turn the call over to the operator to take questions. Operator?

[Operator Instructions] Our first question is coming from Bruce Chan with Stifel.

This is Matt Milask on for Bruce. Just to start here with respect to Omni. Would you be able to provide an update on specific commercial synergy efforts taking place there? Perhaps what's going right so far? One of the key areas of focus now are and perhaps any updated expectations that you might have on the timing of how these efforts might start to ramp more meaningfully through the P&L?

Sure, Matt. Thank you. We hired a new Chief Commercial Officer earlier part of this year, and Eric's really got the team humming on both legacy organizations. And -- not only is everybody laser-focused on their product value streams, but consistently on the Omni side really working on the synergy selling of all of our great products around the world, and that focus is really starting to take hold. So majority of that is coming from working with the team, enabling the sales team supporting them with laser focused on how and where to grow in the best interest of the combined organization.

Great. That's helpful. And then I know Jamie preface this in his remarks, but with respect to the strategic review, is there any perhaps anything on increased activity and inbound interest in any of the lines of business? Or perhaps how the current M&A environment might be affecting your ability to transact?

Yes. I'd say, Matt, that there is always interest in this collection of assets just proud and honored to be a part of the combined company. So in terms of increased interest, in terms of us putting a press release out there saying that we're entertaining a strategic alternatives review, I don't know how much more interest we could garner. If you mean about the individual assets, we believe that the value of the collective whole is greater than the sum of the individual parts.

We'll move next to Stephanie Moore with Jefferies.

I wanted to ask maybe a bigger picture question. Clearly, a lot of work has been done over the last year or so on both the expedited side but also Omni side. You can certainly see it across the board, whether it's the margin profile, the pricing actions and the like. So asking kind of a multiyear question here, what is your north star and how you think about the underlying earnings contribution of the combined entity? And if it's not from a dollar standpoint, are there certain margin aspirations that you have your eyes set on and that can be for in the whole company? Or as you look at the LTL business or the forwarding business? But maybe just as you run the business, what are you targeting?

Yes, Stephanie, there's a great page in the back of the earnings period though on Page 28. And what we try to do here is we've broken it down by our competitive set relative to us. And if you look at where the LTL carriers are, the freight quarters and the truck loading Intermodal, we've broken up the opportunity there. Omni, Intermodal are crushing. Omni, as you can see, has been growing. The margin has been steady, if not increasing. Intermodal has been at the high end of the comp head since the walk to the door. The biggest opportunity is in cost the 8 percentage point on a $1 billion business that we have in the truckload business. Now I'm not saying that we're going to go straight to 18%, but if we're at 10% now, the market is sharing that kind of 18% to 20% range given our premium service, given what we do, given the, I guess, high value and expedited nature of the service that we deliver. There's no reason in my mind that over the next couple years, that we can't reach that same market margin.

Great. No, that's really helpful. And then maybe just taking a step further, clearly, a lot of action on the pricing front, what is next? Because I think as we look at that per set one key differentiation might just be kind of a scale advantage the like. But to your point, your service is high. You've made corrective pricing actions. What are the next steps to close that gap over the next couple of years?

Step, it's Shawn. So outside of just growth in general, what you see us doing, I would say, under the hood is fine-tuning the organization really getting lean. And when I say lean, lean did not just mean cost cutting, but really looking at improving quality of operations, not only just in service, but also in cost around revenues. So that's from optimizing the LTL network to really focus on standards around the world, and focused on no rework, get it right the first time. Let's not do what must not do it twice, do it once. And that's what you're seeing even in Q2 as the team has really focused here and done a fantastic job of adjusting operating costs to the revenues. And that's probably my most proudest moment over the last year is the teams just real confidence in what they're doing, how they're doing it and enjoying it in this very weird market we're in, it's a lot of fun to watch.

Step, it's Jamie. I'll jump on there. You called out the pricing. Shawn, you talked about our ability to contain costs as we grow this business. But you say what is next is, right now, our net margins are solid. They're good. We're doing incredibly well on the line all side of the business and on the terminal side of the business. Pricing is just starting to kick in. You saw we actually showed a graph. Now it's two points higher on a revenue per hundredweight ex fuel and a little bit more than 4 points higher on a revenue per shipment basis, the what mix in terms of getting it to that next level and closing the gap. I think you're leading us to water a little bit in terms of how do you close that gap is on operating leverage. So if we can hold the net margin, marginally increase it with our pricing actions, but grow the top line and not grow the SG&A portion of the business, which we have a very, very stringent line to hold, then that's what's going to help us close that gap.

We'll take our next question from Scott Group with Wolfe Research.

So I know you probably can't say too much, but what do you think is the timing to hear on this process? Is this weeks away, months away? Any thoughts at all you can share with us?

Yes, Scott, I know you would ask it, we really can't share anything. We are in the process, and it's moving, as I say, on track and will. So as soon as we have something more, but I don't have necessarily a crystal ball to say timing at this point.

Okay. And then maybe just can you give us an update as Q2 played out, as Q3 started, just some of the volume trends that you're seeing so far into Q3? And then I know some of the LTLs have announced GRIs. How are you thinking about GRIs back half this year?

Yes. I'll take a sequential question and then let Shawn give them much more eloquent GRI versus the customer-specific increase. Scott, we don't give intra-quarter guidance. But all I would say is that where we ended the second quarter, we don't see anything that's meaningfully different as we enter the third.

And on the GRI, Scott, I'm a big fan and also talking to the customers when I arrived. I don't believe anything's in general. So I'm not a big fan of GRIs because I've seen multiple organizations. They'll impose the GRI and then the volume slides. And we're not in a market that, that's -- in my world, that's not very smart. So what we do, Scott, is what we call SRIs, which is more strategic. And we're working with each customer strategically on lane pairs that will need adjustment up. And sometimes, I can even adjust some down in exchange. So as volume fluctuates on OD pairs, we work directly with the customer to exchange those on an SRI basis, and we do that consistently. So I don't just find a period of time in an annualized situation to take a GRI, more SRI, if that makes sense.

No, it does. Okay. And then maybe just lastly, Jamie, small cash burn first half of the year, any thoughts on how you're thinking about back half cash flow?

Yes. The way I look at it, there's a great -- you've coached me well, Scott. There's Page 21, we do a cash bridge. And what we're showing here is about $45 million to $50 million in cash flow from ops every single quarter with a consistent, consistent regularity. And so we generate cash in every end of the quarter, we burn a little bit of cash year quarter, and that burn is only in the quarter when we have the $34 million senior secured note payment which is in April and October. If you look at it over a year, I think we're only down like $10 million in cash over the last 365 days and it's in the midst of integrating these 2 behemoth companies and an incredibly soft freight environment. So as we sit here right now, a little bit less than $400 million in liquidity, I'm feeling pretty darn good.

But do you think that cash -- operating cash flow changes much in the back half of the year?

Yes, that would be given guidance, Scott, but I appreciate the effort.

We'll move next to Bascome Majors with Susquehanna.

I want to go back to some of the questions about the transition from integration to transformation. I mean you've called out some new services, some wins and press releases. Any way you can dimensionalize the kind of new revenue you're bringing on even directionally in aggregate. And we realize it's not a one-for-one add to what you did last quarter. I just wanted to -- want to see what you're seeing and the opportunity to cure some of the business, where that's happening?

Bascome, yes. So we're -- the couple of press releases, they're just really large ones that were worthy of press releases. I mean we're winning a lot more than what we've pressed. But we're seeing wins in the truckload space. We're seeing wins in the international airfreight space and then just in general ground. It just depends on whether it's a new logo or organic growth with an existing logo. But it's pretty much across the board, I would say, in general, Bascome.

And if we aggregate this, are we talking tens of millions, hundreds of millions of incremental revenue? I just want to understand kind of what this looks like and how it could potentially help with some of the general plays in the freight market?

Yes. I'd say it's a little bit of both because we talk about customers that are lost throughout this transition, and then down trading and up trading. So we've got as much customers that are up trading with us that are existing customers, then we have new logos. So -- and I hate to put it in such a crastway, but I'm almost indifferent of where the increase in revenue comes from as long as it comes. So -- and we all know everybody on this call including yourself, know that the cheapest dollar to win is the customer that you already have. So we continue to grow revenue with certain key accounts. And with the new platform, we do have a couple of big wins that we wouldn't have been able to win absent the combination. But given the state of the freight market, Bascome, mean everyone right now is slugging it out. What we have to do is be very, very disciplined to the price that we are charging our customer that is commensurate with the expedited service delivery that we have. And we just got to -- we got to look into that discipline and sometimes make some tough decisions to not take on some business that is not profitable for our network. But from the -- I guess, the broader perspective, a couple of big wins that we would not have been able to achieve on a stand-alone basis.

Just one more for me. I appreciate the commentary on the earnings quality, improving and the add-backs getting a little more traditional in your EBITDA adjustment as we go forward and certainly year-to-date as well. Can you give us a little color on any of the ones this quarter were at the segment level? Or were they all at the corporate level? And maybe a little more on what's running through other where I think you added back $14 million this quarter and $11 million last?

Yes. So the vast majority of the other is a noncash stock comp. And what we -- there's two big pieces of it. I hope we might get everywhere -- curious right here. So it's noncash comp and facility closing costs that make up over half of that. So that's the vast majority of it. And then you've got some noncash FX gain and loss. So noncash, by and large, and that's why I said in my opening comments, that it is more akin to what you and I would define as traditional adjusted EBITDA. Because the vast majority of it is either noncash or on restructuring and facility closing costs.

And just of those larger ones this quarter or any made at the segment level? Or are those all the corporate?

Well, FX is at a segment stock-based comp can be allocated to the segment, but we don't track it that way, Bascome. Right now, enroll all of those costs up at a corporate level, so that I've got visibility into it. I don't want to hidden down into the segments or around the smaller opcos. You don't want the opcos in indirect taxes, as an example.

[Operator Instructions] We'll move next to Christopher Kuhn with Benchmark Company.

Shawn, I know that you got some poorly priced freight out of the network business. Is that largely done? I don't know if you talked about that this quarter. I know last quarter, you pretty much had it done. I was just curious if some of that tonnage is really just market or some of the things you've done to?

Yes, Chris, that is primarily done. I mean it's always an ongoing assessment. But I would say we fixed the pricing number one, a new basis line. And with the new modeling tools on cost and pricing, I would say we make much more accurate assumptions with new logos and have fixed the existing logos. So you would see less to 6, if that makes sense.

Yes. Understood. And the pricing actions... I'm sorry, go ahead.

If you pointed to there's a segment level profitability chart. If you look at Page 14 of the Expedited material, you'll see a 500 basis point improvement in just 2 quarters. So it's not just pricing of freight like we -- that's commensurate with the service that we provide that we show in the back. But it's also getting that negative contribution margin break out of the network. And I think this page right now is as strong as a testament of what Shawn was able to get accomplished over the last 2 quarters.

And how should we think about pricing from this level here in terms of revenue per hundredweight ex fuel?

How do we think of it in what way?

Should it improve sequentially? Do you really need the market to make better improvements or kind of where is pricing going from here in terms of...

I would say, Chris, if nothing else changes, that's pretty much a run here for the current market condition that we're in. I don't like to overcommit and underdeliver. So I think as the market -- if and when it starts to tighten, we can make sequential improvements on that as well.

So really, it sounds like that Expedited margin you need the leverage to be back in the model in terms of volume growth from here?

Well, just no, Chris, we don't give guidance on what's going to happen with pricing or the margin. I think Shawn responses is spot on.

Okay. Just lastly, it sounds like the strategic view, I'm not going to really ask about that, but I just it sounds like there's not going to be a lot of portfolio reshaping anymore. I thought we're not any businesses that you're kind of looking to shed now as you think the whole is bigger than the sum of the parts?

That's a question or a statement?

Yes. I was just asking, I mean, have you -- is there any portfolio reshaping as or not?

Yes. I'd tell you what, we have integrated these 2 companies, there's only probably one that would be nonstrategic or non-core. But if you collapse the other individual entities of Omni with Forward on a network basis, we've already made that decision, and we delivered $120 million in synergy savings. So to unwind it, I think, would be value destructive, but there might be one that we would consider.

And it does appear that there are no further questions at this time. I would now like to turn the call back to Mr. Stewart for any final remarks.

All right. Well, listen, we really appreciate your interest and support, and we remain confident in our strategy and look forward to updating you on our progress upcoming. So -- with that, if you have any follow-up questions, please contact Tony directly, and we'd be happy to follow up and/or schedule follow-up calls with you guys. Appreciate it. Take care.

This concludes today's Forward Air Second Quarter 2025 Earnings Conference Call. Please disconnect your lines at this time. Have a wonderful day.