Forward Air Undertakes Major Strategic Review for Growth

Forward Air's New Strategic Direction

Forward Air Corporation (NASDAQ:FWRD) has recently initiated a significant strategic review aimed at maximizing shareholder value. This comprehensive assessment by the Board of Directors will explore various options, including potential mergers, acquisitions, or other financial strategies that could enhance the Company's long-term prospects.

Leadership Commitment to Shareholder Value

George Mayes, the Independent Chairman, emphasized that under the new leadership, the Company is making remarkable progress in the integration of Omni, a strategic move aimed at transforming Forward Air into a global logistics leader. The Board is dedicated to identifying the optimal pathway to elevate shareholder value. Mayes conveyed confidence in the ongoing efforts and reassured stakeholders that Forward Air remains unwavering in its dedication to delivering high-quality services to its customers.

Review of Strategic Alternatives

The Board has not set a specific timeline for completing this strategic review, acknowledging that no definitive action or decision regarding potential strategies has been made yet. Stakeholders are advised that the Company will refrain from disclosing any developments until deemed necessary. Goldman Sachs & Co. LLC has been engaged as the financial advisor, while Jones Day is providing legal counsel for this process.

Strategic Financial Amendments

Forward Air has also made significant amendments to its Senior Secured Term Loan Agreement. These amendments are designed to strengthen financial flexibility amid ongoing strategic transformations.

Highlights of the Credit Agreement Amendments

• The maximum consolidated first lien net leverage ratio has been modified, reflecting the organization's proactive approach to financial management.
• The total commitments under the revolving credit facility have been reduced from $340 million to $300 million, streamlining financial resources for operational purposes.

Management Insights on Transformation Initiatives

Jamie Pierson, Chief Financial Officer, stated that these financial amendments are crucial for supporting the company's ongoing transformation initiatives, regardless of the strategic review's outcomes. The leadership team is focused on streamlining operations, enhancing efficiency, and improving the cost structure to better meet customer demands and capitalize on market opportunities.

Savings from Transformation Strategies

As part of the transformation efforts, substantial steps have been taken to reduce operating expenses, including workforce reductions and consolidation of terminal operations. These strategic moves are expected to yield an estimated annual savings of around $20 million, complementing the anticipated $75 million from merger integrations, all of which are on track for completion by the end of the first quarter of the upcoming year.

Future Financial Expectations

Forward Air continues to reaffirm its guidance for the full-year 2024 Consolidated EBITDA, projecting it to remain between $300 million and $310 million. This forecast includes anticipated reductions in operating expenses.

About Forward Air Corporation

Forward Air has established itself as a premier asset-light provider of transportation services across North America. The Corporation specializes in expedited less-than-truckload services, which encompass local pick-up and delivery, shipment consolidation, warehousing, and customs brokerage, leveraging a robust national terminal network.

In addition to these services, Forward Air is active in truckload brokerage and intermodal operations, providing first- and last-mile services, high-value drayage, and dedicated contract services. The Company's capabilities extend further through its partnership with Omni Logistics, a global logistics provider offering air, ocean, and ground services for critical shipments. Forward Air embodies a comprehensive solution for diverse shipping needs.

Transformation Through Strategic Financial Management

For investors and stakeholders, the importance of understanding non-GAAP financial measures such as Consolidated EBITDA cannot be overstated. These figures present a clearer picture of the Company’s financial health and its strategic planning capabilities, particularly in light of significant changes and ongoing transformations.

Frequently Asked Questions

1. What prompted Forward Air to review its strategic options?

The Board of Directors is looking to maximize shareholder value and assess potential strategic alternatives such as mergers or acquisitions.

2. Who is providing advisory services for the strategic review?

Goldman Sachs & Co. LLC has been engaged as the financial advisor, with Jones Day serving as legal counsel.

3. What financial amendments have been made recently?

The Company has modified its Credit Agreement to adjust leverage ratios and reduce total commitments on its revolving credit facility.

4. What are the expected savings from the transformation initiatives?

Forward Air aims to achieve approximately $20 million in annual savings, in addition to $75 million in synergies from integration.

5. How is Forward Air positioned in the transportation industry?

Forward Air is recognized as a leading asset-light provider of transportation services across North America, focusing on efficiency and integrated logistics solutions.

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