8-K
FORWARD AIR CORP (FWRD)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
______________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 8, 2024
FORWARD AIR CORPORATION
(Exact name of registrant as specified in its charter)
| TN | 62-1120025 | |||||
|---|---|---|---|---|---|---|
| (State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) | |||||
| 1915 Snapps Ferry Road | Building N | Greeneville | TN | 37745 | ||
| (Address of principal executive offices) | (Zip Code) | 000-22490 | ||||
| --- | ||||||
| (Commission File Number) |
Registrant's telephone number, including area code: (423) 636-7000
| Not Applicable |
|---|
| (Former name or former address, if changed since last report) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value | FWRD | NASDAQ |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
SECTION 2. FINANCIAL INFORMATION.
Item 2.02. Results of Operations and Financial Condition.
On May 8, 2024, Forward Air Corporation (the “Company”) issued a press release (the “Press Release”) announcing its financial results for the three months ended March 31, 2024. On May 8, 2024, the Company also posted an Earnings Presentation (the “Earnings Presentation”), dated May 8, 2024, on the Company’s Investor Relations website at ir.forwardaircorp.com.
Copies of the Press Release and Earnings Presentation are being furnished as Exhibits 99.1 and 99.2, attached hereto, respectively, and are incorporated herein by reference. The information furnished pursuant to Items 2.02 and 9.01, including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Exchange Act.
SECTION 9. FINANCIAL STATEMENTS AND EXHIBITS.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished as part of this Report.
| No. | Exhibit | |
|---|---|---|
| 99.1 | Press Release of Forward Air Corporation, datedMay8, 2024 | |
| 99.2 | Forward Air Q1 2024 Earnings and Business Update Presentation Slides | |
| 104 | Cover Page Interactive File (the cover page tags are embedded within the Inline XBRL document) |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| FORWARD AIR CORPORATION | ||
|---|---|---|
| Date: May 8, 2024 | By: | /s/ Michael L. Hance |
| Michael L. Hance <br>Chief Legal Officer and Secretary |
Document
NEWS RELEASE
FORWARD AIR CORPORATION REPORTS FIRST QUARTER 2024 RESULTS
Industry veteran Shawn Stewart appointed as Chief Executive Officer
First quarter results impacted by elongated weak freight market and Omni Logistics deal closing
Cost synergy realization in line with initial diligence estimates
Preliminary April results providing early indication of improvement
GREENEVILLE, Tenn.- (BUSINESS WIRE) - May 8, 2024 - Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “Forward”, “we”, “our”, or “us”) today reported financial results for the three months ended March 31, 2024 as presented in the tables below on a continuing operations basis (Final Mile is being reported as a discontinued operations).
Recently appointed Chief Executive Officer Shawn Stewart, said, “It is a privilege to be leading Forward during this pivotal time. Together, Forward and Omni have created an industry leader dedicated to delivering world-class service to customers. Forward excels at providing best-in-class premium less-than-truckload service to an attractive and broad customer base, while Omni provides custom supply chain solutions across multiple service modes to domestic and international customers. Together, Forward and Omni, provide customers a seamless partnership and flawless execution for their time-sensitive and mission-critical freight.”
Mr. Stewart continued, “I see tremendous opportunity for the combined entity to maximize value for customers, employees and shareholders. I am committed to aggressively taking action to improve profitability, maximize synergy capture and drive our leadership in global supply chain and domestic transportation services. With the distractions of the deal closing behind us, our team is focused on execution. I look forward to sharing our progress along the next phase of our journey. To that end, we look forward to sharing our full year 2024 guidance and our path to achievement on our second quarter earnings call.”
Rebecca J. Garbrick, Chief Financial Officer, said, “Our first quarter results did not meet our expectations. We continue to face challenging market conditions, characterized by weak freight demand, excess carrier capacity, and pressure on pricing. Omni's first quarter results were more adversely impacted as a result of its exposure to the international freight market. While these conditions led to decreased customer demand for our intermodal, truckload brokerage and Omni lines of business, we saw momentum in our less-than-truckload line of business where we experienced positive volume trends and improved freight quality metrics. In the first quarter, our shipments per day growth was +1.4%, weight per shipment was +7.4%, and revenue per shipment excluding fuel was +0.7% over the same period in the prior year. Unfortunately, this momentum did not offset softer demand for our intermodal and truckload brokerage services, resulting in an 8% decline in revenues and 41% decline in adjusted EBITDA on a continuing operations basis over the same period in the prior year, excluding the results of Omni. From the acquisition date, January 25, 2024, through the end of the quarter, Omni contributed $225 million in revenues and $(5.9) million in adjusted EBITDA.”
Ms. Garbrick continued, “Our first quarter results are not indicative of what we expect for 2024, and we are taking aggressive steps to improve profitability. One early positive indicator is the sequential growth in revenue as reflected in our preliminary April results. From the month of March 2024 to April 2024, we saw sequential revenue growth of 6% as compared to a sequential decline in revenue from March to April of (15%) over the same period in the prior year. We are also successfully executing on the cost synergies associated with the Omni transaction, which
are in line with initial diligence estimates. While our first quarter EBITDA was not reflective of run-rate synergies, we expect to see a steady increase in subsequent quarters until synergies are fully realized by the end of 2025.”
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands, except per share data) | March 31, 2024 | March 31, 2023 | Change | Percent Change | ||||||
| Operating revenue | $ | 541,813 | $ | 357,709 | $ | 184,104 | 51.5 | % | ||
| (Loss) income from operations | $ | (65,732) | $ | 47,196 | $ | (112,928) | (239.3) | % | ||
| Operating margin | (12.1) | % | 13.2 | % | (2,530) bps | |||||
| Net (loss) income | $ | (88,794) | $ | 33,904 | $ | (122,698) | (361.9) | % | ||
| Net (loss) income per diluted share | $ | (2.35) | $ | 1.27 | $ | (3.62) | (285.0) | % | ||
| Cash (used in) provided by operating activities | $ | (51,719) | $ | 60,839 | $ | (112,558) | (185.0) | % | ||
| Non-GAAP Financial Measures: 1 | ||||||||||
| Adjusted income from operations | $ | 12,534 | $ | 47,196 | $ | (34,662) | (73.4) | % | ||
| Adjusted net (loss) income | $ | (24,172) | $ | 33,904 | $ | (58,076) | (171.3) | % | ||
| Adjusted net (loss) income per diluted share | $ | (0.64) | $ | 1.27 | $ | (1.91) | (150.4) | % | ||
| Adjusted EBITDA | $ | 29,390 | $ | 59,568 | $ | (30,178) | (50.7) | % | ||
| Free cash flow | $ | (55,840) | $ | 56,135 | $ | (111,975) | (199.5) | % | ||
| 1 Reconciliation of these non-GAAP financial measures are provided below the financial tables. |
Review of Financial Results
Forward Air will hold a conference call to discuss first quarter 2024 results on Thursday, May 9, 2024 at 10:00 a.m. ET. An Earnings Presentation has been posted online on the Investor Relations portion of the Company’s website at ir.forwardaircorp.com, and will be referenced during the conference call. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at ir.forwardaircorp.com, or by dialing (877) 876-9173, Access Code: FWRDQ124.
A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investor Relations portion of the Company’s website to easily find or navigate to current and pertinent information about us.
About Forward Air Corporation
Forward Air is a leading asset-light provider of transportation services across the United States, Canada and Mexico. We provide expedited less-than-truckload (“LTL”) services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer truckload brokerage services, including dedicated fleet services; and intermodal, first-and last-mile, high-value drayage services, both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services. Forward also operates a full portfolio of multimodal solutions, both domestically and internationally, via Omni Logistics. Omni Logistics is a global provider of air, ocean and ground services for mission-critical freight. We are more than a transportation company. Forward is a single resource for your shipping needs. For more information, visit our website at www.forwardaircorp.com.
| Forward Air Corporation | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Condensed Consolidated Statements of Comprehensive (Loss) Income | ||||||||||||
| (Unaudited, in thousands, except per share data) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | March 31, 2023 | |||||||||||
| Operating revenues: | ||||||||||||
| Expedited Freight | $ | 273,295 | $ | 269,577 | ||||||||
| Intermodal | 56,292 | 88,169 | ||||||||||
| Omni Logistics | 224,838 | — | ||||||||||
| Eliminations and other operations | (12,612) | (37) | ||||||||||
| Operating revenues | 541,813 | 357,709 | ||||||||||
| Operating expenses: | ||||||||||||
| Purchased transportation | 277,015 | 145,171 | ||||||||||
| Salaries, wages and employee benefits | 128,867 | 66,647 | ||||||||||
| Operating leases | 38,803 | 24,073 | ||||||||||
| Depreciation and amortization | 31,786 | 12,372 | ||||||||||
| Insurance and claims | 12,881 | 13,258 | ||||||||||
| Fuel expense | 5,246 | 5,686 | ||||||||||
| Other operating expenses | 112,947 | 43,306 | ||||||||||
| Impairment of goodwill, intangibles and other assets | — | — | ||||||||||
| Total operating expenses | 607,545 | 310,513 | ||||||||||
| Income (loss) from continuing operations: | ||||||||||||
| Expedited Freight | 19,498 | 29,685 | ||||||||||
| Intermodal | 3,586 | 11,203 | ||||||||||
| Omni Logistics | (28,585) | — | ||||||||||
| Other Operations | (60,231) | 6,308 | ||||||||||
| (Loss) income from continuing operations | (65,732) | 47,196 | ||||||||||
| Other expense: | ||||||||||||
| Interest expense, net | (40,753) | (2,355) | ||||||||||
| Foreign exchange loss | (668) | — | ||||||||||
| Other income, net | 9 | — | ||||||||||
| Total other expense | (41,412) | (2,355) | ||||||||||
| (Loss) income before income taxes | (107,144) | 44,841 | ||||||||||
| Income tax expense | (18,350) | 10,937 | ||||||||||
| Net (loss) income from continuing operations | (88,794) | 33,904 | ||||||||||
| Income from discontinued operation, net of tax | — | 2,464 | ||||||||||
| Net (loss) income | (88,794) | 36,368 | ||||||||||
| Net loss attributable to Non-controlling interest | (27,082) | — | ||||||||||
| Net (loss) income attributable to Forward Air | $ | (61,712) | $ | 36,368 | ||||||||
| Net income per common share: | ||||||||||||
| Basic net (loss) income per share | ||||||||||||
| Continuing operations | $ | (2.35) | $ | 1.28 | ||||||||
| Discontinued operation | — | 0.09 | ||||||||||
| Basic | $ | (2.35) | $ | 1.37 | ||||||||
| Diluted net (loss) income per share | ||||||||||||
| Continuing operations | $ | (2.35) | $ | 1.27 | ||||||||
| Discontinued operation | — | 0.09 | ||||||||||
| Diluted | $ | (2.35) | $ | 1.37 | ||||||||
| Dividends per share: | $ | — | $ | 0.24 | ||||||||
| Net (loss) income | $ | (88,794) | $ | 36,368 | ||||||||
| Other comprehensive (loss) income: | ||||||||||||
| Foreign currency translation adjustments | (151) | — | ||||||||||
| Comprehensive (loss) income | $ | (88,945) | $ | 36,368 | ||||||||
| Expedited Freight Segment Information | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | Percent of Revenue | March 31, 2023 | Percent of Revenue | Change | Percent Change | |||||||
| Operating revenues: | ||||||||||||
| Network 1 | $ | 214,493 | 78.5 | % | $ | 205,931 | 76.4 | % | $ | 8,562 | 4.2 | % |
| Truckload | 37,055 | 13.6 | 41,744 | 15.5 | (4,689) | (11.2) | ||||||
| Other | 21,747 | 8.0 | 21,902 | 8.1 | (155) | (0.7) | ||||||
| Total operating revenues | 273,295 | 100.0 | 269,577 | 100.0 | 3,718 | 1.4 | ||||||
| Operating expenses: | ||||||||||||
| Purchased transportation | 127,760 | 46.7 | 125,194 | 46.4 | 2,566 | 2.0 | ||||||
| Salaries, wages and employee benefits | 62,553 | 22.9 | 55,918 | 20.7 | 6,635 | 11.9 | ||||||
| Operating leases | 14,982 | 5.5 | 15,738 | 5.8 | (756) | (4.8) | ||||||
| Depreciation and amortization | 10,290 | 3.8 | 7,626 | 2.8 | 2,664 | 34.9 | ||||||
| Insurance and claims | 10,652 | 3.9 | 9,219 | 3.4 | 1,433 | 15.5 | ||||||
| Fuel expense | 2,581 | 0.9 | 2,513 | 0.9 | 68 | 2.7 | ||||||
| Other operating expenses | 24,979 | 9.1 | 23,684 | 8.8 | 1,295 | 5.5 | ||||||
| Total operating expenses | 253,797 | 92.9 | 239,892 | 89.0 | 13,905 | 5.8 | ||||||
| Income from operations | $ | 19,498 | 7.1 | % | $ | 29,685 | 11.0 | % | $ | (10,187) | (34.3) | % |
| 1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial and Truckload revenue. | ||||||||||||
| Expedited Freight Operating Statistics | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | March 31, 2023 | Percent Change | ||||||||||
| Business days | 64 | 64 | — | % | ||||||||
| Tonnage 1,2 | ||||||||||||
| Total pounds | 684,995 | 629,080 | 8.9 | |||||||||
| Pounds per day | 10,703 | 9,829 | 8.9 | |||||||||
| Shipments 1,2 | ||||||||||||
| Total shipments | 828 | 817 | 1.4 | |||||||||
| Shipments per day | 12.9 | 12.8 | 1.4 | |||||||||
| Weight per shipment | 827 | 770 | 7.4 | |||||||||
| Revenue per hundredweight 3 | $ | 31.32 | $ | 33.36 | (6.1) | |||||||
| Revenue per hundredweight, ex fuel 3 | $ | 24.15 | $ | 25.75 | (6.2) | |||||||
| Revenue per shipment 3 | $ | 259.14 | $ | 256.89 | 0.9 | |||||||
| Revenue per shipment, ex fuel 3 | $ | 199.78 | $ | 198.30 | 0.7 | |||||||
| 1 In thousands | ||||||||||||
| 2 Excludes accessorial and Truckload and products | ||||||||||||
| 3 Includes intercompany revenue between the Network and Truckload revenue streams | ||||||||||||
| Intermodal Segment Information | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | Percent of Revenue | March 31, 2023 | Percent of Revenue | Change | Percent Change | |||||||
| Operating revenue | $ | 56,292 | 100.0 | % | $ | 88,169 | 100.0 | % | $ | (31,877) | (36.2) | % |
| Operating expenses: | ||||||||||||
| Purchased transportation | 17,443 | 31.0 | 20,014 | 22.7 | (2,571) | (12.8) | ||||||
| Salaries, wages and employee benefits | 15,082 | 26.8 | 18,914 | 21.5 | (3,832) | (20.3) | ||||||
| Operating leases | 4,692 | 8.3 | 8,335 | 9.5 | (3,643) | (43.7) | ||||||
| Depreciation and amortization | 4,627 | 8.2 | 4,746 | 5.4 | (119) | (2.5) | ||||||
| Insurance and claims | 2,606 | 4.6 | 2,349 | 2.7 | 257 | 10.9 | ||||||
| Fuel expense | 2,361 | 4.2 | 3,173 | 3.6 | (812) | (25.6) | ||||||
| Other operating expenses | 5,895 | 10.5 | 19,435 | 22.0 | (13,540) | (69.7) | ||||||
| Total operating expenses | 52,706 | 93.6 | 76,966 | 87.3 | (24,260) | (31.5) | ||||||
| Income from operations | $ | 3,586 | 6.4 | % | $ | 11,203 | 12.7 | % | $ | (7,617) | (68.0) | % |
| Intermodal Operating Statistics | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | ||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | March 31, 2023 | Percent Change | ||||||||||
| Drayage shipments | 62,659 | 72,465 | (13.5) | % | ||||||||
| Drayage revenue per shipment | $ | 822 | $ | 1,136 | (27.6) | % | ||||||
| Omni Logistics Segment Information | ||||||||||||
| --- | --- | --- | --- | --- | ||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | Percent of Revenue | |||||||||||
| Operating revenue | $ | 224,838 | 100.0 | % | ||||||||
| Operating expenses: | ||||||||||||
| Purchased transportation | 144,424 | 64.2 | ||||||||||
| Salaries, wages and employee benefits | 48,775 | 21.7 | ||||||||||
| Operating leases | 19,127 | 8.5 | ||||||||||
| Depreciation and amortization | 16,869 | 7.5 | ||||||||||
| Insurance and claims | 2,053 | 0.9 | ||||||||||
| Fuel expense | 304 | 0.1 | ||||||||||
| Other operating expenses | 21,871 | 9.7 | ||||||||||
| Total operating expenses | 253,423 | 112.7 | ||||||||||
| Loss from operations | $ | (28,585) | (12.7) | % | ||||||||
| Forward Air Corporation | ||||||||||||
| --- | --- | --- | --- | --- | ||||||||
| Condensed Consolidated Balance Sheets | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| March 31, 2024 | December 31, 2023 | |||||||||||
| Assets | ||||||||||||
| Current assets: | ||||||||||||
| Cash and cash equivalents | $ | 172,270 | $ | 121,969 | ||||||||
| Restricted cash equivalents | — | 39,604 | ||||||||||
| Accounts receivable, net | 351,813 | 153,267 | ||||||||||
| Other receivables | 1,539 | 5,408 | ||||||||||
| Prepaid expenses | 39,512 | 25,682 | ||||||||||
| Other current assets | 4,299 | 1,098 | ||||||||||
| Total current assets | 569,433 | 347,028 | ||||||||||
| Noncurrent restricted cash equivalents | — | 1,790,500 | ||||||||||
| Property and equipment | 591,562 | 508,280 | ||||||||||
| Less accumulated depreciation and amortization | 263,856 | 250,185 | ||||||||||
| Property and equipment, net | 327,706 | 258,095 | ||||||||||
| Operating lease right-of-use assets | 334,262 | 111,552 | ||||||||||
| Goodwill | 1,379,180 | 278,706 | ||||||||||
| Other acquired intangibles, net | 1,264,428 | 134,789 | ||||||||||
| Other assets | 84,251 | 58,863 | ||||||||||
| Total assets | $ | 3,959,260 | $ | 2,979,533 | ||||||||
| Liabilities and Shareholders’ Equity | ||||||||||||
| Current liabilities: | ||||||||||||
| Accounts payable | $ | 130,646 | $ | 45,430 | ||||||||
| Accrued expenses | 118,955 | 62,948 | ||||||||||
| Other current liabilities | 73,461 | 71,727 | ||||||||||
| Current portion of debt and finance lease obligations | 28,134 | 12,645 | ||||||||||
| Current portion of operating lease liabilities | 93,645 | 44,344 | ||||||||||
| Total current liabilities | 444,841 | 237,094 | ||||||||||
| Finance lease obligations, less current portion | 34,306 | 26,736 | ||||||||||
| Long-term debt, less current portion | 1,664,107 | — | ||||||||||
| Long-term debt held in escrow | — | 1,790,500 | ||||||||||
| Operating lease liabilities, less current portion | 246,956 | 71,598 | ||||||||||
| Liabilities under tax receivable agreement | 13,270 | — | ||||||||||
| Other long-term liabilities | 45,536 | 47,144 | ||||||||||
| Deferred income taxes | 177,806 | 42,200 | ||||||||||
| Shareholders’ equity: | ||||||||||||
| Preferred stock | — | — | ||||||||||
| Common stock | 265 | 257 | ||||||||||
| Additional paid-in capital | 508,675 | 283,684 | ||||||||||
| Retained earnings | 417,282 | 480,320 | ||||||||||
| Accumulated other comprehensive loss | (151) | — | ||||||||||
| Total shareholders’ equity attributable to Forward Air | 926,071 | 764,261 | ||||||||||
| Noncontrolling interest | 406,367 | — | ||||||||||
| Total shareholders’ equity | 1,332,438 | 764,261 | ||||||||||
| Total liabilities and shareholders’ equity | $ | 3,959,260 | $ | 2,979,533 | ||||||||
| Forward Air Corporation | ||||||||||||
| --- | --- | --- | --- | --- | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||||||
| (In thousands) | ||||||||||||
| (Unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, 2024 | March 31, 2023 | |||||||||||
| Operating activities: | ||||||||||||
| Net (loss) income from continuing operations | $ | (88,794) | $ | 33,904 | ||||||||
| Adjustments to reconcile net (loss) income of continuing operations to net cash (used in) provided by operating activities of continuing operations | ||||||||||||
| Depreciation and amortization | 31,786 | 12,372 | ||||||||||
| Share-based compensation expense | 1,567 | 2,906 | ||||||||||
| Provision for revenue adjustments | 1,038 | 1,098 | ||||||||||
| Deferred income tax expense | 2,945 | 1,857 | ||||||||||
| Other | 4,169 | (1,091) | ||||||||||
| Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses: | ||||||||||||
| Accounts receivable | (20,495) | 16,397 | ||||||||||
| Other receivables | 5,367 | — | ||||||||||
| Other current and noncurrent assets | (7,104) | 10,910 | ||||||||||
| Accounts payable and accrued expenses | 17,802 | (17,514) | ||||||||||
| Net cash (used in) provided by operating activities of continuing operations | (51,719) | 60,839 | ||||||||||
| Investing activities: | ||||||||||||
| Proceeds from sale of property and equipment | 849 | 1,815 | ||||||||||
| Purchases of property and equipment | (4,970) | (6,519) | ||||||||||
| Purchases of a business, net of cash acquired | (1,565,242) | (56,567) | ||||||||||
| Other | (89) | — | ||||||||||
| Net cash used in investing activities of continuing operations | (1,569,452) | (61,271) | ||||||||||
| Financing activities: | ||||||||||||
| Repayments of finance lease obligations | (4,560) | (2,086) | ||||||||||
| Proceeds from credit facility | — | 45,000 | ||||||||||
| Payments on credit facility | (80,000) | — | ||||||||||
| Payment of debt issuance costs | (60,591) | — | ||||||||||
| Payment of earn-out liability | (12,247) | — | ||||||||||
| Payments of dividends to shareholders | — | (6,345) | ||||||||||
| Repurchases and retirement of common stock | — | (54,783) | ||||||||||
| Payment of minimum tax withholdings on share-based awards | (1,328) | — | ||||||||||
| Contributions from subsidiary held for sale | — | 4,852 | ||||||||||
| Net cash used in financing activities of continuing operations | (158,726) | (13,362) | ||||||||||
| Effect of exchange rate changes on cash | 94 | — | ||||||||||
| Net decrease in cash and cash equivalents from continuing operations | (1,779,803) | (13,794) | ||||||||||
| Cash from discontinued operation: | ||||||||||||
| Net cash provided by operating activities of discontinued operation | — | 5,154 | ||||||||||
| Net cash used in investing activities of discontinued operation | — | (270) | ||||||||||
| Net cash used in financing activities of discontinued operation | — | (4,884) | ||||||||||
| Net decrease in cash and cash equivalents | (1,779,803) | (13,794) | ||||||||||
| Cash and cash equivalents at beginning of period of continuing operations | 1,952,073 | 45,822 | ||||||||||
| Cash at beginning of period of discontinued operation | — | — | ||||||||||
| Net decrease in cash and cash equivalents | (1,779,803) | (13,794) | ||||||||||
| Less: cash at end of period of discontinued operation | — | — | ||||||||||
| Cash and cash equivalents at end of period of continuing operations | $ | 172,270 | $ | 32,028 |
Forward Air Corporation Reconciliation of Non-GAAP Financial Measures
In this press release, the Company uses non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with GAAP. The Company believes that meaningful analysis of its financial performance requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions as well as evaluating the Company’s performance.
For the three months ended March 31, 2024 and 2023, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, free cash flow, adjusted income from continuing operations, adjusted net income, and adjusted net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.
The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization) and tax impacts. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance shareholder value. The Company believes providing adjusted EBITDA, adjusted income from operations, adjusted net income and adjusted net income per diluted share allows investors to compare Company performance consistently over various periods without regard to the impact of unusual, nonrecurring or nonoperational items.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s financial results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the Company has included, for the periods indicated, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure.
The following is a reconciliation of net income to EBITDA for the three months ended March 31, 2024 and 2023 (in thousands):
| Three Months Ended | ||||
|---|---|---|---|---|
| March 31, 2024 | March 31, 2023 | |||
| Net (loss) income | $ | (88,794) | $ | 33,904 |
| Interest expense | 40,753 | 2,355 | ||
| Income tax (benefit) expense | (18,350) | 10,937 | ||
| Depreciation and amortization | 31,786 | 12,372 | ||
| Reported EBITDA | (34,605) | 59,568 | ||
| Transaction and integration costs | 58,226 | — | ||
| Severance costs | 5,769 | — | ||
| Adjusted EBITDA | $ | 29,390 | $ | 59,568 |
The following is a reconciliation of the change in operating revenues and adjusted EBITDA excluding the impact of Omni Logistics for the three months ended March 31, 2024 and 2023 (in thousands):
| Forward Air Corporation (excluding Omni Logistics) | ||||||||
|---|---|---|---|---|---|---|---|---|
| Three Months Ended | ||||||||
| March 31, 2024 | March 31, 2023 | Change | Percent Change | |||||
| Operating revenue | $ | 329,565 | $ | 357,709 | $ | (28,144) | (8) | % |
| Consolidated EBITDA | $ | (34,605) | $ | 59,568 | ||||
| Omni Logistics - Income from Operations | 28,585 | — | ||||||
| Omni Logistics - Depreciation and Amortization | (16,869) | — | ||||||
| Reported EBITDA | (22,889) | 59,568 | ||||||
| Transaction and integration costs | 58,226 | — | ||||||
| Adjusted EBITDA | $ | 35,337 | $ | 59,568 | (24,231) | (41) | % |
The following is a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2024 and 2023 (in thousands):
| Three Months Ended | ||||
|---|---|---|---|---|
| March 31, 2024 | March 31, 2023 | |||
| Net cash (used in) provided by operating activities of continuing operations | $ | (51,719) | $ | 60,839 |
| Proceeds from sale of property and equipment | 849 | 1,815 | ||
| Purchases of property and equipment | (4,970) | (6,519) | ||
| Free cash flow | $ | (55,840) | $ | 56,135 |
The following is a reconciliation of reported income from operations, net income, and net income per diluted share to adjusted income from operations, net income, and net income per diluted share for the three months ended March 31, 2024 and 2023 (in thousands, except net income per diluted share):
| Three Months Ended March 31, 2023 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Loss1 | Net Loss Per Diluted Share1 | Income From Operations | Net Income | Net Income Per Diluted Share | |||||||
| As Reported | (65,732) | $ | (88,794) | $ | (2.35) | $ | 47,196 | $ | 33,904 | $ | 1.27 |
| Transaction and integration costs | 48,076 | 1.27 | — | — | — | ||||||
| Severance | 4,763 | 0.13 | — | — | — | ||||||
| Acquisition amortization | 11,783 | 0.31 | — | — | — | ||||||
| As Adjusted | 12,534 | $ | (24,172) | $ | (0.64) | $ | 47,196 | $ | 33,904 | $ | 1.27 |
| 1 Net loss and net loss per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax benefit effect of the above item is 13,643. |
All values are in US Dollars.
Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements included in this press release relate to the Company’s (i) ability to provide excellent service to its customers for their time-sensitive and mission-critical freight; (ii) ability to maximize value for customers, employees and shareholders and ability to be a leader in the global supply chain and domestic transportation services; (iii) ability and expectations regarding improved profitability; (iv) ability to achieve the intended benefits of the acquisition of Omni Logistics, including the timing of recognizing these potential revenue and cost synergies; (v) expectations regarding the Company’s ability to execute on its plan to integrate Omni Logistics in order to generate long-term value for shareholders and (vi) expectations regarding future market conditions as well as expectations regarding customer demand for the Company’s services.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the Company’s ability to achieve the expected strategic, financial and other benefits of the acquisition of Omni Logistics, including the realization and timing of expected synergies and the achievement of deleveraging targets within the expected timeframes or at all, the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected, the risk that operating costs, customer loss, management and employee retention and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) as a result of the acquisition of Omni Logistics may be greater than expected, continued weakening of the freight environment, future debt and financing levels, our ability to deleverage, including, without limitation, through capital allocation or divestitures of non-core businesses, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, and as may be identified in our subsequent Current Reports on Form 8-K.
We caution readers that any forward-looking statement made by us in this press release is based only on information currently available to us and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion as of the date on which it is made. We undertake no obligation to publicly update any forward- looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise unless required by law.
SOURCE: Forward Air Corporation
Forward Air Corporation
Justin Moss, 404-362-8933
jmoss@forwardair.com
12
q1resultspresentationsli
Forward Air Q1 Earnings and Business Update May 2024
Forward Looking Statements This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements included in this presentation relate to expectations regarding customer demand for services of Forward Air Corporation (“Forward”, “we” or “us”) as well as the performance of Forward’s less-than-truckload services; Forward's ongoing commitment to provide excellent service to its customers; ability to achieve the intended benefits of the acquisition of Omni Logistics, including any revenue and cost synergies; expectations regarding Forward's ability to execute on its plan to integrate Omni Logistics in order to generate long- term value for shareholders; expectations regarding Forward's ability to grow its customer base, including the expected volumes from freight forwarder customers; expectations regarding Forward's revenue growth strategies, including with respect to capital allocation and leverage; and the future declaration of dividends. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, Forward's ability to achieve the expected strategic, financial and other benefits of the acquisition of Omni Logistics, including the realization of expected synergies and the achievement of deleveraging targets within the expected timeframes or at all, the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected, the risk that operating costs, customer loss, management and employee retention and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) as a result of the acquisition of Omni Logistics may be greater than expected, continued weakening of the freight environment, future debt and financing levels, our ability to deleverage, including, without limitation, through capital allocation or divestitures of non-core businesses, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2023, and as may be identified in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We caution readers that any forward-looking statement made by us in this presentation is based only on information currently available to us and they should not place undue reliance on these forward-looking statements, which reflect management's opinion as of the date on which it is made. We undertake no obligation to publicly update any forward- looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise unless required by law. Non-GAAP Measures To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), we have included Adjusted EBITDA and Adjusted Operating Income, each a non GAAP financial measure (each, a “Non-GAAP Measure”), in this presentation. The reconciliation of each Non-GAAP Measure to the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in the Appendix to this presentation. Because each Non-GAAP Measure excludes certain items as described herein, it may not be indicative of the results that Forward expects to recognize for future periods. As a result, each Non-GAAP Measure should be considered in addition to, and not a substitute for, financial information prepared in accordance with GAAP. 2
Agenda 3 Appendix Omni Integration Capital Structure & Allocation Update on Business Results
A Powerful Combination 4 Category leader in expedited LTL and uniquely positioned to deliver integrated global supply chain solutions for our customers’ most service-sensitive logistics needs + Integrated Capabilities Customer Oriented Culture Superior Level of Service Significant Value Creation Opportunity Adj. EBITDA(2): $270MRevenue: $2.7B Forward Air 50.9% Omni 49.1% Forward Air 75.2% Omni 24.8% Notes: (1) Calculated as summation of standalone Forward Air and Omni financials (2) See Appendix for GAAP to non GAAP reconciliation; not adjusted for intercompany transactions between Forward Air and Omni FY 2023A Combined Metrics(1)Key Highlights
Omni Core Service Offerings 5 Omni is a leading 3PL providing customized logistics solutions for high-value, mission-critical freight for some of the industry’s most demanding customers Value-Added Warehousing and Distribution ✓Global warehousing, distribution and fulfillment solutions ✓ Free Trade Zone and Bonded warehouse capabilities ✓ In-depth value-added services Domestic Freight ✓ Providing a full menu of LTL, expedited and TL services based on various time requirements ✓ Specialized white glove delivery for high-value freight ✓ Air charter, next flight out, hand carry and other expedited services ✓ Reverse logistics (returns management), tradeshows, and project logistics International Freight ✓ Primarily focused on Asia to U.S. and intra-Asia air and ocean transportation ✓ International compliance and customs brokerage FY 2023A Revenue Domestic Freight International Freight Value-Added Warehousing and Distribution 19% 18% 63%
✓ Softer freight conditions persisted throughout 2023, leading to topline decline YoY ✓ However, precision execution of the revenue growth strategies led to an adjusted EBITDA margin expansion of 170bps from 2021(1) ✓ Brokerage revenue decreased 28.1% YoY in 2023 due to a decrease in loads and revenue per load ✓ Impact driven by challenged market conditions that led to decreased customer demand for our services ✓ Intermodal revenue decreased 34.7% YoY in 2023 due to a decrease in drayage shipments and drayage revenue per shipment ✓ Decline primarily driven by challenged market conditions that led to decreased customer demand for our services ✓ LTL revenue decreased 9.7% in 2023 as compared to 2022 due to a decrease in pounds per day and revenue per hundredweight ✓ Decrease in tonnage reflects an increase in weight per shipment on fewer shipments compared to 2022 Forward Air Standalone 6 ($ in millions) FY Revenue FY Adjusted EBITDA(1) FY Capital Expenditures(2) Margin: 17.4% Notes: Historical figures restated for exclusion of Final Mile (1) See Appendix for GAAP to non GAAP reconciliation (2) 2019 and 2020 figures include Final Mile, which had a de minimus contribution FY2023 revenue and EBITDA performance remains ahead of pre-covid levels + % Margin Average % of Revenue: 2.2% + % of Revenue $1,115 $1,045 $1,387 $1,680 $1,371 2019 2020 2021 2022 2023 $141 $86 $189 $292 $203 2019 2020 2021 2022 2023 12.6% 8.2% 17.3% 14.8%13.6% $22 $20 $38 $39 $31 2019 2020 2021 2022 2023 2.2%2.1%2.7%1.6%1.8%
Omni Standalone 7 ($ in millions) FY Revenue FY Adjusted EBITDA(1) FY Capital Expenditures Margin: 17.4% + % Margin Average % of Revenue: 1.1% + % of Revenue Growth trend impacted by 2023 freight recession Notes: 2019 figures are unadjusted (1) See Appendix for GAAP to non GAAP reconciliation $462 $539 $1,515 $1,872 $1,321 2019 2020 2021 2022 2023 $32 $42 $168 $203 $67 2019 2020 2021 2022 2023 6.9% 7.8% 10.8% 5.1%11.1% $4 $5 $15 $36 $14 2019 2020 2021 2022 2023 2.2%2.1%2.7%1.6%1.8% ✓ Omni completed nine complementary acquisitions between 2019 and 2022 driving both organic and inorganic revenue growth ✓ Revenue declined 29% YoY in 2023 primarily driven by freight recession, with the International business more severely impacted ✓ During 2023, Omni was undertaking the actions needed to integrate and capture the full value from the nine acquisitions ✓ As part of those integration efforts, the cost structure was higher in 2023 as it was considered an investment year ✓ Despite a competitive market, net revenue margin, defined as revenue less purchased transportation costs, increased 730bps YoY in 2023 ✓ Omni continued to focus on profitable revenue growth in 2023 ✓ Global freight markets were negatively impacted by weak customer demand, high inventories, and excess capacity ✓ This resulted in a more competitive market and suppressed transportation rates, impacting both volume and pricing in the International business
First Quarter 2024 Financial Results 8 $542M Revenue $13M Adjusted Operating Income(1) $29M Adjusted EBITDA(1)(2) Notes: (1) See Appendix for GAAP to non GAAP reconciliation (2) Includes impact from “Other Operations” In spite of the protracted freight recession, the less-than-truckload line of business continued to show signs of growth Q1 results affected by seasonality and depressed freight market Omni performance impacted by weaker freight environment in the first quarter 2024 Shipments per day increased 1.4% YoY Weight per shipment increased 7.4% YoY Revenue per shipment ex fuel increased 0.7% In-quarter synergy actions taken will have greater impact on Q2 and beyond
9 First Quarter 2024 Metrics April has seen an upward sequential trajectory month over month, positioning the business well for the year Expedited Freight Revenue $273M +1.4% Adjusted EBITDA(1) $30M (20.2%) % Margin 10.9% (290 bps) Intermodal Revenue $56M (36.2%) Adjusted EBITDA(1) $8M (48.5%) % Margin 14.6% (349 bps) Omni(2) Revenue $307M (13.0%) Adjusted EBITDA(1) ($9M) (147.4%) % Margin (2.9%) (826 bps) Notes: (1) See Appendix for GAAP to non GAAP reconciliation (2) Pro forma for inclusion of Omni in full month of January (3) Preliminary figures YoY Change YoY Change YoY Change January(2) February April(3) January – April Consolidated Revenues $205 $218 $213 $227 March ($ in millions)
Updated Omni Acquisition Cost Synergy Targets 10 Network Optimization (LTL Linehaul + LTL PUD) Facilities Consolidation SG&A and Other Technology Drayage / Brokerage Total Already Achieved $35.0 $6.7 $13.0 $0.6 - $55.4 Estimated Total Opportunity $40.5 $15.6 $11.3 $2.7 $3.5 $73.4 Estimated at Announcement $47.0 $12.0 $8.5 $7.5 - $75.0 Notes: Annualized synergies excluding cost to achieve ($ in millions) ▪ Largest operational synergy actions are complete or underway, including consolidation of linehaul, facilities consolidations, and insourcing of PUD in targeted markets ▪ Management continues to evaluate new opportunities to add to pipeline ▪ The LTL and PUD synergies are correlated to volume and pricing, meaning that as volumes increase, the synergies achieved would also increase Executing synergies in line with diligence estimates in a softer market
Capital Structure Overview as of March 31, 2024 11 Note: (1) Undrawn revolver balance (2) See Appendix for bank covenant leverage calculation No material maturities in next 5 years ▪ $1,045M of term loans mature in 2030 ▪ $725M of notes mature in 2031 ▪ Currently in compliance with bank covenants(2) (only applicable to RCF) ~60% Variable Rate Debt ▪ Majority of debt would be exposed to a declining interest rate environment $512M of Liquidity ▪ $172M of cash ▪ $340M RCF capacity(1) Capital Expenditures 1.1% of Q1 2024 Revenue ▪ We are an asset-light business with low capital needs Debt paydown remains a key priority for management
Capital Allocation Roadmap 12 Capital Expenditures Debt Paydown Dividends & Share Repurchases Strategic M&A Asset light business model with capital expenditures expected to remain at 1 - 2% of revenues Deleveraging is a key priority, demonstrated by repayment of $80M of term loans in Q1 Dividends and repurchases stand suspended in the near term, with focus on debt repayment Actively reviewing portfolio to identify any non-core assets We remain committed to our previously announced capital allocation plan, focused on debt paydown
Appendix 13
Forward Air Standalone Non-GAAP Reconciliation 14 EBITDA Reconciliation 2023 2022 2021 2020 2019 Net Income $43 $179 $107 $37 $77 Interest expense 32 5 4 5 3 Income tax expense (benefit) 14 63 36 11 26 Depreciation and amortization 57 43 35 33 35 Reported EBITDA $146 $290 $182 $86 $141 Vehicle liability reserve - 2 - - - Due diligence, integration and transaction costs 57 1 - - - Change in fair value of contingent consideration - - (0) - - Professional fees for an operational improvement project - - 1 - - Professional fees for cybersecurity and shareholder engagement activities - - 7 - - Adjusted EBITDA $203 $292 $189 $86 $141 ($ in millions)
Omni Standalone Non-GAAP Reconciliation 15 EBITDA Reconciliation 2023 2022 2021 2020 2019 Net Income ($243) $16 ($3) ($11) $25 Interest expense 165 102 45 20 20 Income tax expense (benefit) 5 6 5 2 1 Depreciation and amortization 65 56 35 12 11 Reported EBITDA ($8) $180 $83 $23 $58 Due diligence, integration and transaction costs 61 32 28 15 - Other normalization EBITDA adjustments(1) 26 9 15 (8) - Severance 1 - - - - Change in fair value of contingent consideration (13) (18) 42 13 (26) Adjusted EBITDA $67 $203 $168 $42 $32 Note: (1) Represents items considered non-operational or non-recurring such as non-recurring bad debt expenses, sponsor and board fees, FX gains and losses, and other non-recurring-and non-cash expenses ($ in millions)
Combined Company Non-GAAP Reconciliation 16 EBITDA Reconciliation Q1 2024 Net Income (Loss) ($89) Interest expense 41 Income tax expense (benefit) (18) Depreciation and amortization 32 Reported EBITDA ($34) Transaction and integration costs 58 Severance 6 Adjusted EBITDA $29 Operating Income Reconciliation Q1 2024 Reported Operating Income (Loss) ($66) Transaction and integration costs 58 Severance 6 Acquisition amortization 14 Adjusted Operating Income $13 ($ in millions)
Segment Level Non-GAAP Reconciliation 17 Expedited Freight EBITDA Reconciliation Q1 2024 Q1 2023 Income from Operations $19 $30 Depreciation and amortization 10 8 Reported EBITDA $30 $37 Intermodal EBITDA Reconciliation Q1 2024 Q1 2023 Income from Operations $4 $11 Depreciation and amortization 5 5 Reported EBITDA $8 $16 ($ in millions)
Segment Level Non-GAAP Reconciliation (Cont’d) 18 Omni EBITDA Reconciliation Q1 2024(1) Q1 2023 Net Income ($86) ($56) Interest expense 13 38 Income tax expense (benefit) 2 1 Depreciation and amortization 6 16 Reported EBITDA ($65) ($0) Due diligence, integration and transaction costs 50 5 Other normalization EBITDA adjustments(2) 0 7 Severance 6 0 Change in fair value of contingent consideration - 8 Adjusted EBITDA ($9) $19 Note: (1) Pro forma for inclusion of Omni in full month of January (2) Represents items considered non-operational or non-recurring such as non-recurring bad debt expenses, sponsor and board fees, FX gains and losses, and other non-recurring-and non-cash expenses ($ in millions)
Covenant Leverage Reconciliation 19 EBITDA Reconciliation TTM (3/31/24) Reported EBITDA ($10) Due diligence, transaction and integration costs 222 Other normalization EBITDA adjustments 20 Other pro forma EBITDA adjustments 6 Share-based compensation 9 Severance 7 Change in fair value of contingent consideration (21) Run-rate of cost synergies(1) 68 Adjusted Covenant EBITDA $300 Outstanding balance of Term Loan, Notes, and Revolver $1,770 Outstanding balance of Finance Leases 51 (Cash available for netting) (155)(2) Net Debt $1,666 Net Leverage Ratio 5.5x ($ in millions) Note: (1) Net of $7.5M of cost synergies recorded in the reported EBITDA (2) $155M of the Company's $172M in cash can be netted against debt per the revolving credit facility agreement