Dive Brief:
- Forward Air’s profits fell by $110 million — 239% year over year — in Q1 due to a weak freight environment and integration expenses, the company reported Thursday.
- The company’s reported nearly $66 million operating loss for the quarter, compared to a $47 million operating income last year. The swing was attributed to severance expenses and other operational costs related to its Omni Logistics acquisition, which was completed in late January.
- Much of the expenses related to the Omni Logistics acquisition were perceived to be “one time only costs,” and are not expected to reoccur in H2, CFO and Treasurer Rebecca Garbrick told analysts.
Dive Insight:
Despite the many hurdles to acquire Omni Logistics, executives told analysts that the purchase is already showing promise. In Q1, Omni Logistics contributed about $225 million to the company’s roughly $542 million operating revenue.
Executives are expecting further boosts in profitability in addition to operational savings, though it will take time. Garbrick projects the company will “deliver full runway cost synergies by the end of 2025.”
CEO Shawn Stewart, who started as the company’s new chief executive as of Wednesday, acknowledged that the firm’s Q1 results were “negatively impacted by two really tough headwinds,” adding that the “distraction is behind us now.”
Forward Air’s Omni Logistics acquisition was intended to help the company create a more robust global LTL network, according to Stewart. The company is focused on growing its LTL business, which saw its Q1 per day shipments grow 1.4% YoY and revenue excluding fuel grow 0.7% from a year ago.
“We are starting to see the power of the revenue synergies of these assets because of our combined capabilities,” Stewart said on the call. “We were recently awarded a substantial volume of business from a Fortune 500 global technology company. We have similar opportunities in the advanced stages of our sales pipeline.”
