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On Thursday, Benchmark analysts maintained a Hold rating on Forward Air (NASDAQ:FWRD), emphasizing the company’s progress and challenges following its acquisition of Omni. The stock, currently trading at $22.48, has experienced significant pressure, declining over 35% in the past year. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculation. Forward Air has surpassed its cost savings targets, achieving an $80 million annualized run-rate expected to continue from the first quarter of 2025. The company successfully realized over $100 million in annualized cost synergies in the year after the Omni deal. However, InvestingPro data reveals concerning metrics, including a significant debt burden with a debt-to-equity ratio of 9.24x and challenges in making interest payments.
Despite these cost savings, Forward Air’s core Expedited Less-Than-Truckload (LTL) segment underperformed, leading to fourth-quarter adjusted EBITDA falling short of expectations. However, the adjusted EBITDA for Omni showed sequential improvement, excluding integration costs, rising from $27 million to $32 million. The LTL segment’s performance was impacted by an unfavorable business mix.
Forward Air’s amended credit facility has resulted in a leverage ratio that is comfortably below its first lien net leverage ratio at 5.5x trailing twelve-month adjusted EBITDA. The company’s full-year 2024 adjusted EBITDA reached $308 million, at the upper end of its guidance range of $300 million to $310 million. This performance has provided a $59 million cushion in accordance with the terms of the amended credit agreement.
The company’s cash flow from operations saw a decline of $31 million in the fourth quarter, following a $53 million increase in the third quarter. Despite this, the second half of the year showed a net positive cash flow from operations of $20 million, a significant improvement over the $97 million used in the first half of the year. Analysts expect Forward Air’s cash flow profile to improve in 2025 as transaction and other costs decrease and core operations strengthen.
Ending the quarter, Forward Air reported having $105 million in total cash. When combined with the $277 million of available credit under the amended revolving credit facility, the company’s total liquidity stood at $382 million, down from $460 million in the previous quarter. With an Altman Z-Score of 1.85 and an overall "WEAK" financial health rating from InvestingPro, investors seeking deeper insights can access the comprehensive Pro Research Report, which provides detailed analysis of Forward Air’s financial position among 1,400+ top US stocks.
In other recent news, Forward Air Corporation reported its fourth-quarter 2024 earnings, revealing a substantial miss on earnings per share (EPS) forecasts. The company posted an EPS of -$1.23, significantly below the expected -$0.12. Revenue for the quarter was $632.85 million, also falling short of the forecasted $667.72 million. Despite these results, Forward Air demonstrated an impressive year-over-year revenue growth of 87%, reaching $633 million. The company achieved $75 million in integration synergies, contributing to $100 million in annualized savings. Forward Air’s strategic initiatives and cost-saving measures were positively received, as evidenced by a 4.08% increase in its stock during aftermarket trading. Looking ahead, Forward Air anticipates improvements in earnings quality in 2025, with expectations for volume and yield enhancements in the second quarter. The company continues to focus on long-term growth and strategic pricing corrections in the expedited freight segment.
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