Forward Air Corporation

Welcome to the Ford Air Second Quarter 2025 Earnings Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions following the presentation. If you would like to ask a question at that time, please press star 1 on your telephone keypad. If at any point your question has been answered, you may remove yourself from the queue by pressing star 2. So others can hear your questions clearly, we ask that you pick up your handset for best sound quality. Lastly, if you should require operator assistance, please press star 0. I would now like to turn the call over to Tony Carino, 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 Sean Stewart, Chief Executive Officer, and Jamie Pearson, Chief Financial Officer. By now, you should have received the press release announcing Forward Air's second quarter 2025 results, which was also furnished to the SEC on Form 8 . 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 at 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 extra 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 Sean.

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 ForwardAir as the Commitment to Excellence Carrier of the Year for 2024. This award underscores Ford'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 an 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 segments 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 costs. 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, and the margin improved by 110 basis points from 7.9% to 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 to 10 million of reported EBITDA in each of the last four 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 clouds 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.