What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-09 compared with 2023-08-07 · 202 added, 109 removed, 488 unchanged (39% of the section changed)

3 unchanged sentences

(unaudited and in thousands, except share and per share amounts)

2023 December 31,

September 30, 2023 December 31, 2022

Current assets:

41 unchanged sentences

Three Months Ended

2023 June 30,

September 30, 2023 September 30, 2022

Operating revenues $ 413,447 $ 510,023

23 unchanged sentences

(unaudited and in thousands, except per share amounts)

Six Months Ended

2023 June 30,

Nine Months Ended

September 30, 2023 September 30, 2022

Operating revenues $ 1,242,695 $ 1,492,203

23 unchanged sentences

(unaudited and in thousands)

Six Months Ended

2023 June 30,

Nine Months Ended

September 30, 2023 September 30, 2022

Operating activities:

16 unchanged sentences

Purchases of property and equipment ( 23,418 ) ( 25,401 )

Purchases of a business, net of cash acquired ( 56,703 ) ( 40,433 )

Purchase of a business, net of cash acquired ( 56,703 ) ( 40,433 )

Net cash used in investing activities ( 76,846 ) ( 64,411 )

37 unchanged sentences

Balance at June 30, 2023 25,786 $ 258 $ 277,593 $ 395,758 $ 673,609

Net income — — — 9,288 9,288

Share-based compensation expense — — 3,043 — 3,043

Payment of dividends to shareholders — — 4 ( 6,202 ) ( 6,198 )

Payment of minimum tax withholdings on share-based awards — — — ( 23 ) ( 23 )

Repurchases and retirement of common stock ( 124 ) ( 1 ) — ( 14,018 ) ( 14,019 )

Balance at September 30, 2023 25,662 $ 257 $ 280,640 $ 384,803 $ 665,700

Forward Air Corporation

Condensed Consolidated Statements of Shareholders’ Equity

(unaudited and in thousands)

Common Stock Additional Paid-in

17 unchanged sentences

Balance at June 30, 2022 26,880 $ 269 $ 265,129 $ 398,952 $ 664,350

Net income — — — 52,133 52,133

Share-based compensation expense — — 2,676 — 2,676

Payment of dividends to shareholders — — 4 ( 6,471 ) ( 6,467 )

Repurchases and retirement of common stock ( 290 ) ( 3 ) — ( 29,991 ) ( 29,994 )

Balance at September 30, 2022 26,590 $ 266 $ 267,809 $ 414,623 $ 682,698

The accompanying notes are an integral part of the condensed consolidated financial statements.

2 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Description of Business and Basis of Presentation

32 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Revenue is classified based on the line of business as the Company believes that best depicts the nature, timing and amount of revenue and cash flows.

10 unchanged sentences

The associated goodwill has been included in the Company ’ s Expedited Freight reportable segment.

On August 10, 2023, the Company entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Omni Newco LLC (“Omni”) and certain other parties.

Omni, headquartered in Dallas, Texas, is an asset-light, high-touch logistics and supply chain management company with customer relationships in high-growth end markets.

Omni delivers domestic and international freight forwarding, fulfillment services, customs brokerage, distribution, and value-added services for time-sensitive freight to U.S.-based customers operating both domestically and internationally.

The Merger Agreement provides that the Company, through a series of transactions involving the Company’s direct and indirect subsidiaries (collectively with the other transactions contemplated by the Merger Agreement and the other Transaction Agreements referred to therein, the “Transactions”), will acquire Omni for a combination of (a) $ 150 million in cash and (b) (i) common equity consideration representing 5,135,008 shares of the Company’s outstanding common stock on an as-converted and as-exchanged basis (the “Common Equity Consideration”) and (ii) non-voting, convertible perpetual preferred equity consideration representing, if the Conversion Approval (as defined below) is obtained, an additional 10,615,418 shares of the Company’s common stock on an as-converted and as-exchanged basis (the “Convertible Preferred Equity Consideration”).

The Common Equity Consideration will represent, as of the closing of the Transactions (the “Closing”) and before any Conversion Approval, 16.5 % of the Company’s common stock, on a fully diluted, as-exchanged basis.

If the Conversion Approval is obtained, the Common Equity Consideration and the Convertible Preferred Equity Consideration together will represent as of Closing 37.7 % of the Company’s common stock on a fully diluted, as-converted and as-exchanged basis.

Prior to the consummation of the Transactions, the Company will complete a restructuring, pursuant to which, among other things, the Company will contribute all of its operating assets to Clue Opco LLC, a newly formed subsidiary of the Company (“Opco”).

After giving effect to the consummation of the Transactions, Opco will be structured as an umbrella partnership C corporation through which the existing direct and certain indirect equityholders of Omni (“Omni Holders”) will at Closing (i) a portion of the Common Equity Consideration in the form of units of Opco designated as “Class B Units” (“Opco Class B Units”) and corresponding Series B Preferred Units (as defined below) and (ii) a portion of the Convertible Preferred Equity Consideration in the form of units of Opco designated as “Series C-2 Preferred Units” (“Opco Series C-2 Preferred Units”) .

Following the Closing, the Company will operate its business through Opco, which will indirectly hold all of the assets and operations of the Company and Omni.

Opco will be governed by an amended and restated limited liability company agreement of Opco (“Opco LLCA”) to be entered into at Closing.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

The portion of the transaction consideration payable to Omni Holders that is Common Equity Consideration will consist of (a) shares of the Company’s common stock and (b) Opco Class B Units and corresponding Series B Preferred Units that will be exchangeable at the option of the holders thereof into shares of the Company’s common stock pursuant to the Opco LLCA.

The portion of the transaction consideration payable to the Omni Holders that is Convertible Preferred Equity Consideration will consist of (a) Series C Preferred Units that will automatically convert into shares of the Company’s common stock upon the receipt of the Conversion Approval and (b) Opco Series C-2 Preferred Units that will be economically equivalent to Series C Preferred Units and will automatically convert into Opco Class B Units and corresponding Series B Preferred Units upon receipt of the Conversion Approval pursuant to the Opco LLCA.

If the Conversion Approval is obtained, the Convertible Preferred Equity Consideration will convert into (i) the Company’s common stock and (ii) Opco Class B Units and corresponding Series B Preferred Units.

In connection with the Transactions, the Company has agreed to use its reasonable best efforts to obtain the approval of its shareholders to, among other things, convert the Series C Preferred Units to the Company’s common stock in accordance with the listing rules of NASDAQ (the “Conversion Approval”) at the first annual meeting of the Company’s shareholders following the Closing.

If the Company does not obtain the Conversion Approval at such annual meeting, then, so long as any Series C Preferred Units remain outstanding, the Company has agreed to continue to use its reasonable best efforts to obtain the Conversion Approval at each annual meeting of shareholders thereafter until the Conversion Approval is obtained.

The Company, Opco, Omni Holders and certain other parties will enter into a tax receivable agreement (the “Tax Receivable Agreement”), which sets forth the agreement among the parties regarding the sharing of certain tax benefits realized by the Company as a result of the Transactions.

Pursuant to the Tax Receivable Agreement, the Company will be generally obligated to pay certain Omni Holders 83.5 % of (a) the total tax benefit that the Company realizes as a result of increases in tax basis in Opco’s assets resulting from certain actual or deemed distributions and the future exchange of units of Opco for shares of securities of the Company (or cash) pursuant to the Opco LLCA, (b) certain pre-existing tax attributes of certain Omni Holders that are corporate entities for tax purposes, (c) the tax benefits that the Company realizes from certain tax allocations that correspond to items of income or gain required to be recognized by certain Omni Holders, and (d) other tax benefits attributable to payments under the Tax Receivable Agreement.

The consummation of the Transactions is subject to customary closing conditions, including the expiration or termination of any waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and there not having occurred with respect to Omni’s business or the Company’s business a material adverse effect, subject to certain customary exceptions.

All approvals required from the Omni Holders have been obtained.

Neither the Conversion Approval nor the financing are conditions to Closing.

On September 28, 2023, the waiting period expired under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, with respect to the Transactions.

Series B Preferred Stock

Pursuant to Articles of Amendment to the Restated Charter of the Company to be filed with the Secretary of State of the State of Tennessee at Closing (the “Charter Amendment”), the Company will establish the terms of a new series of preferred stock of the Company designated as “Series B Preferred Stock” (the “Series B Preferred Stock”), and, at Closing, certain Omni Holders will receive fractional units (the “Series B Preferred Units”) each representing one one-thousandth of a share of the Company Series B Preferred Stock.

Each Series B Preferred Unit will, together with a corresponding Opco Class B Unit, be exchangeable at the option of the holder thereof into one share of the Company’s common stock.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

Series C Preferred Stock

Pursuant to the Charter Amendment, the Company will also establish the terms of a new series of convertible preferred stock of the Company designated as “Series C Preferred Stock” (the “Series C Preferred Stock”), and, at Closing, certain Omni Holders will receive fractional units (each, a “Series C Preferred Unit”) each representing one one-thousandth of a share of Series C Preferred Stock.

The liquidation preference of Series C Preferred Unit will be equal to $ 110.00 per unit, subject to adjustment for any in-kind payment of the Annual Coupon as described below (the “Liquidation Preference”).

In addition, the Series C Preferred Units will accrue on each anniversary of issuance a cumulative annual dividend (without any interim accrual) equal to the product of (a) a rate to be fixed at Closing (which will equal the rate per annum equal to a spread of 3.50 % above the yield payable on the most junior tranche of debt issued in connection with the Transactions, rounded to the nearest 0.25%) multiplied by (b) the Liquidation Preference (the “Annual Coupon”).

The Annual Coupon will be paid, at the Company’s option, in cash or in-kind by automatically increasing the Liquidation Preference in an equal amount.

Commitment Letter

In connection with entry into the Merger Agreement, the Company also entered into a commitment letter (the “Commitment Letter”), with Morgan Stanley Senior Funding, Inc., Citigroup Global Markets Inc., Goldman Sachs Bank USA and JPMorgan Chase Bank, N.A.

(collectively, the “Commitment Parties”), pursuant to which the Commitment Parties committed to provide to Opco, subject to the terms and conditions of the Commitment Letter, (i) up to $ 1,850 million of indebtedness in the form of a senior secured bridge loan facility and a senior secured first lien term loan “B” facility and (ii) a $ 400 million senior secured revolving credit facility (collectively, the “Facilities”).

The proceeds of the Facilities will be used to (a) finance a portion of the cash consideration for the Transactions and other amounts payable by the Company and its subsidiaries under the Merger Agreement, (b) refinance certain existing indebtedness of the Company and Omni and (c) in the case of the revolving credit facility described above, finance working capital and general corporate purposes of Opco.

Senior Secured Notes

On September 20, 2023, the Company announced that, in connection with the Merger Agreement, GN Bondco, LLC, a wholly owned subsidiary of Omni, (the “Escrow Issuer”) commenced a private offering of $ 725,000 aggregate principal amount of its 9.5 % senior secured notes due 2031 (the “Notes”) in a transaction exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”) (the “Notes Offering”).

The Notes and the related future guarantees have not been, and will not be, registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state laws.

The Notes will bear interest at a rate of 9.5 % per annum, payable semiannually in cash in arrears on April 15 and October 15 of each year, commencing April 15, 2024.

The Notes will mature on October 15, 2031.

On October 2, 2023, the Escrow Issuer closed its Notes Offering and the Notes were issued pursuant to an indenture (the “Indenture”'), dated as of October 2, 2023, between the Escrow Issuer and U.S.

Bank Trust Company, National Association, as trustee and notes collateral agent.

In addition, the Company and the Escrow Issuer entered into an escrow agreement (the “Escrow Agreement”) pursuant to which the initial purchasers of the Notes deposited the gross proceeds of the sale of the Notes into an escrow account and the Company deposited additional funds required to be deposited therein pursuant to the terms of the Escrow Agreement.

On a monthly basis starting in December 2023, the Company is required to deposit or cause to be deposited additional amounts into the escrow account (unless an escrow release has occurred).

In connection with the Merger Agreement, the Escrow Issuer will be merged with and into Opco, with Opco surviving the merger as a wholly owned subsidiary of the Company (the “Escrow Merger”).

Upon consummation of the Escrow Merger, Opco would assume the obligations of the Escrow Issuer under the Notes and the Indenture and become the “Issuer” thereunder of executing a supplemental indenture to the Indenture.

If the Merger is not consummated on or prior to June 30, 2024 (the “Escrow Outside Date”), or if, prior to such date, (i) the Company notifies the escrow agent that the Merger Agreement has been terminated in accordance with its terms or (ii) the Company issues a press release indicating that the Merger will not be consummated on or prior to the Escrow Outside Date (or at all), then, in each case, the Escrow Issuer will be required to redeem all of the notes at a special mandatory redemption price equal to the initial issue price of the Notes, plus accrued and unpaid interest to, but excluding, the special mandatory redemption date.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

New Senior Secured Term Loan Facility

On September 22, 2023, the Company priced and allocated a $ 1,125,000 term loan “B” facility (the “New Term Loan Facility”) to a group of prospective lenders in connection with the financing of the Merger.

Loans under the New Term Loan Facility bear interest at a rate equal to, at the Company’s option, the Secured Overnight Financing Rate (“SOFR”) plus 4.50 % or the alternate base rate plus 3.50 %, subject to an interest rate floor of 0.75 % and 1.75 %, respectively, and to be issued at an issue price of 96.0 %.

The Company elected to include a ticking fee construct to the New Term Loan Facility such that beginning on October 23, 2023, a fee, calculated as 50 % of the interest rate margin or 2.25 %, is earned by the prospective lender through November 21, 2023.

On November 22, 2023, the fee is increased to 4.50 % plus SOFR, until the New Term Loan Facility is closed into escrow or the Merger is not consummated.

Due Diligence and Transaction Costs

For the three and nine months ended September 30, 2023, the Company recorded $ 22,371 and $ 27,871 , respectively, of due diligence and transactions costs incurred in connection with the acquisition of Omni.

The due diligence and transaction costs were recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income.

Intermodal Acquisitions

2 unchanged sentences

The fair value was based on the estimated certain profit contribution during the nineteen month period and was calculated using the option pricing method.

The nineteen month period ended in the second quarter of 2023 and the Company paid zero based on the terms of the purchase agreement.

Edgmon, headquartered in Kent, Washington, operates a terminal in Kent and a yard in Seattle, servicing both the Port of Seattle and the Port of Tacoma.

6 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Fair Value of Assets Acquired and Liabilities Assumed

27 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill during the six months ended June 30, 2023 are summarized as follows:

Changes in the carrying amount of goodwill during the nine months ended September 30, 2023 are summarized as follows:

Expedited Freight Intermodal Consolidated

1 unchanged sentence

Acquisition 50,443 136 50,579

Balance as of June 30, 2023 $ 219,731 $ 137,032 $ 356,763

Balance as of September 30, 2023 $ 219,731 $ 137,032 $ 356,763

The Company ’ s accumulated goodwill impairment is $ 25,686 related to impairment charges the Company recorded during 2016 pertaining to its Truckload Services reporting unit.

The Truckload Services reporting unit operates within the Expedited Freight reportable segment.

As of June 30, 2023, approximately $ 277,619 of goodwill is deductible for tax purposes.

As of September 30, 2023, approximately $ 277,619 of goodwill is deductible for tax purposes.

Goodwill is tested for impairment on an annual basis and more often if indications of impairment exist.

The Company conducts its annual impairment analyses as of June 30 each year.

The results of the Company's goodwill impairment analyses conducted as of June 30, 2023 indicated that no reduction in the carrying amount of the goodwill was required.

There have been no indicators of impairment during the three months ended September 30, 2023.

Other Intangible Assets

Changes in the carrying amount of acquired intangible assets during the six months ended June 30, 2023 are summarized as follows:

Changes in the carrying amount of acquired intangible assets during the nine months ended September 30, 2023 are summarized as follows:

Gross Carrying Amount

3 unchanged sentences

Acquisition 4,513 873 — 5,386

Balance as of June 30, 2023 $ 272,383 $ 9,629 $ 1,500 $ 283,512

Balance as of September 30, 2023 $ 272,383 $ 9,629 $ 1,500 $ 283,512

Accumulated Amortization

3 unchanged sentences

Amortization expense 12,980 497 — 13,477

Balance as of June 30, 2023 $ 123,023 $ 7,771 $ 1,500 $ 132,294

1 Carrying value as of June 30, 2023 and December 31, 2022 is inclusive o f $ 16,501 of accumulated impairment.

Balance as of September 30, 2023 $ 127,360 $ 7,942 $ 1,500 $ 136,802

1 Carrying value as of September 30, 2023 and December 31, 2022 is inclusive o f $ 16,501 of accumulated impairment.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Stock Incentive Plans

Stock Incentive Plan

The Company recorded share-based compensation expense as follows for the three and six months ended June 30, 2023 and 2022:

Three Months Ended Six Months Ended

2023 June 30,

2022 June 30,

2023 June 30,

Total share-based compensation expense $ 2,803 $ 2,884 $ 5,613 $ 5,306

The Company recorded share-based compensation expense as follows for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Share-based compensation expense $ 2,736 $ 2,355 $ 8,349 $ 7,661

In May 2016, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 common shares to employees.

As of June 30, 2023, appro ximately 564 shares remain available for grant under the Omnibus Plan.

As of September 30, 2023, appro ximatel y 568 shares remain available for grant under the Omnibus Plan.

Stock Options

3 unchanged sentences

The Company estimates the fair value of the grants using the Black-Scholes option-pricing model.

Stock option transactions during the six months ended June 30, 2023 were as follows:

Stock option transactions during the nine months ended September 30, 2023 were as follows:

Stock Options Weighted-Average Exercise Price

3 unchanged sentences

Forfeited ( 61 ) 44.97

Outstanding as of June 30 370 $ 76.91

As of June 30, 2023, the total share-based compensation expense related to unvested stock options not yet recognized was $ 2,937 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Outstanding as of September 30 370 $ 76.91

As of September 30, 2023, the total share-based compensation expense related to unvested stock options not yet recognized w as $ 2,554 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

Restricted Shares

3 unchanged sentences

Share-based compensation expense associated with these awards is amortized ratably over the requisite service period.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2023

Restricted share transactions during the six months ended June 30, 2023 were as follows:

Restricted share transactions during the nine months ended September 30, 2023 were as follows:

Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 9 ) 104.39

Outstanding as of June 30 150 $ 104.76

As of June 30, 2023, the total share-based compensation expense related to restricted shares not yet recognized was $ 12,770 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Outstanding as of September 30 145 $ 104.82

As of September 30, 2023, the total share-based compensation expense related to restricted shares not yet recognized was $ 10,624 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Performance Awards

Performance awards are based on achieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, and the Company’s total shareholder return as compared to the total shareholder return of a selected peer group, as determined by the Board.

Performance targets are set at the beginning of each three-year measurement period.

2 unchanged sentences

The Company estimates the fair value of the grants with a financial target based on the Company’s total shareholder return using a Monte Carlo simulation model.

Performance award transactions during the six months ended June 30, 2023 were as follows assuming target levels of performance:

Performance award transactions during the nine months ended September 30, 2023 were as follows assuming target levels of performance:

Performance Awards Weighted-Average Grant Date Fair Value

4 unchanged sentences

Forfeited or unearned — —

Outstanding as of June 30 61 $ 105.95

As of June 30, 2023, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was $ 3,720 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Outstanding as of September 30 61 $ 105.95

As of September 30, 2023, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performan ce that will be achieved, was $ 3,089 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

Employee Stock Purchase Plan

2 unchanged sentences

Common stock purchases are paid for through periodic payroll deductions and/or up to two large lump sum contributions.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2023

Employee stock purchase plan activity and related information was as follows:

Six Months Ended

2023 June 30,

Nine Months Ended

September 30, 2023 September 30, 2022

Shares purchased by participants under the ESPP 4 5

5 unchanged sentences

Under the Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”), approved in May 2007 and further amended in February 2013 and January 2016, up to 360 of common shares may be issued.

As of June 30, 2023, approxim ately 45 shares re main available for grant under the Amended Plan.

As of September 30, 2023, approxim ately 47 shares re main available for grant under the Amended Plan.

Under the Amended Plan, each non-employee director receives an annual grant of restricted shares of the Company’s common stock.

The restricted shares vest on the earlier of (a) the day immediately prior to the first annual shareholder meeting that occurs after the grant date or (b) one year after the grant date.

Director restricted share transactions during the six months ended June 30, 2023 were as follows:

Director restricted share transactions during the nine months ended September 30, 2023 were as follows:

Director Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 1 ) 96.10

Outstanding as of June 30 15 $ 96.10

For the three and six months ended June 30, 2023, the Company recorded $ 357 and $ 696 , respectively, of share-based compensation expense associated with these grants.

For the three and six months ended June 30, 2022, the Company recorded $ 380 and $ 719 , respectively, of share-based compensation expense associated with these grants.

As of June 30, 2023, the total share-based compensation expense related to the restricted shares not yet recognized was $ 1,226 , and the weighted-average period over which it is expected to be recognized is approximately less than one year .

Outstanding as of September 30 14 $ 96.10

For the three and nine months ended September 30, 2023, the Company re corded $ 307 and $ 1,003 , re spectively, of share-based compensation expense associated with these grants.

For the three and nine months ended September 30, 2022, the Company recorded $ 321 and $ 1,040 , respectively, of share-based compensation expense associated with these grants.

As of September 30, 2023, the total share-based compensation expense related to the restricted shares not yet recognized was $ 790 , and the weighted-average period over which it is expected to be recognized is approximately less than one year .

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2023

Long-term debt consisted of the following as of June 30, 2023 and December 31, 2022:

June 30, 2023 December 31, 2022

September 30, 2023

Long-term debt consisted of the following as of September 30, 2023 and December 31, 2022:

September 30, 2023 December 31, 2022

Credit facility, expires 2026 $ 122,375 $ 108,500

12 unchanged sentences

Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of default under the Facility.

As of June 30, 2023 and December 31, 2022, the Company had $ 265,166 and $ 279,966 , respectively, of available borrowing capacity under the Facility.

As of September 30, 2023 and December 31, 2022, the Company had $ 265,166 and $ 279,966 , respectively, of available borrowing capacity under the Facility.

The Facility contains covenants that, among other things, restrict the ability of the Company, without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit agreement.

The Company also has to fulfill financial covenants with respect to a leverage ratio and an interest coverage ratio.

As of June 30, 2023, the Company was in compliance with the aforementioned covenants.

As of September 30, 2023, the Company was in compliance with the aforementioned covenants.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Under the amended Facility, interest accrues on the amounts outstanding under the Facility at the Company ’s option, at either (1) Bloomberg Short-Term Bank Yield Index rate (the “BSBY Rate ”), which cannot be less than zero , plus a margin ranging from 1.25 % to 1.75 % based on the Company ’s leverage ratio, or (2) the base rate, which cannot be less than 2.00 %.

1 unchanged sentence

Interest is payable in arrears for each loan that is based on the BSBY rate on the last day o f the interest period applicable to each loan, and interest is payable in arrears on loans not based on the BSBY rate on the last day of each quarter.

The weighted average interest rate on the outstanding borrowings under the credit facility was 6.32% and 2.14 % for the three months ended June 30, 2023, and 2022, respectively.

The weighted average interest rate on the borrowings under the credit facility was 6.70 % and 3.33 % as of September 30, 2023, and 2022, respectively.

Letters of Credit

The Company has an arrangement under the Facility to issue letters of credit, which guarantee the Company’s obligations for potential claims exposure for insurance coverage.

As of June 30, 2023 and December 31, 2022, outstanding letters of credit totaled $ 19,834 and $ 20,034 , respectively.

As of September 30, 2023 and December 31, 2022, outstanding letters of credit totaled $ 19,834 and $ 20,034 , respectively.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

Net Income Per Share

2 unchanged sentences

Diluted net income per common share assumes the exercise of outstanding stock options and the vesting of performance share awards using the treasury stock method when the effects of such assumptions are dilutive.

A reconciliation of net income attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income per share during the three and six months ended June 30, 2023 and 2022 is as follows:

Three Months Ended Six Months Ended

2023 June 30,

2022 June 30,

2023 June 30,

A reconciliation of net income attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income per share during the three and nine months ended September 30, 2023 and 2022 is as follows:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Net income attributable to Forward Air $ 9,288 $ 52,133 $ 65,607 $ 150,249

7 unchanged sentences

Diluted $ 0.36 $ 1.93 $ 2.50 $ 5.53

The number of shares that were not included in the calculation of net income per diluted share because to do so would have been anti-dilutive for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended Six Months Ended

2023 June 30,

2022 June 30,

2023 June 30,

The number of shares that were not included in the calculation of net income per diluted share because to do so would have been anti-dilutive for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Anti-dilutive stock options 112 57 105 49

5 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

For the six months ended June 30, 2023 and 2022, the Company recorded income tax expense of $ 19,461 and $ 32,803 , respectively.

The effective tax rate of 25.7 % for the six months ended June 30, 2023 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

The effective tax rate of 25.1 % for the six months ended June 30, 2022 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

September 30, 2023

For the nine months ended September 30, 2023 and 2022, the Company recorded income tax expense of $ 23,011 and $ 50,791 , respectively.

The effective tax rate of 26.0 % for the nine months ended September 30, 2023 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

The effective tax rate of 25.3 % for the nine months ended September 30, 2022 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

The Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain.

As of both June 30, 2023 and December 31, 2022, the Company had $ 198 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

As of both June 30, 2023 and December 31, 2022, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 85 .

As of both September 30, 2023 and December 31, 2022, the Company had $ 198 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

As of both September 30, 2023 and December 31, 2022, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 85 .

With a few exceptions, the Company is no longer subject to U.S.

7 unchanged sentences

The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the valuation allowance, in future years.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2023

Fair Value of Financial Instruments

1 unchanged sentence

The carrying amount of long-term debt under the Company’s credit facility approximates fair value based on the borrowing rates currently available to the Company for a loan with similar terms and average maturity.

As of June 30, 2023, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 33,820 , compared to its carrying value of $ 34,799 .

As of September 30, 2023, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 34,140 , compared to its carrying value of $ 35,252 .

As of December 31, 2022, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 23,210 , compared to its carrying value of $ 23,794 .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

Shareholders’ Equity

Cash Dividends

During the first and second quarters of 2023, the Board declared and the Company has paid a quarterly cash dividend of $ 0.24 per common share.

During each quarter of 2022, the Company’s Board of Directors declared and the Company has paid a quarterly cash dividend of $ 0.24 per common share.

On July 25, 2023, the Board declared a quarterly cash dividend of $ 0.24 per common share that will be paid in the third quarter of 2023.

During the first, second and third quarters of 2023, the Board declared and the Company has paid a quarterly cash dividend of $ 0.24 per common share.

During each quarter of 2022, the Company’s Board declared and the Company paid a quarterly cash dividend of $ 0.24 per common share.

On October 24, 2023, the Board declared a quarterly cash dividend of $ 0.24 per common share that will be paid in the fourth quarter of 2023.

Share Repurchase Program

On February 5, 2019, the Board of Directors approved a stock repurchase plan authorizing the repurchase of up to 5,000 shares of the Company’s common stock (the “2019 Repurchase Plan”).

On February 5, 2019, the Board approved a stock repurchase plan authorizing the repurchase of up to 5,000 shares of the Company’s common stock (the “2019 Repurchase Plan”).

The 2019 Repurchase Plan expires when the shares authorized for repurchase are exhausted or the 2019 Repurchase Plan is canceled.

During the six months ended June 30, 2023, the Company repurchased through open market transactions 759 shares of common stock for $ 79,792 , or an average of $ 105.09 per share, and during the six months ended June 30, 2022, the Company repurchased through open market transactions 176 shares of common stock for $ 17,780 , or an average of $ 100.86 per share.

During the nine months ended September 30, 2023, the Company repurchased through open market transactions 883 shares of common stock for $ 93,811 , or an average of $ 106.21 per share, and during the nine months ended September 30, 2022, the Company repurchased through open market transactions 466 shares of common stock for $ 47,774 , or an average of $ 102.44 per share.

All shares received were retired upon receipt, and the excess of the purchase price over the par value per share was recorded to “Retained Earnings ” in the Condensed Consolidated Balance Sheets.

As of June 30, 2023, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 1,473 shares.

As of September 30, 2023, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 1,349 shares.

Commitments and Contingencies

Contingencies

On September 26, 2023, Rodney Bell, Michael A.

Roberts and Theresa Woods, three shareholders of the Company, filed a complaint (the “Shareholder Complaint”) against the Company and certain of its directors and officers in the Third District Chancery Court sitting in Greeneville, Tennessee.

The Shareholder Complaint alleges, among other things, that the Company’s shareholders have the right to vote on certain transactions contemplated by the Merger Agreement and seeks an injunction against the consummation of the transaction until a shareholder vote was held.

Based on the allegations contained in the Shareholder Complaint, the court issued an ex parte temporary restraining order (the “ TRO ”) enjoining the transactions contemplated by the Merger Agreement.

On October 4, 2023, the shareholder plaintiffs filed an amended complaint setting forth additional bases for their contention that the transactions set forth in the Merger Agreement necessitated a shareholder vote under Tennessee law.

On October 4, 2023, the shareholder plaintiffs further filed a motion for a temporary injunction enjoining the closing of the transaction until the entry of a final judgment as to the requirement for a shareholder vote.

On October 11, 2023, the court held a hearing on the plaintiffs’ motion for a temporary injunction, at the conclusion of which it took the matter under advisement and entered an order extending the TRO until further order of the court.

On October 25, 2023, the court held a telephonic conference in which it ordered the dissolution of the TRO.

The court did not grant the shareholder plaintiffs’ request for a temporary injunction.

On October 26, 2023, the shareholder plaintiffs filed an emergency motion to reinstate the TRO and for leave to take an interlocutory appeal.

On October 31, 2023, the court held an emergency hearing on the shareholder plaintiffs’ request to reinstate the TRO and to take an interlocutory appeal of the court’s ruling.

During the hearing, the shareholder plaintiffs withdrew their request to reinstate the TRO.

The court took the request for leave to take an interlocutory appeal under advisement.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2023

On October 31, 2023, Omni filed a complaint (the “Omni Complaint”) against the Company and certain of its direct and indirect subsidiaries in the Court of Chancery in the State of Delaware.

The Omni Complaint alleges, among other things, that the Company is in breach of its obligation to close the transactions contemplated by the Merger Agreement and seeks specific performance to compel the Company to close and related declaratory relief.

the Company has not yet formally responded to the Omni Complaint, but the Company believes that Omni has not complied with certain of its obligations under Sections 7.03 and 7.14 of the Merger Agreement.

Consequently, the Company believes the closing condition contained in Section 8.02(b) of the Merger Agreement will not be satisfied at the anticipated closing of the transactions under the Merger Agreement, and the Company will not be obligated to close.

As a result, the Company is considering its rights and obligations under the Merger Agreement.

the Company intends to vigorously defend its rights in this matter, but there can be no assurance that Omni will not prevail in its claims or that the court will not compel the Company to close the transactions contemplated by the Merger Agreement.

The Company is party to various legal claims and actions incidental to its business, including claims related to vehicle liability, workers’ compensation, property damage and employee medical benefits.

The Company accrues for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Based on the knowledge of the facts, the Company believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our condensed consolidated financial statements.

Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and related events unfold.

3 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

September 30, 2023

For vehicle liability, the Company retains a portion of the risk.

14 unchanged sentences

Also, from time to time, when brokering freight, the Company may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and the Company maintains third-party liability insurance coverage with a $ 100 deductible per occurrence for most of its brokered services.

Additionally, the Company maintains workers’ compensation insurance with a self-insured retention of $ 500 per occurrence.

The Company maintains workers’ compensation insurance with a self-insured retention of $ 500 per occurrence.

Insurance coverage in excess of the self-insured retention limit is an important part of the Company’s risk management process.

18 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

Segment results from operations for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended June 30, 2023

September 30, 2023

Segment results from operations for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended September 30, 2023

Expedited Freight Intermodal Corporate Eliminations Consolidated

5 unchanged sentences

Purchases of property and equipment 5,822 21 — — 5,843

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated

8 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2023

Six Months Ended June 30, 2023

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

September 30, 2023

Nine Months Ended September 30, 2023

Expedited Freight Intermodal Corporate Eliminations Consolidated

External revenues $ 1,028,173 $ 214,522 $ — $ — $ 1,242,695

2 unchanged sentences

Amortization 5,794 7,683 — — 13,477

Income from operations 63,947 15,515 1,258 — 80,720

Income (loss) from operations 100,298 20,259 ( 24,344 ) — 96,213

Purchases of property and equipment 22,834 584 — — 23,418

Six Months Ended June 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

Nine Months Ended September 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated

External revenues $ 1,180,947 $ 311,256 $ — $ — $ 1,492,203

4 unchanged sentences

Purchases of property and equipment 24,155 1,246 — — 25,401

As of June 30, 2023 $ 737,387 $ 282,077 $ 165,198 $ ( 89 ) $ 1,184,573

As of September 30, 2023 $ 811,940 $ 277,629 $ 101,082 $ ( 70 ) $ 1,190,581

As of December 31, 2022 683,386 322,001 202,756 ( 67 ) 1,208,076

Revenue from the individual services within the Expedited Freight segment for the three and six months ended June 30, 2023 and 2022 are as follows:

Three Months Ended Six Months Ended

2023 June 30,

2022 June 30,

2023 June 30,

Revenue from the individual services within the Expedited Freight segment for the three and nine months ended September 30, 2023 and 2022 are as follows:

Three Months Ended Nine Months Ended

September 30, 2023 September 30, 2022 September 30, 2023 September 30, 2022

Expedited Freight revenues:

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements