What changed in this filing

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Item 1. Financial Statements

2024-05-15 compared with 2023-11-09 · 448 added, 339 removed, 351 unchanged (69% of the section changed)

3 unchanged sentences

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Current assets:

Cash and cash equivalents $ 152,042 $ 121,969

Restricted cash and restricted cash equivalents 20,228 39,604

Accounts receivable, less allowance of $ 3,644 in 2024 and $ 2,206 in 2023

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, net of accumulated depreciation and amortization of $ 263,856 in 2024 and $ 250,185 in 2023

15 unchanged sentences

Finance lease obligations, less current portion 34,306 26,736

Long-term debt, less current portion and debt issuance costs 118,857 106,588

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

4 unchanged sentences

no shares issued or outstanding in 2024 and 2023

Preferred stock, Class B, $ 0.01 par value:

Authorized shares - 15,000 ;

issued and outstanding shares - 4,435 in 2024 and none in 2023

Preferred stock, Class C, $ 0.01 par value:

Authorized shares - 10,000 ;

issued and outstanding shares - 1,210 in 2024 and none in 2023

Common stock, $ 0.01 par value:

3 unchanged sentences

Retained earnings 417,282 480,320

Accumulated other comprehensive loss ( 151 ) —

Total Forward Air shareholders' equity 926,071 764,261

Noncontrolling interest 406,367 —

Total shareholders' equity 1,332,438 764,261

2 unchanged sentences

Forward Air Corporation

Condensed Consolidated Statements of Comprehensive Income

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income

(unaudited and in thousands, except per share amounts)

Three Months Ended

September 30, 2023 September 30, 2022

Operating revenues $ 413,447 $ 510,023

Operating expenses:

Purchased transportation 190,766 229,326

Salaries, wages and employee benefits 88,159 90,755

Operating leases 22,662 24,965

Depreciation and amortization 15,506 12,269

Insurance and claims 13,626 12,093

Fuel expense 5,917 6,772

Other operating expenses 61,318 62,178

Total operating expenses 397,954 438,358

Income from operations 15,493 71,665

Other expense:

Interest expense, net ( 2,655 ) ( 1,544 )

Total other expense ( 2,655 ) ( 1,544 )

Income before income taxes 12,838 70,121

Income tax expense 3,550 17,988

Net income and comprehensive income $ 9,288 $ 52,133

Net income per share

Basic $ 0.36 $ 1.94

Diluted $ 0.36 $ 1.93

Dividends per share $ 0.24 $ 0.24

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

Forward Air Corporation

Condensed Consolidated Statements of Comprehensive Income

(unaudited and in thousands, except per share amounts)

Nine Months Ended

September 30, 2023 September 30, 2022

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

March 31, 2024 March 31, 2023

Operating revenue $ 541,813 $ 357,709

Operating expenses:

7 unchanged sentences

Total operating expenses 607,545 310,513

Income from operations 96,213 204,561

Other expense:

(Loss) income from continuing operations ( 65,732 ) 47,196

Other income and expenses:

Interest expense, net ( 40,753 ) ( 2,355 )

Foreign exchange loss ( 668 ) —

Other income, net 9 —

Total other expense ( 41,412 ) ( 2,355 )

Income before income taxes 88,618 201,040

Income tax expense 23,011 50,791

Net income and comprehensive income $ 65,607 $ 150,249

Net income per share

Basic $ 2.51 $ 5.56

Diluted $ 2.50 $ 5.53

(Loss) income before income taxes ( 107,144 ) 44,841

Income tax (benefit) 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 noncontrolling interest ( 27,082 ) —

Net (loss) income attributable to Forward Air $ ( 61,712 ) $ 36,368

Basic net (loss) income per share attributable to Forward Air:

Continuing operations $ ( 2.81 ) $ 1.28

Discontinued operations — 0.09

Net (loss) income per basic share $ ( 2.81 ) $ 1.37

Diluted net (loss) income per share attributable to Forward Air:

Continuing operations $ ( 2.81 ) $ 1.27

Discontinued operations — 0.09

Net (loss) income per diluted share $ ( 2.81 ) $ 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

Comprehensive loss attributable to noncontrolling interest ( 27,082 ) —

Comprehensive (loss) income attributable to Forward Air $ ( 61,863 ) $ 36,368

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

2 unchanged sentences

(unaudited and in thousands)

Nine Months Ended

September 30, 2023 September 30, 2022

Three Months Ended

March 31, 2024 March 31, 2023

Operating activities:

Net income from operations $ 65,607 $ 150,249

Adjustments to reconcile net income from operations to net cash provided by 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

Change in fair value of earn-out liability — ( 294 )

Share-based compensation expense 1,567 2,906

7 unchanged sentences

Accounts payable and accrued expenses 17,802 ( 17,514 )

Net cash provided by operating activities 159,431 196,814

Net cash (used in) provided by operating activities of continuing operations ( 51,719 ) 60,839

Investing activities:

2 unchanged sentences

Purchase of a business, net of cash acquired ( 1,565,242 ) ( 56,567 )

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

Other ( 89 ) —

Net cash used in investing activities of continuing operations ( 1,569,452 ) ( 61,271 )

Financing activities:

2 unchanged sentences

Payments on credit facility ( 80,000 ) —

Payment of debt issuance costs ( 60,591 ) —

Payment of earn-out liability ( 12,247 ) —

Proceeds from issuance of common stock upon stock option exercises — 206

Payments of dividends to shareholders — ( 6,345 )

Repurchases and retirement of common stock — ( 50,491 )

Proceeds from common stock issued under employee stock purchase plan 421 374

Payment of minimum tax withholdings on share-based awards ( 1,326 ) ( 4,292 )

Net cash used in financing activities ( 109,564 ) ( 122,873 )

Net (decrease) increase in cash and cash equivalents ( 26,979 ) 9,530

Cash and cash equivalents at beginning of period 45,822 37,316

Cash and cash equivalents at end of period $ 18,843 $ 46,846

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, cash equivalents, restricted cash, and restricted 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, cash equivalents, restricted cash and restricted cash equivalents ( 1,779,803 ) ( 13,794 )

Cash, cash equivalents and restricted 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, cash equivalents, restricted cash and restricted cash equivalents ( 1,779,803 ) ( 13,794 )

cash at end of period of discontinued operation — —

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period of continuing operations $ 172,270 $ 32,028

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

Three Months Ended

March 31, 2024 March 31, 2023

Reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents:

Cash and cash equivalents $ 152,042 $ 32,028

Restricted cash and restricted cash equivalents 20,228 —

Noncurrent restricted cash equivalents — —

Total cash, cash equivalents, restricted cash and restricted cash equivalents shown in the statement of cash flow:

$ 172,270 $ 32,028

Non-Cash Transactions:

4 unchanged sentences

(unaudited and in thousands)

Common Stock Additional Paid-in

Capital Retained Earnings Total Shareholders’ Equity

Shares Amount

Common Stock Preferred Stock -

Class B Amount Preferred Stock -

Class C Amount Additional Paid-in

Capital Accumulated Other Comprehensive Loss Retained Earnings Noncontrolling Interest Total Shareholders'

Shares Amount Shares Amount Shares Amount

Balance at December 31, 2023 25,671 $ 257 — $ — — $ — $ 283,684 $ — $ 480,320 $ — $ 764,261

Net income — — — 36,368 36,368

Net loss — — — — — — — — ( 61,712 ) ( 27,082 ) ( 88,794 )

Foreign currency translation adjustments — — — — — — — ( 151 ) — — ( 151 )

Shares issued - acquisition 700 7 4 — 1 — 223,425 — — 433,449 656,881

Share-based compensation expense — — — — — — 1,567 — — — 1,567

Payment of dividends to shareholders — — 4 ( 6,349 ) ( 6,345 )

Payment of minimum tax withholdings on share-based awards ( 33 ) — — — — — — — ( 1,326 ) — ( 1,326 )

Repurchases and retirement of common stock ( 474 ) ( 5 ) — ( 50,486 ) ( 50,491 )

Issuance of share-based awards 100 1 — — — — ( 1 ) — — — —

Balance at March 31, 2024 26,438 $ 265 4 $ — 1 $ — $ 508,675 $ ( 151 ) $ 417,282 $ 406,367 $ 1,332,438

Net income — — — 19,951 19,951

Common stock issued under employee stock purchase plan 4 — 421 — 421

Share-based compensation expense — — 3,160 — 3,160

Payment of dividends to shareholders — — 5 ( 6,260 ) ( 6,255 )

Repurchases and retirement of common stock ( 285 ) ( 3 ) — ( 29,298 ) ( 29,301 )

Issuance of share-based awards 14 — — — —

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

Capital Retained Earnings Total Shareholders’ Equity

Common Stock Additional

Capital Retained

Earnings Total

Shareholders’

Shares Amount

1 unchanged sentence

Net income — — — 36,368 36,368

Stock options exercised 3 — 206 — 206

Share-based compensation expense — — 3,149 — 3,149

4 unchanged sentences

Balance at March 31, 2023 26,053 $ 261 $ 274,007 $ 411,365 $ 685,633

Net income — — — 55,430 55,430

Common stock issued under employee stock purchase plan 5 — 374 — 374

Share-based compensation expense — — 3,306 — 3,306

Payment of dividends to shareholders — — 5 ( 6,497 ) ( 6,492 )

Payment of minimum tax withholdings on share-based awards ( 1 ) — — ( 39 ) ( 39 )

Issuance of share-based awards 14 — — — —

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)

September 30, 2023

March 31, 2024

Description of Business and Basis of Presentation

1 unchanged sentence

Forward Air Corporation and its subsidiaries (“Forward Air ” or the “Company ” ) is a leading asset-light freight and logistics company.

The Company has two reportable segments:

Expedited Freight and Intermodal.

The Company conducts business in the United States, Canada, and Mexico.

The Expedited Freight segment provides expedited regional, inter-regional and national less-than-truckload (“LTL ” ), truckload and final mile services.

The Company has three reportable segments:

Expedited Freight, Intermodal and Omni Logistics.

The Company conducts business in North America, Europe, and Asia.

The Expedited Freight segment provides expedited regional, inter-regional and national less-than-truckload (“LTL ” ) and truckload services.

Expedited Freight also offers customers local pick-up and delivery and other services including shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling services.

1 unchanged sentence

Intermodal also offers dedicated contract and container freight station (“CFS ” ) warehouse and handling services.

The Company’s condensed consolidated financial statements include Forward Air Corporation and its wholly-owned subsidiaries.

The Omni Logistics segment provides a full suite of global logistics services.

Services include air and ocean freight consolidation and forwarding, custom brokerage, warehousing and distribution, time-definite transportation services and other supply chain solutions.

The Company’s condensed consolidated financial statements include Forward Air Corporation and its wholly-owned and majority owned domestic and foreign subsidiaries.

Intercompany accounts and transactions have been eliminated in consolidation.

In the fourth quarter of 2023, the Company held interests in two wholly-owned subsidiaries of Omni Newco, LLC (“Omni”), GN Bondco, LLC and GN Loanco, LLC, that were considered Variable Interest Entities (“VIEs”).

VIEs are legal entities in which equity investors do not have sufficient equity at risk for the entity to independently finance its activities, or as a group, the holders of the equity investment at risk lack the power through voting or similar rights to direct the activities of the entity that most significantly impact its economic performance, or do not have the obligation to absorb the expected losses of the entity or the right to receive expected residual returns of the entity.

Consolidation of a VIE is required if a reporting entity is the primary beneficiary of the VIE.

Interests in these VIEs are evaluated to determine if the Company is the primary beneficiary.

This evaluation gives appropriate consideration to the design of the entity and the variability that the entity was designed to create and pass along, the relative power of each party, and to the Company’s obligation to absorb losses or receive residual returns of the entity.

The Company concluded that the VIEs should be consolidated as of December 31, 2023 because the Company had (i) the power to direct the activities that most significantly impact the economic performance of the VIE and (ii) the obligation to absorb losses and the right to receive benefits, which could potentially be significant.

On January 25, 2024 (“the Closing”), the Company completed the acquisition of Omni Newco, LLC (“the Omni Acquisition”) pursuant to the Agreement and plan of Merger, dated as of August 10, 2023 (the “Merger Agreement”) and amended by Amendment No.

1, dated as of January 22, 2024 (the “Amended Merger Agreement”).

The VIEs were acquired as part of the Omni Acquisition and assumed into the Company's consolidated subsidiaries as of March 31, 2024.

Refer to Note 4, Acquisitions, for additional disclosures regarding the Company’s previously held VIEs.

The condensed consolidated financial statements of the Company have been prepared in conformity with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission.

generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission (the “SEC”).

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature necessary to present fairly the Company’s financial position, results of operations, and cash flows for the periods presented.

1 unchanged sentence

Results for interim periods are not necessarily indicative of the results for the year.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Foreign Currency

Foreign currency amounts attributable to foreign operations have been translated into United States dollars.

Assets and liabilities are translated to United States dollars at period-end exchange rates and income and expense items are translated at average rates of exchange prevailing during the period.

Translation adjustments are included in “Accumulated other comprehensive loss” in stockholders’ equity within the Condensed Consolidated Balance Sheets and gains and losses, which result from foreign currency transactions, are included in the Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income.

Restricted Cash

As of March 31, 2024, the Company had restricted cash in the amount of $ 20,228 related to letters of credit, which guarantee the Company’s obligations for potential claims exposure for insurance coverage.

Revenue Recognition

2 unchanged sentences

A contract exists once the Company enters into a contractual agreement with a customer.

The Company does not recognize revenue in cases where collectibility is not probable, and defers recognition until collection is probable or payment is received.

The Company does not recognize revenue in cases where collectability is not probable, and defers recognition until collection is probable or payment is received.

The Company generates revenue from the delivery of a shipment and the completion of related services.

7 unchanged sentences

Related services are a separate performance obligation and include accessorial charges such as terminal handling, storage, equipment rentals and customs brokerage.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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.

2 unchanged sentences

These factors, discretion in the amount of consideration and the selection of drivers and other vendors, support revenue recognized on a gross basis.

Expedited Freight Acquisitions

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Discontinued Operation

As previously disclosed, in December 2023, the Company made a decision to divest of the Final Mile business and the sale was completed on December 20, 2023.

As a result, the results of operations of Final Mile, have been presented under the caption “Income from discontinued operations, net of tax” in the Consolidated Statement of Operations for the three months ended March 31, 2023.

Summarized Discontinued Operation Financial Information

A summary of the results of operations classified as a discontinued operation, net of tax, in the Condensed Consolidated Statement of Operations for the three months ended March 31, 2023 is as follows:

Three Months Ended

March 31, 2023

Operating revenue $ 69,357

Operating expenses:

Purchased transportation 40,046

Salaries, wages and employee benefits 12,873

Operating leases 3,175

Depreciation and amortization 1,263

Insurance and claims 524

Fuel expense 98

Other operating expenses 8,065

Total operating expenses 66,044

Income from discontinued operation before income taxes 3,313

Income tax expense 849

Income from discontinued operation, net of tax $ 2,464

Expedited Freight Acquisition

In January 2023, the Company acquired certain assets of Land Air Express, Inc.

1 unchanged sentence

Land Air, headquartered in Bowling Green, Kentucky, offers a variety of less-than-truckload services including guaranteed, standard, exclusive, same day, hot shot and pickup and delivery, and operates in over 25 terminals across the United States.

The acquisition of Land Air will accelerate the expansion of the Company ’ s national terminal footprint, particularly in the middle part of the United States, and is expected to strategically position the Company to better meet the current and future needs of customers.

The acquisition of Land Air is expected to accelerate the expansion of the Company’s national terminal footprint, particularly in the middle part of the United States, and strategically position the Company to better meet the current and future needs of customers.

The acquisition was funded using cash flow from operations and proceeds from the Company’s credit facility.

The results of Land Air have been included in the Company ’ s Condensed Consolidated Financial Statements as of and from the date of acquisition.

The results of Land Air have been included in the Condensed Consolidated Financial Statements as of and from the date of acquisition.

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

1 unchanged sentence

(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.

March 31, 2024

Acquisition of Omni

On January 25, 2024, the Company completed the Omni Acquisition pursuant to the Merger Agreement, and amended by the Amended Merger Agreement.

Omni Newco, LLC (“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.

Pursuant to the Amended Merger Agreement, through a series of transactions involving the Company’s direct and indirect subsidiaries (collectively, with the other transactions contemplated by the Amended Merger Agreement and the other Transaction Agreements referred to therein, the “Transactions”), acquired Omni for a combination of (a) $ 100,499 in cash and (b) (i) common equity consideration representing 5,135 shares of the Company’s outstanding common stock, par value $ 0.01 per share on an as-converted and as-exchanged basis (the “Common Equity Consideration”) and (ii) non-voting, convertible perpetual preferred equity consideration representing, if the Company’s shareholders give the Conversion Approval (as defined below), an additional 8,880 shares of common stock on an as-exchanged basis (the “Convertible Preferred Equity Consideration”).

The Common Equity Consideration represents, as of the Closing and before any Conversion Approval, approximately 16.5 % of the Company’s common stock, on a fully diluted, as-exchanged basis.

If the Company’s shareholders approve the conversion of the Convertible Preferred Equity Consideration to Forward Common Stock in accordance with the listing rules of NASDAQ (the “Conversion Approval”), the Common Equity Consideration and the Convertible Preferred Equity Consideration together will represent, as of the Closing, 35.0 % of the Company’s common stock on a fully diluted and as-exchanged basis.

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

Opco has been structured as an umbrella partnership C corporation through which the existing direct and certain indirect equityholders of Omni (“Omni Holders”), as of Closing, hold (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”).

Effective as of the Closing, the Company operates its business through Opco, which indirectly holds all of the assets and operations of the Company and Omni.

Opco is governed by an amended and restated limited liability company agreement of Opco that became effective at the Closing (“Opco LLCA”).

The portion of the transaction consideration paid to Omni Holders that is Common Equity Consideration consists of (a) shares of the Company’s common stock and (b) Opco Class B Units and corresponding Series B Preferred Units that are 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 paid to Omni Holders that is Convertible Preferred Equity Consideration consists 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 are 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.

In connection with the Transactions, the Company has agreed to use its reasonable best efforts to obtain 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

1 unchanged sentence

(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

In May 2022, the Company acquired certain assets and liabilities of Edgmon Trucking, LLC (“Edgmon”) for $ 40,993 and a potential earn-out of up to $ 5,000 , based on the achievement of certain profit contribution milestones over a nineteen month period, beginning May 31, 2022.

The estimated fair value of the earn-out liability on the date of acquisition was immaterial.

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

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.

The acquisition of Edgmon marks the Company’s first Intermodal location on the West Coast, a key area of expansion in the Intermodal strategic growth plan.

The acquisition was funded using cash flows from operations.

The results of Edgmon have been included in the Company’s Condensed Consolidated Financial Statements as of and from the date of acquisition.

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

March 31, 2024

At the Closing, the Company, Opco, Omni Holders and certain other parties entered 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 is 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.

As of December 31, 2023, the Company consolidated the activities of GN Bondco, LLC (VIE) and GN Loanco, LLC (VIE) with the proceeds from the Notes and New Term Loan recorded in “Noncurrent restricted cash equivalents” and the corresponding long-term debt recorded in “Long-term debt held in escrow” on the Condensed Consolidated Balance Sheets.

Pursuant to the Merger Agreement, the Company deposited the appropriate funds into escrow on behalf of GN Bondco, LLC and GN Loanco, LLC in connection with the interest accrued through the Closing Date.

For the interest funded but unpaid as of December 31, 2023, the corresponding amounts were recorded in “Restricted cash equivalents” and “Accrued expenses” on the Condensed Consolidated Balance Sheets.

Additionally, while held in escrow, the proceeds from the Notes and New Term Loan were invested in a liquid, short-term instrument.

The receivable for the interest earned through December 31, 2023 was recorded in “Restricted cash equivalents” and “Other receivables” on the Condensed Consolidated Balance Sheets.

At the Closing, the funds held in escrow were released, the aforementioned VIEs were dissolved, and the proceeds were distributed to the Company to affect the Transactions.

The Notes and New Term Loans are discussed in Note 7, Indebtedness.

The Omni Acquisition enables the Company to provide a differentiated service offering and expanded geographic footprint to customers.

In addition, the combination of these complementary businesses positions the Company to deliver integrated global supply chain solutions for customers’ most service-sensitive logistics needs.

Goodwill recognized related to the preliminary purchase price represents planned operational synergies, expanded geographic reach of our services, and strategic market positioning.

The results of Omni have been included in the Condensed Consolidated Financial Statements as of and from the date of acquisition.

The associated goodwill has been included in the Omni reportable segment and is not expected to be deductible for tax purposes.

Purchase Price of Omni

The sources of the preliminary purchase price consideration are as follows:

Cash $ 100,499

Liabilities under tax receivable agreement 13,270

Common shares 32,795

Series B preferred shares (each issued with a corresponding Opco class B unit) 207,880

Series C preferred shares 56,713

Opco C-2 preferred units 359,493

Extinguishment of Omni's indebtedness 1,543,003

Preliminary purchase price $ 2,313,653

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

March 31, 2024

Fair Value of Assets Acquired and Liabilities Assumed

Assets acquired and liabilities assumed as of the acquisition date are presented in the following table:

Edgmon Land Air

May 31, 2022 January 31, 2023

Land Air Omni

January 31, 2023 January 25, 2024

Tangible assets:

Cash $ — $ 78,260

Accounts receivable — 181,570

Property and equipment 738 75,292

Other assets — 35,639

Operating lease right-of-use assets — 234,025

Total tangible assets 738 604,786

2 unchanged sentences

Non-compete agreements — 42,509

Trademarks and other — 42,510

Goodwill 20,629 1,100,474

3 unchanged sentences

Current liabilities — 156,408

Finance lease obligations — 14,606

Operating lease liabilities — 234,025

Other liabilities — 643

Deferred income taxes — 133,673

Total liabilities assumed — 539,355

Net assets acquired $ 56,567 $ 2,313,653

The preliminary purchase price for Land Air has been allocated to assets acquired and liabilities assumed based on the the Company’s best estimates and assumptions using the information available as of the acquisition date through the date of this filing.

The provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to the acquisition are subject to adjustments in subsequent periods as the Company finalizes its purchase price allocation, including the third-party valuation.

The preliminary purchase price for Omni has been allocated to assets acquired and liabilities assumed based on the Company’s best estimates and assumptions using the information available as of the acquisition date through the date of this filing.

As a part of the Omni Acquisition, the interest in Opco not owned by Company was valued to be $ 433,449 on January 25, 2024 and is disclosed in the Condensed Consolidated Statements of Shareholders’ Equity.

Due to the timing of the Closing, the Company continues to evaluate the impact of this acquisition on its Condensed Consolidated Financial Statements.

The primary areas of the acquisition accounting that are not yet finalized include, but are not limited to, the following:

(1) finalizing the review and valuation of the acquired tangible and intangible assets and liabilities (including the models, key assumptions, inputs, and estimates) and (2) finalizing the identification of the tangible and intangible assets acquired and liabilities assumed and identified.

Actual values may differ (possibly materially) when final information becomes available that differs from our current estimates.

We believe that the information gathered to date provides a reasonable basis for estimating the preliminary fair values of assets acquired and liabilities assumed.

The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

The estimated useful life of acquired intangible assets as of the acquisition date are summarized in the following table:

Estimated Useful Lives

Edgmon Land Air

Customer relationships 9 years 12 years

Non-compete agreements 5 years 5 years

For the three months ended March 31, 2024 , the Company recorded $ 58,226 of transactions and integration costs incurred in connection with the Omni Acquisition.

The transaction and integration costs were recorded in “Other operating expenses” in the Condensed Consolidated Statements of Operations.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

March 31, 2024

The preliminary estimated useful life of acquired intangible assets as of the acquisition date are summarized in the following table:

Estimated Useful Lives

Land Air Omni

Customer relationships 15 years 12 years

Non-compete agreements — 5 years

Trademarks and other — 5 years

Supplemental Pro Forma Information

The following table represents the pro forma financial information as if Omni had been included in the consolidated results of the Company since January 1, 2023 (unaudited and in thousands) :

Three Months Ended

March 31, 2024 March 31, 2023

Pro forma revenue $ 623,813 $ 701,600

Pro forma net loss from continuing operations ( 154,345 ) ( 41,436 )

The pro forma financial information adjusts the revenue and net loss for amortization of the intangible assets and the fair value adjustments of the assets acquired in connection with the Omni Acquisition as if the closing had occurred on January 1, 2023.

Goodwill and Intangible Assets

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

Expedited Freight Intermodal Consolidated

Changes in the carrying amount of goodwill during the three months ended March 31, 2024 are summarized as follows:

Expedited Freight Intermodal Omni Logistics Consolidated

Balance as of December 31, 2023 $ 141,720 $ 136,986 $ — $ 278,706

Acquisition — — 1,100,474 1,100,474

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

Balance as of March 31, 2024 $ 141,720 $ 136,986 $ 1,100,474 $ 1,379,180

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 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.

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

There have been no indicators of impairment during the three months ended March 31, 2024.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Other Intangible Assets

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

Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2024 are summarized as follows:

Gross Carrying Amount

3 unchanged sentences

Acquisition 1,062,729 42,509 42,510 1,147,748

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

Balance as of March 31, 2024 $ 1,316,643 $ 48,916 $ 44,010 $ 1,409,569

Accumulated Amortization

3 unchanged sentences

Amortization expense 15,243 1,449 1,417 18,109

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.

Balance as of March 31, 2024 $ 134,236 $ 7,988 $ 2,917 $ 145,141

1 Carrying value as of March 31, 2024 and December 31, 2023 is inclusive o f $ 16,501 of accumulated impairment.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

March 31, 2024

Stock Incentive Plans

Stock Incentive Plan

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

The Company recorded share-based compensation expense as follows for the three months ended March 31, 2024 and 2023:

Three Months Ended

March 31, 2024 March 31, 2023

Salaries, wages and employee benefits - continuing operations $ 1,217 $ 2,567

Salaries, wages and employee benefits - discontinued operation — 243

Total share-based compensation expense $ 1,217 $ 2,810

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

As of March 31, 2024, appro ximatel y 137 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 nine months ended September 30, 2023 were as follows:

Stock option transactions during the three months ended March 31, 2024 were as follows:

Stock Options Weighted-Average Exercise Price

Outstanding as of January 1 370 $ 76.83

Granted 55 115.42

Exercised — —

Forfeited ( 83 ) 73.02

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 .

Outstanding as of March 31 287 $ 77.93

As of March 31, 2024, the total share-based compensation expense related to unvested stock options not yet recognized was $ 750 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

March 31, 2024

Restricted Shares

3 unchanged sentences

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

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

All forfeitures are recognized as incurred.

Restricted share transactions during the three months ended March 31, 2024 were as follows:

Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 13 ) 99.84

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 .

Outstanding as of March 31 418 $ 44.41

As of March 31, 2024, the total share-based compensation expense related to restricted shares not yet recognized was $ 17,293 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Performance Awards

4 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 nine months ended September 30, 2023 were as follows assuming target levels of performance:

Performance award transactions during the three months ended March 31, 2024 were as follows assuming target levels of performance:

Performance Awards Weighted-Average Grant Date Fair Value

4 unchanged sentences

Forfeited or unearned ( 23 ) 115.17

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 .

Outstanding as of March 31 129 $ 19.15

As of March 31, 2024, 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 $ 1,644 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

March 31, 2024

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.

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

Nine Months Ended

September 30, 2023 September 30, 2022

Shares purchased by participants under the ESPP 4 5

Average purchase price $ 94.23 $ 82.76

Weighted-average fair value of each purchase right under the ESPP granted¹ $ 10.47 $ 9.20

Share-based compensation expense for ESPP $ 42 $ 42

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Director Restricted Shares

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

As of March 31, 2024, approxim ately 45 s hares 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 nine months ended September 30, 2023 were as follows:

Director restricted share transactions during the three months ended March 31, 2024 were as follows:

Director Restricted Shares Weighted-Average Grant Date Fair Value

1 unchanged sentence

Granted 2 38.46

Vested ( 15 ) 93.70

Forfeited — —

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 .

Outstanding as of March 31 16 $ 89.69

For the three months ended March 31, 2024 and 2023 , the Company re corded $ 350 an d $ 339 , respectively, of share-based compensation expense associated with these grants.

As of March 31, 2024, the total share-based compensation expense related to the restricted shares not yet recognized was $ 179 , 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)

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

Debt issuance costs ( 330 ) ( 418 )

March 31, 2024

Long-term debt consisted of the following as of March 31, 2024 and December 31, 2023:

March 31, 2024 December 31, 2023

Term Loan, expiring 2030 1

$ 1,045,000 $ —

Senior Secured Notes, maturing 2031 1

Debt issuance discount ( 58,551 ) —

Debt issuance costs 2

Current portion of long-term debt ( 11,250 ) —

Total long-term debt, less current portion $ 1,664,107 $ —

1 On December 31, 2023 the debt instruments and related proceeds were consolidated but were restricted under an escrow agreement contingent upon the Closing of the Omni Acquisition.

2 Debt issuance costs of $ 11,275 related to the Revolving Credit Facility are recorded in Other Assets.

Senior Secured Notes

In order to finance a portion of the cash consideration payable for the Omni Acquisition and the costs and expenses incurred in connection with the transaction, GN Bondco, LLC, a wholly owned subsidiary of Omni, (the “Escrow Issuer” and consolidated VIE) completed 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.

As of December 31, 2023, the Notes were included in Long-term debt held in escrow on the Condensed Consolidated Balance Sheets.

Upon the Closing, Opco assumed the Escrow Issuer’s obligations under the Notes.

The Notes 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 were issued at 98.0 % of the face amount and will mature on October 15, 2031.

Notes were issued pursuant to an 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.

The Notes are guaranteed on a senior secured basis in an aggregate principal amount in excess of $ 100,000 .

Prior to October 15, 2026, Opco may redeem some or all of the Notes at any time and from time to time at a redemption price equal to 100.000 % of the principal amount thereof plus the applicable “make-whole” premium, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

On or after October 15, 2026, Opco may redeem some or all of the Notes at the following prices (expressed as a percentage of principal), plus in each case accrued and unpaid interest, if any, to, but excluding, the redemption date:

(a) in the case of a redemption occurring during the 12-month period commencing October 15, 2026, at a redemption price of 104.750 %;

(b) in the case of a redemption occurring during the 12-month period commencing on October 15, 2027, at a redemption price of 102.375 %;

and (c) in the case of a redemption occurring on or after October 15, 2028, at a redemption price of 100.000 %.

In addition, at any time prior to October 15, 2026, Opco may redeem up to 40.000 % of the original aggregate principal amount of the Notes in an amount not to exceed the amount of net cash proceeds from one or more equity offerings at a redemption price equal to 109.5 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Upon the occurrence of a “change of control”, Opco will be required to offer to repurchase all of the outstanding principal amount of the Notes at a purchase price of 101.000 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Senior Secured Term Loan Facility

In order to finance a portion of the cash consideration payable for the Omni Acquisition and the costs and expenses incurred in connection with the transaction, GN Loanco, LLC, a wholly owned subsidiary of Omni, (the “Escrow Loan Borrower” and consolidated VIE), entered into a credit agreement (the “Credit Agreement”) with Citibank, N.A., as administrative agent and collateral agent and as initial term loan lender on December 19, 2023.

Pursuant to the Credit Agreement, the Escrow Loan Borrower obtained senior secured term B loans in an aggregate principal amount of $ 1,125,000 (the “New Term Loans”) and the ability to draw down up to $ 400,000 under a line of credit (the “Revolving Credit Facility”).

The New Term Loans bear interest based, at Opco’s election, on (a) SOFR plus an applicable margin or (b) the base rate plus an applicable margin.

The base rate is equal to the highest of the following:

(i) the prime rate;

(ii) 0.50 % above the overnight federal funds rate;

and (iii) the one-month Term SOFR plus 1.00 %.

The applicable margin for Term SOFR loans is 4.50 % and the applicable margin for base rate loans is 3.50 %.

The New Term Loans are subject to customary amortization of 1.00 % per year.

The New Term Loans were issued at 96.0 % of the face amount and will mature on December 19, 2030.

No borrowings under the Revolving Credit Facility were made in connection with the Omni Acquisition.

The Revolving Credit Facility will mature on January 25, 2029.

Loans made under the Revolving Credit Facility bear interest based, at Opco’s election, on (a) SOFR plus an applicable margin or (b) the base rate plus an applicable margin.

Until delivery of a compliance certificate in respect of the fiscal quarter ending June 30, 2024, the applicable margin for SOFR loans is 4.25 % and the applicable margin for base rate loans is 3.25 %.

Thereafter, the applicable margin can range from 3.75 % to 4.25 % for SOFR loans and from 2.75 % to 3.25 % for base rate loans, in each case depending on Opco’s first lien net leverage ratio, as set forth in the Credit Agreement.

Upon closing of the Omni Acquisition, Opco assumed the Escrow Loan Borrower’s obligations under the Credit Agreement, which were further secured by certain guarantors.

Opco’s obligations under the Credit Agreement are guaranteed on a senior secured basis by the Company and each of Opco’s existing and future domestic subsidiaries (subject to customary exceptions).

On February 12, 2024, Opco and the parties to the Credit Agreement entered into Amendment No.

2 (“Amendment No.

2”) to the Credit Agreement, which (a) modifies the financial performance covenant in the Credit Agreement by temporarily increasing the 4.50 :1.00 maximum consolidated first lien net leverage ratio permitted by the covenant to (i) 6.00 :1.00 (for the second and third quarters of 2024), (ii) 5.50 :1.00 (for the fourth quarter of 2024), (iii) 5.25 :1.00 (for the first quarter of 2025), (iv) 5.00 :1.00 (for the second quarter of 2025) and (v) 4.75 :1.00 (for the third quarter of 2025) and (b) reduces the revolving credit commitments available under the Credit Agreement from an aggregate principal amount of $ 400,000 to an aggregate principal amount of $ 340,000 .

If the financial performance covenant is not met, the Company will lose access to the Revolving Credit Facility.

Amendment No.

2 also amends certain other terms of the Credit Agreement.

Prior to the effectiveness of Amendment No.

2, on February 12, 2024, Opco repaid $ 80,000 aggregate principal amount of the New Term Loans outstanding under the Credit Agreement, together with all accrued and unpaid interest thereon.

Both the Notes and Revolving Credit Facility contain 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.

As of the date of this report, the Company was in compliance with these aforementioned covenants.

The Revolving Credit Facility’s terms also include a financial covenant which requires the Company to maintain a specific leverage ratio with a measurement date starting on June 30, 2024.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Former Credit Facility

In September 2017, the Company entered into a five-year senior unsecured revolving credit facility (the “Facility”) with a maximum aggregate principal amount of $ 150,000 , with a sublimit of $ 30,000 for letters of credit and a sublimit of $ 30,000 for swing line loans.

5 unchanged sentences

In connection with the third amendment, the Company borrowed $ 150,000 under the term loan and simultaneously repaid $ 150,000 on the revolving line of credit from the borrowings received.

Under the third amendment, the Facility may be increased by up to $ 75,000 to a maximum aggregate principal amount of $ 525,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments.

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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 %.

The base rate is the highest of (i) the federal funds rate, which cannot be less than zero , plus 0.50 %, (ii) the administrative agent ’s prime rate and (iii) the BSBY Rate, which cannot be less than zero , plus 1.00 %, plus a margin ranging from 0.00 % to 0.50 % based on the Company ’s leverage ratio.

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 borrowings under the credit facility was 6.70 % and 3.33 % as of September 30, 2023, and 2022, respectively.

Under the third amendment, the Facility could have been increased by up to $ 75,000 to a maximum aggregate principal amount of $ 525,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments.

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

As of December 31, 2023 the Company had no outstanding borrowings under this credit facility.

No borrowings were made under this credit facility prior to the extinguishment upon the Closing.

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

The Company had 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 December 31, 2023, outstanding letters of credit totaled $ 19,834 .

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

Net Income Per Share

March 31, 2024

Net (Loss) Income Per Share

Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding during each period.

1 unchanged sentence

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 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

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 months ended March 31, 2024 and 2023 is as follows:

Three Months Ended

March 31, 2024 March 31, 2023

Net (loss) income from continuing operations $ ( 61,712 ) $ 33,904

Net income from discontinued operation — 2,464

Net (loss) income attributable to Forward Air ( 61,712 ) 36,368

Dividends allocated to Opco C-2 Preferred Units ( 11,867 ) —

Income allocated to participating securities from continuing operations — ( 172 )

Income allocated to participating securities from discontinued operation — ( 13 )

Income allocated to participating securities — ( 185 )

Numerator for basic and diluted net income per share $ 9,231 $ 51,808 $ 65,250 $ 149,411

Denominator for basic net income per share - weighted-average number of common shares outstanding 25,697 26,769 25,995 26,864

Numerator for basic and diluted net (loss) income per share for continuing operations $ ( 73,579 ) $ 33,732

Numerator for basic and diluted net income per share for discontinued operation $ — $ 2,451

Denominator for basic net (loss) income per share - weighted-average number of common shares outstanding 26,217 26,350

Dilutive stock options and performance share awards — 129

Denominator for diluted net income per share - weighted-average number of common shares and common share equivalents outstanding 25,771 26,902 26,096 26,999

Net income per share:

Basic $ 0.36 $ 1.94 $ 2.51 $ 5.56

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 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

Denominator for diluted net (loss) income per share - weighted-average number of common shares and common share equivalents outstanding 26,217 26,479

Basic net (loss) income per share attributable to Forward Air:

Continuing operations $ ( 2.81 ) $ 1.28

Discontinued operation — 0.09

Net (loss) income per basic share $ ( 2.81 ) $ 1.37

Diluted net (loss) income per share attributable to Forward Air:

Continuing operations $ ( 2.81 ) $ 1.27

Discontinued operation — 0.09

Net (loss) income per diluted share 1

$ ( 2.81 ) $ 1.37

1 Rounding may impact summation of amounts.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

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 months ended March 31, 2024 and 2023 are as follows:

Three Months Ended

March 31, 2024 March 31, 2023

Anti-dilutive stock options 287 112

2 unchanged sentences

Total anti-dilutive shares 480 204

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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 is taxed as a C corporation and is subject to federal and state income taxes.

The Company’s sole material asset is Opco, which is a limited liability company that is taxed as a partnership for federal and certain state and local income tax purposes.

Opco’s net taxable income and related tax credits, if any, are passed through to its partners and included in the partner’s tax returns.

The income tax burden on the earnings taxed to the noncontrolling interest holders is not reported by the Company in its condensed consolidated financial statements.

As a result, the Company’s effective tax rate differs materially from the statutory rate.

For the three months ended March 31, 2024 and 2023, the Company recorded an income tax benefit of $ 18,350 and income tax expense of $ 10,937 , respectively.

The effective tax rate of 17.1 % for the three months ended March 31, 2024 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of the noncontrolling interest, non-deductible executive compensation, excess tax benefits realized on share-based awards, partially offset by state income taxes, net of the federal benefit, and foreign taxes.

The effective tax rate of 24.3 % for the three months ended March 31, 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 Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain.

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 .

As of both March 31, 2024 and December 31, 2023, the Company had $ 153 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

As of both March 31, 2024 and December 31, 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 82 .

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

federal, state and local, or Canadian examinations by tax authorities for years before 2017.

The sale of the Pool Distribution business in February 2021 resulted in a capital loss in the amount of $ 4,253 , which expires in 2026.

The Company concluded that it was more likely than not that the capital loss carryforward will not be realized and therefore, established a valuation allowance of $ 4,253 to reserve against its capital loss carryforward.

The Company also maintains a valuation allowance to reserve against its state net operating loss carryforwards of $ 395 .

3 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.

In connection with the Omni Acquisition, the Company entered into a Tax Receivable Agreement with certain Omni Holders.

As of March 31, 2024, the Company recorded a Tax Receivable Agreement liability of approximately $ 13,270 , after concluding that such Tax Receivable Agreement payments would be probable based on estimates of future taxable income over the term of the Tax Receivable Agreement.

The determination of the Tax Receivable Agreement liability requires the Company to make judgments in estimating the amount of tax attributes as of the date of exchanges (such as cash to be received by the Company on a hypothetical sale of assets and allocation of gain or loss to the Company at the time of the exchanges taking into consideration partnership tax rules).

The amounts payable under the Tax Receivable Agreement will also vary depending upon a number of factors, including tax rates in effect, as well as the amount, character, and timing of the taxable income of Opco in the future and the expected realization of tax benefits with respect to deferred tax assets related to tax attributes subject to Tax Receivable Agreement, which may result in a valuation allowance recorded against the deferred tax assets.

If other tax attributes subject to the Tax Receivable Agreement are determined to be payable, additional Tax Receivable Agreement liabilities may be considered probable at that time.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Fair Value of Financial Instruments

Cash and cash equivalents, accounts receivable, and accounts payable are valued at their carrying amounts in the Company’s Condensed Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments.

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 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 .

The Company categorizes its assets and liabilities into one of three levels based on the assumptions used in valuing the asset or liability.

Estimates of fair value financial assets and liabilities are based on a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.

Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions.

In accordance with this guidance, fair value measurements are classified under the following hierarchy:

• Level 1 - Quoted prices in active markets for identical assets or liabilities.

• Level 2 - Quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in markets that are not active;

and model-derived valuations in which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 - Model-derived valuations in which one or more significant inputs are unobservable.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2024 and December 31, 2023 are summarized below:

As of March 31, 2024

Level 1 Level 2 Level 3 Total

Liabilities under tax receivable agreement $ — $ — $ 13,270 $ 13,270

As of December 31, 2023

Level 1 Level 2 Level 3 Total

Liabilities under tax receivable agreement $ — $ — $ — $ —

Cash, cash equivalents and restricted cash, accounts receivable, other receivables and accounts payable are valued at their carrying amounts in the Company’s Condensed Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments.

As of March 31, 2024, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 50,943 , compared to its carrying value of $ 51,190 .

As of December 31, 2023, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 38,926 , compared to its carrying value of $ 39,381 .

The carrying value of the long-term debt approximates fair value based on the borrowing rates currently available for a loan with similar terms and average maturity.

Shareholders’ Equity

Series B Preferred Stock

Pursuant to Articles of Amendment to the Restated Charter of the Company filed with the Secretary of State of the State of Tennessee at the Closing (the “Charter Amendment”), the Company established 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 the Closing, certain Omni Holders received 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

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2023

Shareholders’ Equity

March 31, 2024

Holders of Series B Preferred Units and holders of the Company’s common stock will vote together as a single class on all matters to be voted on by the Company’s shareholders, subject to limited exceptions.

Each holder of record of Series B Preferred Units is entitled to cast one vote for each such unit.

Pursuant to the Charter Amendment, the Series B Preferred Units have a liquidation preference of $ 0.01 per unit and are not entitled to receive any dividends independent of their corresponding Opco Class B Units.

A Series B Preferred Unit and its corresponding Opco Class B Unit may only be transferred together as a single, combined unit.

Series C Preferred Stock

Pursuant to the Charter Amendment, the Company established 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 received 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 is 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 accrue on each anniversary of issuance a cumulative annual dividend (without any interim accrual) equal to the product of (a) the 14.0 % rate fixed at Closing 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.

Commencing on the six th anniversary of the Closing (and, thereafter, only during the 60 -day period following any anniversary of the Closing), the Series C Preferred Units will be callable at the Company’s option in whole (and not in part), at a call price per Series C Preferred Unit equal to (a) the product of (i) the greater of (A) the outstanding liquidation preference of such Series C Preferred Unit and (B) the product of (x) the number of shares of the Company’s common stock into which such Series C Preferred Unit would be convertible upon the receipt of the Conversion Approval, and (y) the 20 -day volume-weighted average price per share of the Company’s common stock during a defined period prior to the call, and (ii) 103 %, plus (b) the amount of all declared and unpaid dividends in respect of such Series C Preferred Unit.

The Company has deemed the Series C Preferred Units to be permanent equity and expects them to be converted at least within one year from the Closing of the Omni Acquisition.

Cash Dividends

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

During each quarter of 2023, the Board declared and the Company paid a quarterly cash dividend of $ 0.24 per common share.

No dividends were declared in the first quarter of 2024.

Stock Repurchase Program

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 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.

During the three months ended March 31, 2024, the Company did not repurchase any shares of common stock through open market transactions.

During the three months ended March 31, 2023, the Company repurchased through open market transactions 474 shares of common stock for $ 50,491 , or an average of $ 105.38 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 September 30, 2023, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 1,349 shares.

As of March 31, 2024, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 1,349 shares.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Commitments and Contingencies

2 unchanged sentences

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 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 sought an injunction against the consummation of the transaction until a shareholder vote was held.

The court initially granted a temporary restraining order enjoining the transactions contemplated by the Merger Agreement but later dissolved it on October 25, 2023.

Thereafter and as described below, on January 25, 2024, the parties to the Amended Merger Agreement completed the Omni Acquisition.

On May 2, 2024, Plaintiff Michael Roberts, together with the Cambria County Employees Retirement System filed a stipulation and proposed order seeking leave of court to file an amended class action complaint seeking damages, among other forms of relief.

The proposed amended complaint, like the earlier complaints, challenges the Company’s determination not to subject the Omni Acquisition to a stockholder vote.

The Defendants disagree with the allegations of the proposed amended complaint and will defend the matter if and when an amended complaint is filed.

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.

6 unchanged sentences

(unaudited and in thousands, except per share data)

September 30, 2023

March 31, 2024

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

10 unchanged sentences

10/1/2023 to 10/1/2024

¹ Excluding the Final Mile business, which is primarily a brokered service.

¹ For each and every accident/incident, the Company is responsible for damages and defense up to these amounts, regardless of the number of claims associated with any accident/incident.

8 unchanged sentences

Although, an estimate cannot be made of the range of additional loss that is at least reasonably possible.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2024

Segment Reporting

The Company has two reportable segments:

Expedited Freight and Intermodal.

The Company has three reportable segments:

Expedited Freight, Intermodal and Omni Logistics.

The Company evaluates segment performance based on income from operations.

6 unchanged sentences

Any self-insurance loss exposure beyond the deductible allocated to each segment is recorded in Corporate.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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

Segment results from operations for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended March 31, 2024

Expedited Freight Intermodal Omni Logistics Corporate Eliminations Consolidated

External revenues $ 260,753 $ 56,222 $ 224,838 $ — $ — $ 541,813

4 unchanged sentences

Purchases of property and equipment 1,262 1,522 2,186 — — 4,970

Three Months Ended September 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated

Three Months Ended March 31, 2023

Expedited Freight Intermodal Omni Logistics Corporate Eliminations Consolidated

External revenues $ 269,547 $ 88,162 $ — $ — $ — $ 357,709

4 unchanged sentences

Purchases of property and equipment 6,343 176 — — — 6,519

Total Assets Expedited Freight Intermodal Omni Logistics Corporate Eliminations Consolidated

As of March 31, 2024 $ 661,183 $ 264,203 $ 2,799,145 $ 234,740 $ ( 11 ) $ 3,959,260

As of December 31, 2023 661,270 270,421 — 2,047,901 ( 59 ) 2,979,533

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

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

Intersegment revenues 103 81 — ( 184 ) —

Depreciation 23,121 7,056 — — 30,177

Amortization 5,794 7,683 — — 13,477

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

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

Nine Months Ended September 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated

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

Intersegment revenues 136 16 — ( 152 ) —

Depreciation 18,010 4,766 101 — 22,877

Amortization 5,428 6,689 — — 12,117

Income (loss) from operations 167,091 43,005 ( 5,535 ) — 204,561

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

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 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

March 31, 2024

Revenue from the individual services within the Expedited Freight segment for the three months ended March 31, 2024 and 2023 are as follows:

Three Months Ended

March 31, 2024 March 31, 2023

Expedited Freight revenues:

1 unchanged sentence

Truckload 37,055 41,744

Final Mile 72,471 76,822 210,388 215,608

Other 21,747 21,902

1 unchanged sentence

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