FORWARD AIR CORP 10-K

Item 9A. Controls and Procedures Disclosure Controls and Procedures Our management, including our principal executive and principal financial officers, have evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2024. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in this annual report on Form 10-K has been appropriately recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive and principal financial officers, to allow timely decisions regarding required disclosure. Based on that evaluation, our principal executive and principal financial officers have concluded that our disclosure controls and procedures are not effective as of December 31, 2024 due to the material weakness in internal control over financial reporting described below. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives as specified above. However, our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures will prevent or detect all errors and fraud. Any control system, no matter how well designed and operated, is based upon certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within our Company have been detected. Notwithstanding the foregoing conclusion, and notwithstanding the material weakness in our internal control over financial reporting described below, management, including our Chief Executive Officer and Chief Financial Officer, believes the consolidated financial statements included in this Annual Report on Form 10-K fairly represent in all material respects our financial condition, results of operations and cash flows as of and for the periods presented in accordance with U.S. Generally Accepted Accounting Principles. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining effective internal control over financial reporting as defined in Rules 13a-15(f) under the Exchange Act. Our internal control over financial reporting is designed to provide reasonable assurance to management and the Board regarding the preparation and fair presentation of financial statements. 64 Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the framework set forth by the Committee on Sponsoring Organizations of the Treadway Commission in Internal Control — Integrated Framework (“2013 Framework”). During 2024, we acquired Omni. Management's evaluation and conclusion as to the effectiveness of the design and operation of the Company's internal control over financial reporting as of the end of the period covered by this report excludes any evaluation of the internal control over financial reporting of Omni. SEC guidance permits the exclusion of an evaluation of the effectiveness of the registrant's internal control over financial reporting for an acquired business during the first year following such acquisition. The Omni business (excluding intangible assets and goodwill) constitutes approximately 19% of total assets and 47% of net revenue of the consolidated financial statement amounts as of and for the year ended December 31, 2024. Through its assessment, management identified a material weakness in our internal control over financial reporting. As a result of the complexities of the acquisition structure of Omni, our controls were not sufficiently precise over the Omni business combination, related income taxes, and the Omni impairment process. Because of the material weakness, management concluded that we did not maintain effective internal control over financial reporting as of December 31, 2024. The effectiveness of our internal control over financial reporting as of December 31, 2024 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report, which appears herein. Ongoing Remediation Plan Management is committed to remediating the material weakness in a timely manner. Actions and steps we have already taken include enhancing the skill set and competencies of the accounting and finance team through new management since the close of the Omni Acquisition. These actions include the hiring of qualified internal tax experts, the engagement of qualified external tax experts to assist with complex accounting matters for taxes, and we will engage qualified external subject matter experts on a timely basis as required in future transactions with significant complexity. We have and will continue to implement more timely and enhanced review procedures to strengthen our non-routine and income tax control activities with improved documentation and technical oversight. Changes in Internal Control over Financial Reporting There has been no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Subsequent to the Omni Acquisition, we have begun integration and controls assessment activities. In accordance with the SEC’s published guidance, because we acquired these operations during the fiscal year, we excluded these operations from our efforts to comply with Section 404 Rules for fiscal 2024. 65 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Forward Air Corporation Opinion on Internal Control over Financial Reporting We have audited Forward Air Corporation’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, because of the effect of the material weakness described below on the achievement of the objectives of the control criteria, Forward Air Corporation (the Company) has not maintained effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. The following material weakness has been identified and included in management’s assessment. Management has identified a material weakness in the Company’s internal control over financial reporting as the result of ineffective design and operation of controls related to the accounting for the Omni Newco LLC (Omni) business combination within the following processes: (i) initial purchase accounting (ii) accounting for the related income taxes, and (iii) accounting for impairment related to the Omni business. As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Omni, which is included in the 2024 consolidated financial statements of the Company and constituted 19% of total assets as of December 31, 2024 and 47% of revenues for the year then ended. Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of Omni. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2024 and 2023, the related consolidated statements of comprehensive (loss) income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). This material weakness was considered in determining the nature, timing and extent of audit tests applied in our audit of the 2024 consolidated financial statements, and this report does not affect our report dated March 24, 2025 which expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. 66 Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP Atlanta, GA March 24, 2025 67 Item 9B. Other Information During the quarter ended December 31, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading agreement” or “non-Rule 10b5-1 trading agreement,” as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable Part III Item 10. Directors, Executive Officers and Corporate Governance Information required by this item is incorporated herein by reference to our proxy statement for the 2025 Annual Meeting of Shareholders (the “2025 Proxy Statement”). The 2025 Proxy Statement will be filed with the SEC not later than 120 days subsequent to December 31, 2024. Item 11. Executive Compensation The information required by this item is incorporated herein by reference to the 2025 Proxy Statement. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters The information required by this item is incorporated herein by reference to the 2025 Proxy Statement. Item 13. Certain Relationships and Related Transactions, and Director Independence The information required by this item is incorporated herein by reference to the 2025 Proxy Statement. Item 14. Principal Accounting Fees and Services The information required by this item is incorporated herein by reference to the 2025 Proxy Statement. Part IV Item 15. Exhibits, Financial Statement Schedules (a)(1) and (2) List of Financial Statements and Financial Statement Schedules. The response to this portion of Item 15 is submitted as a separate section of this report. (a)(3) List of Exhibits. The response to this portion of Item 15 is submitted as a separate section of this report. (b) Exhibits. The response to this portion of Item 15 is submitted as a separate section of this report. (c) Financial Statement Schedules. The response to this portion of Item 15 is submitted as a separate section of this report. 68 EXHIBIT INDEX No. Exhibit 2.1 Agreement and Plan of Merger, dated as of August 10, 2023 by and among, among others, Forward Air Corporation and Omni Newco LLC (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on August 14, 2023). 2.2 Amendment No. 1 to the Original Merger Agreement, dated January 22, 2024, by and among Forward Air Corporation and Omni Newco, LLC (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 24, 2024). 3.1 Restated Charter of the registrant (incorporated herein by reference to Exhibit 3 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 28, 1999 (File No. 0-22490)) 3.2 Amended and Restated Bylaws of the registrant (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2023). 3.3 Articles of Amendment to the Restated Charter of Forward Air Corporation (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 4.1 Form of Forward Air Corporation Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 1998 filed with the Securities and Exchange Commission on November 16, 1998 (File No. 0-22490)) 4.2 # Description of Capital Stock 4.3 Indenture, dated as of October 2, 2023, by and among Clue Opco LLC (as successor to GN Bondco, LLC), as issuer, and U.S. Bank Trust Company, National Association, as trustee and notes collateral agent (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 4.4 First Supplemental Indenture, dated as of January 25, 2024, by and among Clue Opco LLC, as issuer, Forward Air Corporation and the other guarantors party thereto, as guarantors, and U.S. Bank Trust Company, National Association, as trustee and notes collateral agent (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.1 * Forward Air Corporation 2005 Employee Stock Purchase Plan (incorporated herein by reference to the registrant's Proxy Statement filed with the Securities and Exchange Commission on April 20, 2005 (File No. 0-22490)) 10.2 Air Carrier Certificate, effective August 28, 2003 (incorporated herein by reference to Exhibit 10.5 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission on March 11, 2004 (File No. 0-22490)) 10.3 Form of Director Indemnification Agreement (incorporated herein by reference to Exhibit 10.4 to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange Commission on February 23, 2018 (File No. 0-22490)) 10.4 * Forward Air Corporation Amended and Restated Stock Option and Incentive Plan, as further amended and restated on February 7, 2013 (incorporated herein by reference to Exhibit 10.1 to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 13, 2013 (File No. 0-22490)) 10.5 First Amendment to the Forward Air Corporation Amended and Restated Stock Option and Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2016, filed with the Securities and Exchange Commission on April 27, 2016 (File No. 0-22490)) 10.6 * Form of Nonqualified Stock Option Agreement under the registrant’s 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.44 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017) 10.7 * Form of Performance Share Agreement under the registrant’s 2016 Omnibus Compensation Plan (incorporated herein by reference to Exhibit 10.45 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2017) 10.8 * Form of Notice of Grant of Performance Shares under the registrant’s 2016 Omnibus Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 27, 2017) 10.9 * Forward Air Corporation 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017 (File No. 0-22490)) 10.10 * Amendment No. 1 to the 2016 Omnibus Incentive Compensation Plan (incorporated by reference to Annex A in the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on May 20, 2024). 10.11 * Amended and Restated Non-Employee Director Stock Plan (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on July 27, 2017 (File No. 02-22490)) 10.12 Credit Agreement dated September 29, 2017 among Forward Air Corporation and Forward Air, Inc., as the borrowers, the subsidiaries of the borrowers identified therein as the guarantors, Bank of America, N.A., U.S. Bank National Association and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on October 3, 2017) 10.13 First Amendment dated April 16, 2020 to Credit Agreement dated September 29, 2017 by and among Forward Air Corporation and Forward Air, Inc., as borrowers, certain subsidiaries of the borrowers as guarantors, Bank of America, N.A., as administrative agent and lender, U.S. Bank National Association, as lender, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on May 1, 2020) 10.14 Second Amendment dated July 20, 2021 to Credit Agreement dated September 29, 2017 by and among Forward Air Corporation and Forward Air, Inc., as borrowers, certain subsidiaries of the borrowers as guarantors, Bank of America, N.A., as administrative agent and lender, U.S. Bank National Association, as lender and the other lenders part thereto (incorporated herein by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 10, 2021) 10.15 Third Amendment, dated December 29, 2021, to the Credit Agreement dated September 29, 2017 by and among Forward Air Corporation and Forward Air, Inc., as borrowers, certain subsidiaries of the borrowers as guarantors, Bank of America, N.A., as administrative agent and lender, U.S. Bank National Association, as lender and the other lenders part thereto (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on January 5, 2022) 10.16 * Employment Agreement, dated June 6, 2018, between Forward Air Corporation and Thomas Schmitt (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2018) 10.17 * Restrictive Covenants Agreement, dated June 6, 2018, between Forward Air Corporation and Thomas Schmitt (incorporated herein by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 12, 2018) 10.18 Form of Performance Share Agreement (Total Shareholder Return) under the registrant's 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.3 to the registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 25, 2019) 10.19 Form of Performance Share Agreement (EBITDA per Share) under the registrant's 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.4 to the registrant's Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on April 25, 2019) 10.20 Rebecca J. Garbrick Offer Letter dated as of June 21, 2021 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 25, 2021 (File No. 0-22490)) 10.21 Form of CEO Nonqualified Stock Option Agreement under the registrant's 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.35 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022) 10.22 Form of Non-Qualified Stock Option Agreement under the registrant's 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.36 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022) 10.23 Form of Performance Share Agreement (Total Shareholder Return) under the registrant's 2016 Omnibus Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.37 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022) 10.24 * Forward Air Corporation Executive Severance and Change in Control Plan Amended and Restated, effective as of October 25, 2021 (incorporated herein by reference to Exhibit 10.38 to the registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 1, 2022) 10.25 Equity Purchase Agreement, dated December 20, 2023 by and between Forward Air Corporation, Forward Air Final Mile, LLC, FFM, LLC, Forward Air, Inc., FAF, Inc., and Hub Group, Inc. (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 27, 2023) 10.26 Credit Agreement, dated as of December 19, 2023, by and among, GN Loanco, LLC, the other credit parties party thereto from time to time, Citibank, N.A. and the lenders and L/C issuers party thereto from time to time (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.27 Escrow Release Date Assumption and Joinder Agreement, dated as of January 25, 2024, among GN Loanco, LLC, Clue Opco LLC, Forward Air Corporation, the subsidiary guarantors party thereto and Citibank, N.A. (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.28 Escrow Release Date Incremental Revolving Amendment, dated as of January 25, 2024, among Clue Opco LLC, the credit parties party thereto from time to time, the lenders party thereto from time to time and Citibank, N.A. (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.29 Shareholder Agreement, dated as of January 25, 2024, by and among, Forward Air Corporation, REP Omni Holdings, L.P. and the other parties thereto (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.30 Shareholder Agreement, dated as of January 25, 2024, by and among, Forward Air Corporation, EVE Omni Investor, LLC and Omni Investor Holdings, LLC and the other parties thereto (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.31 Investor Rights Agreement, dated as of January 25, 2024, by and among Forward Air Corporation, REP Omni Holdings, L.P. and Omni Investor Holdings L.P. (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.32 Tax Receivable Agreement, dated as of January 25, 2024, by and among Forward Air Corporation, Central States Logistics, Inc., Clue Opco LLC and the members from time to time party thereto (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on January 31, 2024). 10.33 Amendment No. 2, dated as of February 12, 2024, among Clue Opco LLC, the revolving lenders party thereto and Citibank, N.A. (incorporated herein by reference to the registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on February 15, 2024). 10.34 * Release and Separation Agreement, by and between the registrant and Thomas Schmitt, dated March 19, 2024 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and filed with the Securities and Exchange Commission on May 15, 2024) 10.35 * Shawn Stewart Employment Agreement dated as of April 28, 2024 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and filed with the Securities and Exchange Commission on May 15, 2024) 10.36 * Participation and Restrictive Covenants Agreement, by and between the registrant and Shawn Stewart, dated April 22, 2024 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and filed with the Securities and Exchange Commission on May 15, 2024) 10.37 Term Sheet for Opco LLC Agreement (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024 and filed with the Securities and Exchange Commission on May 15, 2024) 10.38 * Consulting Agreement, by and between the Company and Mr. Pierson, dated May 20, 2024 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 21, 2024). 10.39 * James Faught Offer Letter, dated as of June 11, 2024 (incorporated herein by reference to Exhibit 10.1 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.40 * Jamie Pierson Offer Letter, dated as of July 3, 2024 (incorporated herein by reference to Exhibit 10.2 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.41 * Participation and Restrictive Covenants Agreement, by and between the registrant and Jamie Pierson, dated July 3, 2024 (incorporated herein by reference to Exhibit 10.3 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.42 Form of Non-Employee Director Annual Compensation Agreements (incorporated herein by reference to Exhibit 10.4 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.43 * Form of Restricted Share Retention Award Agreement under the registrant's 2016 Omnibus Compensation Plan (incorporated herein by reference to Exhibit 10.5 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.44 * Form of Enhanced Severance Program (incorporated herein by reference to Exhibit 10.6 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.45 * Form of Executive Retention Bonus Agreement (incorporated herein by reference to Exhibit 10.7 to the registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 filed with the Securities and Exchange Commission on August 9, 2024). 10.46 # S eparation and General Release Agreement between Kyle Mitchin and Forward Air Corporation 10.47 # Separation and General Release Agreement between Chris Ruble and Forward Air Corporation 19.1 # Insider Trading Policy 21.1 # Subsidiaries of the registrant 23.1 # Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm 31.1 # Certification of Principal Executive Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a)) 31.2 # Certification of Principal Financial Officer Pursuant to Exchange Act Rule 13a-14(a) (17 CFR 240.13a-14(a)) 32.1 # Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 # Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document. 101.SCH XBRL Taxonomy Extension Schema 101.CAL XBRL Taxonomy Extension Calculation Linkbase 101.DEF XBRL Taxonomy Extension Definition Linkbase 101.LAB XBRL Taxonomy Extension Label Linkbase 101.PRE XBRL Taxonomy Extension Presentation Linkbase 104 Cover Page Interactive File (formatted in Inline XBRL and contained in Exhibit 101). *Denotes a management contract or compensatory plan or arrangement. # Filed herewith SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Forward Air Corporation Date: March 24, 2025 By: /s/ Jamie Pierson Jamie Pierson Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ Shawn Stewart Chief Executive Officer March 24, 2025 Shawn Stewart (Principal Executive Officer) /s/ Jamie Pierson Chief Financial Officer March 24, 2025 Jamie Pierson (Principal Financial Officer) /s/ James Faught Chief Accounting Officer March 24, 2025 James Faught (Principal Accounting Officer) /s/ George Mayes Chairman and Director March 24, 2025 George Mayes /s/ Ana B. Amicarella Director March 24, 2025 Ana B. Amicarella /s/ Charles Anderson Director March 24, 2025 Charles Anderson /s/ Valerie Bonebrake Director March 24, 2025 Valerie Bonebrake /s/ Dale W. Boyles Director March 24, 2025 Dale W. Boyles /s/ Robert Edwards, Jr. Director March 24, 2025 Robert Edwards, Jr. /s/ Christine Gorjanc Director March 24, 2025 Christine Gorjanc /s/ Michael Hodge Director March 24, 2025 Michael Hodge /s/ Jerome Lorrain Director March 24, 2025 Jerome Lorrain /s/ Javier Polit Director March 24, 2025 Javier Polit /s/ Laurie A. Tucker Director March 24, 2025 Laurie A. Tucker Annual Report on Form 10-K Item 8, Item 15(a)(1) and (2), (a)(3), (b) and (c) List of Financial Statements and Financial Statement Schedule Financial Statements and Supplementary Data Certain Exhibits Financial Statement Schedule Year Ended December 31, 2024 Forward Air Corporation Greeneville, Tennessee F-1 Forward Air Corporation Form 10-K — Item 8 and Item 15(a)(1) and (2) Index to Financial Statements and Financial Statement Schedule The following consolidated financial statements of Forward Air Corporation are included as a separate section of this report: Page No. Report of Ernst & Young LLP, Independent Registered Public Accounting Firm (PCAOB ID: 42 ) F- 3 Con solidated Balance Sheets — December 31, 202 4 and 202 3 F- 6 Consolidated Statements of Comprehensive (Loss) Income — Years Ended December 31, 202 4 , 202 3 and 202 2 F- 7 C onsolidated Statements of Shareholders’ Equity — Years Ended December 31, 202 4 , 202 3 and 202 2 F- 8 Cons olidated Statements of Cash Flows — Years Ended December 31, 202 4 , 202 3 and 202 2 F- 9 Notes to Consolidated Financial Statements — December 31, 202 4 F- 11 The following financial statement schedule of Forward Air Corporation is included as a separate section of this report. Schedule II - Valuation and Qualifying Accounts S- 1 All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have been omitted. F-2 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of Forward Air Corporation Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Forward Air Corporation (the Company) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive (loss) income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 24, 2025 expressed an adverse opinion thereon. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate. Accounting for the Omni Newco LLC (Omni) Acquisition Customer Relationships Description of the Matter During 2024, the Company completed its acquisition of Omni for total consideration of $2.3 billion as disclosed in Note 3 to the consolidated financial statements. The transaction was accounted for as a business combination. The consideration paid in the acquisition must be allocated to the acquired assets and liabilities assumed generally based on their fair value with the excess of the purchase price over those fair values allocated to goodwill. Auditing the Company’s accounting for its acquisition of Omni was complex due to the significant estimation uncertainty in the Company’s determination of the fair value of the identified customer relationships, which totaled $903.8 million. The significant estimation uncertainty was primarily due to the sensitivity of fair value to the significant underlying assumptions. The significant assumptions used to estimate the value of the customer relationships are forecasted results (i.e., revenue, revenue growth and EBITDA margin), attrition rate, and discount rate. These significant assumptions include forward-looking considerations and were based on expectations of future economic and market conditions. F-3 How We Addressed the Matter in Our Audit To test the estimated fair value of the acquired customer relationships, we performed audit procedures that included, among others, evaluating the selection of the valuation methodology used, evaluating the significant assumptions used by the Company, and evaluating the completeness and accuracy of the underlying data supporting the significant assumptions and estimates. We also involved our valuation specialists to assist with our evaluation of the methodology used by the company and significant assumptions used in the fair value estimates. Goodwill Impairment Assessment of the Omni Logistics Reporting Unit Description of the Matter As more fully described in Note 1 of the consolidated financial statements, goodwill is tested for impairment at least annually at the reporting unit level. As of December 31, 2024, the Company’s goodwill balances totaled $522.7 million of which $244.0 million related to the Omni Logistics reporting unit. The Company recorded total impairment of $1.03 billion related to the Omni Logistics reporting unit in 2024 based on both a discounted cash flow model and guideline public company approach to calculating fair value, with the estimated fair value less than carrying value. Auditing management’s goodwill impairment test of the Omni Logistics reporting unit involved especially subjective judgements due to the significant estimation required in determining the fair value of the reporting unit. In particular, the estimates of the fair value of the Company’s reporting unit were sensitive to assumptions such as the discount rate and expected future projected financial information (i.e., revenue, revenue growth, and EBITDA margin), which are affected by expectations about future market and economic conditions. How We Addressed the Matter in Our Audit To test the estimated fair value of the Company’s reporting unit, our audit procedures included, among others, assessing the valuation methodology and the underlying data used by the Company in its analysis, including testing the significant assumptions discussed above. We compared the significant assumptions used by management to current industry and economic trends and other relevant factors. We also evaluated the reasonableness of the guidelines public companies used to develop the fair value estimate of the Omni Logistics reporting unit. We involved valuation specialists to assist in our evaluation of the valuation methodology and the significant assumptions, including the discount rate used in determining the fair value of the reporting unit. We also tested the reconciliation of the aggregate estimated fair value of all the Company’s reporting units to the market capitalization of the Company. F-4 Self-Insurance Loss Reserves Description of the Matter The liability for self-insurance loss reserves totaled $65.1 million at December 31, 2024 which includes self-insurance reserves for vehicle liability claims. The long-term portion of this liability was included in “Other long-term liabilities,” and the remainder was included in “Accrued expenses” on the Company’s Consolidated Balance Sheet. As more fully described in Note 1 to the consolidated financial statements, the self-insurance reserves include estimates for both known claims and future claims development and are based on company-specific and industry data, as well as general economic information. Auditing the Company’s self-insurance reserves for vehicle liability claims was complex, highly subjective and required significant judgment due to the actuarial techniques and significant assumptions used. The Company utilizes actuarial analyses to evaluate open claims and estimate the ongoing development exposure. The most significant assumptions used in the estimation process include determining the trend in loss costs, the expected consistency in the frequency and severity of claims incurred but not yet reported, changes in the timing of the reporting of losses from the loss date to the notification date, and the expected costs to settle unpaid claims. How We Addressed the Matter in Our Audit We tested internal controls over management’s review of the completeness and accuracy of data inputs used in the actuarial analysis and review of the actuarial assumptions and reserve calculations. To test the self-insurance loss reserves for vehicle liability claims, our audit procedures included, among others, evaluating the methodologies used and the significant actuarial assumptions discussed above, as well as performing substantive procedures over underlying data and calculations used in the analyses. We tested claims data by agreeing the data to supporting source documentation and payment information. We evaluated whether changes to the reserves for known claims were being recognized timely based on the underlying available data and current estimates. We involved actuarial specialists to assist in our evaluation of the actuarial methodologies used as well as to independently calculate a range of reserve estimates for comparison to the recorded reserves. /s/ Ernst & Young LLP We have served as the Company’s auditor since 1991. Atlanta, GA March 24, 2025 F-5 Forward Air Corporation Consolidated Balance Sheets (In thousands, except share data) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 104,903 $ 121,969 Restricted cash equivalents 363 39,604 Accounts receivable, less allowance of $ 3,269 in 2024 and $ 2,206 in 2023 322,291 153,267 Other receivables 205 5,408 Prepaid expenses 29,053 25,682 Other current assets 15,685 1,098 Total current assets 472,500 347,028 Noncurrent restricted cash equivalents — 1,790,500 Property and equipment, net of accumulated depreciation and amortization of $ 292,855 in 2024 and $ 250,185 in 2023 326,188 258,095 Operating lease right-of-use assets 410,084 111,552 Goodwill 522,712 278,706 Other acquired intangibles, net of accumulated amortization of $ 212,905 in 2024 and $ 127,032 in 2023 999,216 134,789 Other assets 71,941 58,863 Total assets $ 2,802,641 $ 2,979,533 Liabilities and Shareholders’ Equity Current liabilities: Accounts payable $ 105,692 $ 45,430 Accrued expenses 119,836 62,948 Other current liabilities 45,148 71,727 Current portion of debt and finance lease obligations 16,930 12,645 Current portion of operating lease liabilities 96,440 44,344 Total current liabilities 384,046 237,094 Non-current liabilities: Finance lease obligations, less current portion 30,858 26,736 Long-term debt, less current portion and debt issuance costs 1,675,930 — Long-term debt held in escrow — 1,790,500 Liability from tax receivable agreement 13,295 — Operating lease liabilities, less current portion 325,640 71,598 Other long-term liabilities 48,835 47,144 Deferred income taxes 38,169 42,200 Total non-current liabilities 2,132,727 1,978,178 Shareholders’ equity: Preferred stock, $ 0.01 par value: Authorized shares - 5,000,000 ; 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 - 10,088 in 2024 and none in 2023 — — Common stock, $ 0.01 par value: Authorized shares - 50,699,707 ; issued and outstanding shares - 29,761,197 in 2024 and 25,670,663 in 2023 298 257 Additional paid-in capital 542,392 283,684 Retained (deficit) earnings ( 338,230 ) 480,320 Accumulated other comprehensive loss ( 2,732 ) — Total Forward Air shareholders equity 201,728 764,261 Noncontrolling interest 84,140 — Total shareholders’ equity 285,868 764,261 Total liabilities and shareholders’ equity $ 2,802,641 $ 2,979,533 The accompanying notes are an integral part of the consolidated financial statements. F-6 Forward Air Corporation Consolidated Statements of Comprehensive (Loss) Income (In thousands, except per share data) Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Operating revenue $ 2,474,262 $ 1,370,735 $ 1,679,634 Operating expenses: Purchased transportation 1,250,570 586,195 730,412 Salaries, wages and employee benefits 536,406 287,566 302,759 Operating leases 182,197 87,413 85,290 Depreciation and amortization 143,978 57,405 42,552 Insurance and claims 64,682 50,133 47,478 Fuel expense 21,460 22,004 26,956 Other operating expenses 309,508 191,809 196,596 Impairment of goodwill 1,028,397 — — Total operating expenses 3,537,198 1,282,525 1,432,043 Income (loss) from continuing operations ( 1,062,936 ) 88,210 247,591 Other expense: Interest expense, net ( 189,215 ) ( 31,571 ) ( 5,138 ) Foreign exchange gain 1,093 — — Other income, net 1,226 — — Total other expense ( 186,896 ) ( 31,571 ) ( 5,138 ) Income (loss) before income taxes ( 1,249,832 ) 56,639 242,453 Income tax (benefit) expense ( 124,991 ) 13,836 63,039 Net income (loss) from continuing operations ( 1,124,841 ) 42,803 179,414 Income (loss) from discontinued operations, net of tax ( 6,387 ) 124,548 13,777 Net (loss) income $ ( 1,131,228 ) $ 167,351 $ 193,191 Net (loss) attributable to noncontrolling interest ( 314,259 ) — — Net (loss) income attributable to Forward Air $ ( 816,969 ) $ 167,351 $ 193,191 Basic net income (loss) per share: Continuing operations $ ( 30.40 ) $ 1.64 $ 6.66 Discontinued operations ( 0.23 ) 4.78 0.51 Net income per basic share $ ( 30.63 ) $ 6.42 $ 7.17 Diluted net income (loss) per share: Continuing operations $ ( 30.40 ) $ 1.64 $ 6.63 Discontinued operations ( 0.23 ) 4.77 0.51 Net income per diluted share 1 $ ( 30.63 ) $ 6.40 $ 7.14 Dividends per share: $ — $ 0.96 $ 0.96 Net (loss) income $ ( 1,131,228 ) $ 167,351 $ 193,191 Other comprehensive (loss) income: Foreign currency translation adjustments ( 2,732 ) — — Comprehensive (loss) income ( 1,133,960 ) 167,351 193,191 Comprehensive loss attributable to noncontrolling interest ( 314,259 ) — — Comprehensive (loss) income attributable to Forward Air $ ( 819,701 ) $ 167,351 $ 193,191 1 Rounding may impact summation of amounts. The accompanying notes are an integral part of the consolidated financial statements. F-7 Forward Air Corporation Consolidated Statements of Shareholders' Equity (In thousands) Common Stock Preferred Stock - Class B Amount Preferred Stock - Class C Amount Additional Paid-in Capital Accumulated Other Comprehensive Loss Retained (Deficit) Earnings Non-controlling Interest Total Shareholders’ Equity Shares Amount Shares Amount Shares Amount Balance at December 31, 2021 26,969 $ 270 — $ — — $ — $ 258,474 $ — $ 334,910 $ — $ 593,654 Net income — — — — — — — — 193,191 — 193,191 Stock options exercised 3 — — — — — 206 — — — 206 Common stock issued under employee stock purchase plan 10 — — — — — 783 — — — 783 Share-based compensation expense — — — — — — 11,376 — — — 11,376 Payment of dividends to shareholders — — — — — — 17 — ( 25,882 ) — ( 25,865 ) Payment of minimum tax withholdings on share-based awards ( 31 ) — — — — — — — ( 3,330 ) — ( 3,330 ) Repurchases and retirement of common stock ( 600 ) ( 6 ) — — — — — — ( 62,765 ) — ( 62,771 ) Issuance of share-based awards 111 1 — — — — ( 1 ) — — — — Balance at December 31, 2022 26,462 $ 265 — $ — — $ — $ 270,855 $ — $ 436,124 $ — $ 707,244 Net income — — — — — — — — 167,351 — 167,351 Common stock issued under employee stock purchase plan 11 — — — — — 800 — — — 800 Share-based compensation expense — — — — — — 12,012 — — — 12,012 Payment of dividends to shareholders — — — — — — 18 — ( 25,013 ) — ( 24,995 ) Payment of minimum tax withholdings on share-based awards ( 40 ) — — — — — — — ( 4,340 ) — ( 4,340 ) Repurchases and retirement of common stock ( 883 ) ( 9 ) — — — — — — ( 93,802 ) — ( 93,811 ) Issuance of share-based awards 121 1 — — — — ( 1 ) — — — — Balance at December 31, 2023 25,671 $ 257 — $ — — $ — $ 283,684 $ — $ 480,320 $ — $ 764,261 Net loss — — — — — — — — ( 816,969 ) ( 314,259 ) ( 1,131,228 ) Foreign currency translation adjustments — — — — — — — ( 2,732 ) — — ( 2,732 ) Shares issued - acquisition 700 7 4 — — — 205,510 — — 411,611 617,128 Share-based compensation expense — — — — — — 10,188 — — — 10,188 Payment of minimum tax withholdings on share-based awards ( 43 ) — — — — — — — ( 1,442 ) — ( 1,442 ) Issuance of share-based awards 170 2 — — — — ( 2 ) — — — — Common stock issued under employee stock purchase plan 44 — — — — — 753 — — — 753 Conversion of preferred C series 1,210 12 8 — — — ( 12 ) — — — — Tax receivable agreement liability and other adjustment — — — — — — ( 25 ) — ( 139 ) — ( 164 ) Series B - Conversions and other 2,009 20 ( 2 ) — — — 42,296 — — ( 13,212 ) 29,104 Balance at December 31, 2024 29,761 $ 298 10 $ — — $ — $ 542,392 $ ( 2,732 ) $ ( 338,230 ) $ 84,140 $ 285,868 The accompanying notes are an integral part of the consolidated financial statements. F-8 Forward Air Corporation Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Operating activities: Net income (loss) from continuing operations $ ( 1,124,841 ) $ 42,803 $ 179,414 Adjustments to reconcile net income (loss) of continuing operations to net cash provided by operating activities of continuing operations: Depreciation and amortization 143,978 57,405 42,552 Impairment of goodwill 1,028,397 — — Change in fair value of earn-out liability — — ( 294 ) Share-based compensation expense 10,188 11,495 10,661 Provision for revenue adjustments 3,635 5,091 6,426 Deferred income tax expense (benefit) ( 133,510 ) ( 8,893 ) 7,686 Other 14,917 ( 1,180 ) ( 1,279 ) Changes in operating assets and liabilities, net of effects from the purchase of acquired companies: Accounts receivable 9,546 30,555 ( 2,588 ) Other receivables 9,677 ( 5,408 ) 8,097 Other current and noncurrent assets ( 15,085 ) 30,683 ( 13,280 ) Accounts payable and accrued expenses ( 15,917 ) 36,661 12,766 Net cash (used in) provided by operating activities of continuing operations ( 69,015 ) 199,212 250,161 Investing activities: Proceeds from sale of property and equipment 5,137 3,741 2,372 Purchases of property and equipment ( 37,060 ) ( 30,725 ) ( 39,254 ) Purchase of businesses, net of cash acquired ( 1,576,219 ) ( 56,703 ) ( 66,105 ) Other ( 444 ) — — Net cash used in investing activities of continuing operations ( 1,608,586 ) ( 83,687 ) ( 102,987 ) Financing activities: Repayments of finance lease obligations ( 18,425 ) ( 9,500 ) ( 6,108 ) Proceeds from credit facility 75,000 70,000 — Payments on credit facility ( 155,000 ) ( 178,500 ) ( 49,000 ) Proceeds from long-term debt held in escrow — 1,790,500 — Payment of debt issuance costs ( 52,471 ) — — Proceeds from issuance of common stock upon stock option exercises — — 206 Payment of earn-out liability ( 12,247 ) — ( 91 ) Payments of dividends to shareholders — ( 24,995 ) ( 25,865 ) Repurchases and retirement of common stock — ( 93,811 ) ( 62,771 ) Proceeds from common stock issued under employee stock purchase plan 753 800 783 Payment of minimum tax withholdings on share-based awards ( 1,442 ) ( 4,340 ) ( 3,330 ) Contributions from subsidiary held for sale — 240,572 7,508 Net cash provided by (used in) financing activities of continuing operations ( 163,832 ) 1,790,726 ( 138,668 ) Effect of exchange rate changes on cash 1,013 — — Net (decrease) increase in cash, cash equivalents and restricted cash equivalents from continuing operations ( 1,840,420 ) 1,906,251 8,506 F-9 Forward Air Corporation Consolidated Statements of Cash Flows (In thousands) Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Cash from discontinued operation: Net (used in) cash provided by operating activities of discontinued operations ( 6,387 ) ( 17,824 ) 8,929 Net cash provided by (used in) investing activities of discontinued operations — 258,525 ( 1,475 ) Net cash used in financing activities of discontinued operations — ( 240,701 ) ( 7,454 ) Net (decrease) increase in cash, cash equivalents and restricted cash equivalents ( 1,846,807 ) 1,906,251 8,506 Cash, cash equivalents, and restricted cash equivalents at beginning of period of continuing operations 1,952,073 45,822 37,316 Cash at beginning of period of discontinued operations — — — Net (decrease) increase in cash, cash equivalents and restricted cash equivalents ( 1,846,807 ) 1,906,251 8,506 Cash, cash equivalents, and restricted cash equivalents at end of period of continuing operations $ 105,266 $ 1,952,073 $ 45,822 Reconciliation of cash, cash equivalents, and restricted cash equivalents: Cash and cash equivalents $ 104,903 $ 121,969 $ 45,822 Restricted cash equivalents 363 39,604 — Noncurrent restricted cash equivalents — 1,790,500 — Total cash, cash equivalents, and restricted cash equivalents shown in the statement of cash flow: $ 105,266 $ 1,952,073 $ 45,822 Non-cash activity: Equipment acquired under finance leases $ 12,404 $ 25,217 $ 14,422 The accompanying notes are an integral part of the consolidated financial statements F-10 Forward Air Corporation Notes To Consolidated Financial Statements December 31, 2024 (In thousands, except per share data) 1. Operations and Summary of Significant Accounting Policies Basis of Presentation and Principles of Consolidation Forward Air Corporation and its subsidiaries (the “Company ” ) is a leading asset-light freight and logistics company. The Company has three reportable segments: Expedited Freight, Omni Logistics ("Omni") and Intermodal. The Company conducts business in North and South 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. 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 Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Intermodal also offers dedicated contract and container freight station (“CFS ” ) warehouse and handling services. The Company’s consolidated financial statements include Forward Air Corporation and its wholly-owned and majority owned domestic and foreign subsidiaries. Opco, a Variable Interest Entity ("VIE") resulting from the Omni Acquisition, is consolidated into Forward Air Corporation. Intercompany accounts and transactions have been eliminated in consolidation. A noncontrolling interest in a consolidated subsidiary represents the portion of equity (net assets) in a subsidiary, not attributable, directly or indirectly, to the Company. Noncontrolling interests are presented as a separate component of equity in the consolidated balance sheet and the presentation of net loss presents losses attributable to controlling and noncontrolling interests. In the fourth quarter of 2023, the Company held interests in two wholly-owned subsidiaries of GN Bondco, LLC and GN Loanco, LLC, that were considered VIEs. These 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 (“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 January 25, 2024. F-11 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) In December 2023, the Board of Directors (the “Board ”) of the Company approved a strategy to divest of the Final Mile business (“Final Mile ” ), and the sale of Final Mile was completed on December 20, 2023. Final Mile provided delivery and installation of heavy bulky appliances such as washing machines, dryers, dishwashers and refrigerators throughout the United States. As a result of the divestiture of the Final Mile business, the results of operations for Final Mile are presented as a discontinued operation in the Consolidated Statements of Comprehensive (Loss) Income for all periods presented. In addition, assets and liabilities were reflected as “assets and liabilities held for sale ” in the Consolidated Balance Sheets for the prior period. Unless otherwise noted, amounts, percentages and discussion for all periods reflect the results of operations, financial condition and cash flows from the Company’s continuing operations. Refer to Note 2, Discontinued Operation and Held for Sale, for further discussion. Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and expenses during the reporting period. Actual results could differ from those estimates. 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 Consolidated Balance Sheets and gains and losses, which result from foreign currency transactions, are included in the Consolidated Statements of Comprehensive (Loss) Income. Cash and Cash Equivalents Cash as of December 31, 2024 and 2023 of $ 103,447 and $ 111,969 , respectively, consisted of cash on hand and bank deposits. Cash equivalents as of December 31, 2024 and 2023 of $ 1,456 and $ 10,000 , respectively, consisted of money market deposits. The Company considers all investments with an original maturity of three months or less to be cash and cash equivalents. Restricted Cash and Cash Equivalents For the year ended December 31, 2024, we held $ 363 of restricted cash as collateral for Omni letters of credit. Restricted cash equivalents and noncurrent restricted cash equivalents for the year ended December 31, 2023 totaled $ 39,604 which related to the amounts held in escrow in connection with the financing of the acquisition of Omni. Allowance for Doubtful Accounts and Revenue Adjustments The Company has a broad range of customers, including freight forwarders, third-party logistics companies, passenger and cargo airlines, steamship lines, and retailers, located across a diverse geography. In circumstances in which the Company is aware of a specific customer’s inability to meet its financial obligations to the Company, the Company records a specific reserve in order to reduce the net recognized accounts receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes a general reserve based on a percentage of revenue to ensure accounts receivables are properly recorded at the net amount expected to be collected. The Company sets the general reserve based on historical collection experience combined with forecasts about any expected changes to the collection experience. If circumstances change, expected recoverability of amounts due to the Company may change by a material amount. Accounts are written off after all means of collection, including legal action, have been exhausted. F-12 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation and amortization. Depreciation is provided on a straight-line basis over the estimated useful lives of 30 to 40 years for building and improvements, three to ten years for equipment, the lesser of the estimated useful life or the initial lease term for leasehold improvements and five years for computer software. Land is not depreciated and construction in progress is not depreciated until ready for service. Expenditures for maintenance and repairs are charged to expense as incurred. For internally developed software, all costs incurred during planning and evaluation are expensed. Costs incurred during the application development stage are capitalized and included in property and equipment. Capitalized software also includes software acquired for internal use. Property and equipment as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 Land $ 26,517 $ 26,479 Buildings and improvements 95,801 94,277 Equipment 364,412 320,557 Leasehold improvements 68,459 24,386 Computer software 47,456 31,063 Construction in progress 16,398 11,518 Total property and equipment 619,043 508,280 Less accumulated depreciation and amortization 292,855 250,185 Total property and equipment, net $ 326,188 $ 258,095 As of December 31, 2024 and 2023, the net book value of computer software included in property and equipment, net w as $ 13,876 and $ 7,361 , respectively. For the years ended December 31, 2024, 2023 and 2022, amortization expense of computer software was $ 3,377 , $ 2,909 and $ 2,558 , respectively. Cloud Computing Costs The Company capitalizes the costs incurred during the implementation stage for cloud computing or hosting arrangements. Costs incurred in the preliminary project stage and post-implementation stage, which includes maintenance and training costs, are expensed as incurred. Capitalized software costs are amortized using the straight-line method over three to five years and are recorded in “Prepaid expenses” and “Other assets” in the Consolidated Balance Sheets. Goodwill, Intangible Assets and Other Long-Lived Assets The Company tests goodwill for impairment, at the reporting unit level, annually and when events or circumstances indicate that fair value of a reporting unit may be below its carrying value. A reporting unit is an operating segment or one level below an operating segment, for example, a component. The Company’s reporting units are not its reportable segments. F-13 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) The annual test of goodwill was performed for each of the reporting units with goodwill balances as of June 30, 2024. As a result of the annual test, a goodwill impairment charge totaling $ 1,028,397 was recorded which all relates to the Omni reporting unit. This reporting unit was acquired on January 25, 2024. Primarily due to a decrease in the market value of the Company’s common stock during the second quarter of 2024, as a result of many factors including, but not limited to, general market factors, credit rating downgrades, and changes in executive leadership, and the inherent uncertainty associated with the combined enterprise, the Omni reporting unit’s fair value was determined to be less than its carrying value. As a result, the Company recorded a non-cash impairment charge of $ 1,092,741 during the three and six months ended June 30, 2024. Subsequent retrospective adjustments made during the three months ended September 30, 2024 and December 31, 2024, of $ 14,751 additional impairment and $ 79,095 reduction, respectively, resulted in $ 1,028,397 total goodwill impairment expense for the year ended December 31, 2024. The goodwill impairment expense was recorded in the Impairment of goodwill caption on the Consolidated Statement of Comprehensive (Loss) Income. To complete the Omni goodwill test, we determined the fair value of the reporting unit using the DCF model and a guideline public company approach with 50% of the value determined using the DCF and 50% of the value using the market approach. Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. Finite-Lived Intangible Assets and Other Long-Lived Assets The Company reviews its long-lived assets, which include intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. The evaluation for recoverability is performed at a level where independent cash flows may be attributed to either an asset or asset group. The analysis differs from our goodwill impairment test in that an intangible or other long-lived asset is only deemed to have occurred if the sum of the forecasted undiscounted cash flows related to the assets being evaluated is less than the carrying value of the assets. If the forecasted net cash flows are less than the carrying value, then the assets are written down to estimated value. We did not identify any impairments of definite-lived assets for the year ended December 31, 2024 and 2023. Changes in the estimates of forecasted net cash flows may result in future asset impairments that could be material to our results of operations. Changes in the carrying amount of goodwill during the years ended December 31, 2024, 2023 and 2022 are summarized as follows: Expedited Freight Omni Logistics Intermodal Consolidated Balance as of December 31, 2022 $ 121,091 $ — $ 136,896 $ 257,987 Acquisitions 20,629 — — 20,629 Acquisition adjustment — — 90 90 Balance as of December 31, 2023 $ 141,720 $ — $ 136,986 $ 278,706 Acquisition — 1,272,403 — 1,272,403 Impairment — ( 1,028,397 ) — ( 1,028,397 ) Balance as of December 31, 2024 $ 141,720 $ 244,006 $ 136,986 $ 522,712 The Company’s accum ulated goodwill impairment is $ 1,054,083 related to impairment charges the Company recorded during 2016 pertaining to its Truckload Services ("TLS") reporting unit of $ 25,686 , and $ 1,028,397 from the Omni transaction. The TLS reporting unit operates within the Expedited Freight reportable segment. As of December 31, 2024, approximate ly $ 336,600 of goodwill is deductible for tax purposes. F-14 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) The Company amortizes certain acquired identifiable intangible assets on a straight-line basis over their estimated useful lives, which range from one year to 20 years. The acquired intangible assets have a weighted-average useful life as follows: Intangible Assets Weighted-Average Useful Life Customer relationships 14 years Non-compete agreements 4 years Trade names 5 years For the years ended December 31, 2024, 2023 and 2022, acquired intangible asset amortization was $ 85,873 , $ 16,039 and $ 12,213 , respectively. The Company estimates amortization of existing intangible assets will be $ 92,412 in 2025, $ 90,557 in 2026, $ 89,096 in 2027, $ 85,199 in 2028, and $ 76,732 in 2029. Changes in the carrying amount of acquired intangible assets during 2024 and 2023 are summarized as follows: Gross Carrying Amount Customer Relationships 1 Non-Compete Agreements Trade Names Total Balance as of December 31, 2022 $ 218,669 $ 6,406 $ 1,500 $ 226,575 Acquisition 35,200 — — 35,200 Acquisition adjustment 45 1 — 46 Balance as of December 31, 2023 $ 253,914 $ 6,407 $ 1,500 $ 261,821 Acquisition 903,800 23,400 23,100 950,300 Balance as of December 31, 2024 $ 1,157,714 $ 29,807 $ 24,600 $ 1,212,121 Accumulated Amortization Customer Relationships Non-Compete Agreements Trade Names Total Balance as of December 31, 2022 $ 103,604 $ 5,889 $ 1,500 $ 110,993 Amortization expense 15,389 650 — 16,039 Balance as of December 31, 2023 $ 118,993 $ 6,539 $ 1,500 $ 127,032 Amortization expense 74,926 6,712 4,235 85,873 Balance as of December 31, 2024 $ 193,919 $ 13,251 $ 5,735 $ 212,905 1 Carrying value as of December 31, 2024, 2023 and 2022 is inclusive of $ 16,501 of accumulated impairment. F-15 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Accrued Expenses Accrued expenses as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 Accrued payroll and related items $ 54,313 $ 15,267 Insurance and claims accruals 23,021 19,566 Payables to Leased Capacity Providers 11,493 10,663 Accrued interest payable 31,009 17,452 Accrued expenses $ 119,836 $ 62,948 Other Current Liabilities Other current liabilities as of December 31, 2024 and 2023 consisted of the following: December 31, 2024 December 31, 2023 Tax liabilities $ 5,946 $ 31,190 Accrued legal and professional fees 11,041 34,721 Deferred revenue 9,899 — Accrued payables non-trade 18,262 5,816 Other current liabilities $ 45,148 $ 71,727 Self-Insurance Loss Reserves The Company’s licensed motor carrier contracts with independent contractor fleets, owner-operators and other third-party transportation capacity providers for most of the transportation services. The Company’s independent contractor fleet owners and owner-operators lease their equipment to the Company (“Leased Capacity Providers”) and own, operate and maintain their own tractors and employ their own drivers. Under U.S. Department of Transportation regulations, the Company is liable for bodily injury and property damage caused by the Leased Capacity Providers and employee drivers while they are operating equipment under the Company’s various motor carrier authorities. The potential liability associated with any accident can be severe and occurrences are unpredictable. F-16 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) For vehicle liability, the Company retains a portion of the risk. Below is a summary of the Company’s risk retention on vehicle liability insurance coverage maintained by the Company through $ 10,000 (in thousands): Company Risk Retention Frequency Layer Policy Term Expedited Freight LTL business $ 5,000 Occurrence/Accident¹ $ 0 to $ 5,000 10/1/2024 to 10/1/2025 Truckload business $ 5,000 Occurrence/Accident¹ $ 0 to $ 5,000 10/1/2024 to 10/1/2025 LTL, Truckload and Intermodal businesses $ 5,000 Policy Term Aggregate² $ 5,000 to $ 10,000 10/1/2024 to 10/1/2025 Intermodal $ 1,000 Occurrence/Accident¹ $ 0 to $ 1,000 10/1/2024 to 10/1/2025 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. ² During the Policy Term, the Company is responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Company Risk Retention before insurance will contribute. Also, from time to time, when brokering freight, the Company may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and the Company maintains third-party liability insurance coverage with a $ 100 deductible per occurrence for its brokered services. Additionally, the Company maintains workers’ compensation insurance with a self-insured retention of $ 500 per occurrence. The Company provides for the estimated costs of vehicle liability and workers’ compensation claims both reported and for claims incurred but not reported. The amount of self-insurance loss reserves and loss adjustment expenses is determined based on an estimation process that uses information obtained from both Company-specific and industry data, as well as general economic information. The most significant assumptions used in the estimation process include determining the trend in loss costs, the expected consistency in the frequency and severity of claims incurred but not yet reported, changes in the timing of the reporting of losses from the loss date to the notification date, and the expected costs to settle unpaid claims. The Company estimates its self-insurance loss exposure by evaluating the merits and circumstances surrounding individual known claims and through actuarial analysis to determine an estimate of probable losses on claims incurred but not reported. T he Company accrues for the costs of the uninsured portion of pending claims, based on the nature and severity of individual claims and historical claims development trends. Estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult. Failure to establish sufficient insurance reserves and adequately estimate for future insurance claims may cause unfavorable differences between actual self-insurance costs and the reserve estimates. As of December 31, 2024 and 2023, the Company recorded self-insurance loss reserves of $ 65,112 and $ 66,374 , respectively, inclusive of reserves in excess of the self-insured retention limit that are expected to be reimbursed from insurance carriers. As of December 31, 2024, $ 23,021 was recorded in “Accrued expenses” and $ 42,091 was recorded in “Other long-term liabilities” in the Consolidated Balance Sheets. As of December 31, 2023, $ 19,566 was recorded in “Accrued expenses” and $ 46,808 was recorded in “Other long-term liabilities” in the Consolidated Balance Sheets. As of December 31, 2024 and 2023, the Company recognized a receivable for insurance proceeds and a corresponding claims payable for vehicle liability and workers’ compensation claims in excess of the self-insured retention limit. As of December 31, 2024 and 2023, the company recorded $ 19,791 and $ 26,712 , respectively, in "Other assets" and "Other long-term liabilities" in the Consolidated Balance Sheets. Revenue Recognition Revenue is recognized when the Company satisfies the performance obligation by the delivery of a shipment in accordance with contractual agreements, bills of lading and general tariff provisions. The amount of revenue recognized is measured as the consideration the Company expects to receive in exchange for those services pursuant to a contract with a customer. A contract exists once the Company enters into a contractual agreement with a customer. The Company does not recognize revenue in cases where collectability is not probable, and defers recognition until collection is probable or payment is received. F-17 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) The Company generates revenue from the delivery of a shipment and the completion of related services. Revenue for the delivery of a shipment is recorded over time to coincide with when customers simultaneously receive and consume the benefits of the delivery services. Accordingly, revenue billed to a customer for the transportation of freight are recognized over the transit period as the performance obligation to the customer is satisfied. The Company determines the transit period for a shipment based on the pick-up date and the delivery date, which may be estimated if delivery has not occurred as of a reporting period. The determination of the transit period and how much of it has been completed as of a given reporting date may require the Company to make judgments that impact the timing of revenue recognized. For delivery of shipments with a pick-up date in one reporting period and a delivery date in another reporting period, the Company recognizes revenue based on relative transit time in each reporting period. A portion of the total revenue to be billed to the customer after completion of a delivery is recognized in each reporting period based on the percentage of total transit time that has been completed at the end of the applicable reporting period. Upon delivery of a shipment or related service, customers are billed according to the applicable payment terms. Related services are a separate performance obligation and include accessorial charges such as terminal handling, storage, equipment rentals. We also provide certain value-added logistics services, such as customs brokerage, fee-based managed services, and warehousing services. These services may include one or more performance obligations, which are generally satisfied over the service period as we perform our obligations. The service period may be a very short duration, in the case of customs brokerage, or it may be longer in the case of warehousing, managed services, and supply chain consulting and optimization services. Pricing for our services is established in the customer contract and is dependent upon the specific needs of the customer but may be agreed upon at a fixed fee per transaction, labor hour, or service period. 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. For all lines of business, the Company records revenue on a gross basis as it is the principal in the transaction as the Company has discretion to determine the amount of consideration. Additionally, the Company has the discretion to select drivers and other vendors for the services provided to customers. These factors, discretion in the amount of consideration and the selection of drivers and other vendors, support revenue recognized on a gross basis. Leases The Company accounts for leases under Accounting Standards Codification 842, Leases, (“ASC 842”), where lessees are required to record an asset (right-of-use asset or finance lease asset) and a lease liability. ASC 842 allows for two types of leases for recognition purposes: operating leases and finance leases. Operating leases result in the recognition of a single lease expense on a straight-line basis over the lease term, while finance leases result in an accelerated expense. The Company determines if an arrangement contains a lease at inception based on whether or not the Company has the right to control the asset during the contract period. All leases greater than 12 months result in the recognition of a right-of-use asset and liability at the lease commencement date based on the present value of the lease payments over the lease term. The present value of the lease payments is calculated using the applicable weighted-average discount rate. The weighted-average discount rate is based on the discount rate implicit in the lease, or if the implicit rate is not readily determinable from the lease, then the Company estimates an applicable incremental borrowing rate. The incremental borrowing rate is estimated based on the contractual lease term and the Company’s applicable borrowing rate. Business Combinations Upon the acquisition of a business, the fair value of the assets acquired and liabilities assumed are estimated, which may require judgment regarding the identification of acquired assets and liabilities assumed. Once the acquired assets and assumed liabilities are identified, the fair value of the assets and liabilities are estimated using a variety of approaches that require significant judgments. For intangible assets, significant judgments include, but are not limited to, future cash flows, selection of discount rates, determination of terminal growth rates, and estimated useful life and pattern of use of the underlying intangible assets. For tangible assets, significant judgements include, but are not limited to, current market values, physical and functional obsolescence of the assets, and remaining useful lives. Consideration is paid in the form of cash, and at times equity, and paid upon closing while contingent consideration is paid upon the satisfaction of a future obligation. If contingent consideration is included as a component of the consideration, the Company values the consideration as of the acquisition date. F-18 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Refer to Note 7, Income Taxes , for further discussion. Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during each period. Restricted shares have non-forfeitable rights to dividends and as a result, are considered participating securities for purposes of computing net income (loss) per common share pursuant to the two-class method. Diluted net income (loss) 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 (loss) per share during the years ended December 31, 2024, 2023 and 2022 is as follows: 2024 2023 2022 Numerator: Net income (loss) $ ( 1,131,228 ) $ 167,351 $ 193,191 Less, net income (loss) from discontinued operations ( 6,387 ) 124,548 13,777 Less, net loss attributable to noncontrolling interest ( 314,259 ) — — Adjustments to net (loss) attributable to the Company 26,552 — — Net (loss) income attributable to common shareholders $ ( 837,134 ) $ 42,803 $ 179,414 Income allocated to participating securities from continuing operations — ( 220 ) ( 993 ) Income allocated to participating securities from discontinued operations — ( 639 ) ( 77 ) Income allocated to participating securities — ( 859 ) ( 1,070 ) Numerator for basic and diluted net (loss) income per share for continuing operations $ ( 837,134 ) $ 42,583 $ 178,421 Numerator for basic and diluted net (loss) income per share for discontinued operations $ ( 6,387 ) $ 123,909 $ 13,700 Denominator: Denominator for basic net income per share - weighted-average number of common shares outstanding 27,540 25,913 26,783 Dilutive effect of stock awards — 90 143 Denominator for diluted net income per share - weighted-average number of common shares and common share equivalents outstanding 27,540 26,003 26,926 Basic net income (loss) per share: Continuing operations $ ( 30.40 ) $ 1.64 $ 6.66 Discontinued operations ( 0.23 ) 4.78 0.51 Net income per basic share $ ( 30.63 ) $ 6.42 $ 7.17 Diluted net income (loss) per share: Continuing operations $ ( 30.40 ) $ 1.64 $ 6.63 Discontinued operations ( 0.23 ) 4.77 0.51 Net income per diluted share 1 $ ( 30.63 ) $ 6.40 $ 7.14 1 Rounding may impact summation of amounts. F-19 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) The number of shares that were not included in the calculation of net income (loss) per diluted share because to do so would have been anti-dilutive for the years ended December 31, 2024, 2023 and 2022 are as follows: 2024 2023 2022 Anti-dilutive stock options 280 112 57 Anti-dilutive performance shares 5 18 13 Anti-dilutive restricted shares and deferred stock units 154 67 2 Total anti-dilutive shares 439 197 72 Share-Based Compensation The Company grants awards under the stock incentive plans to certain employees of the Company. The awards include stock options, restricted shares and performance shares. The fair value of the stock options is estimated on the grant date using the Black-Scholes option pricing model, and share-based compensation expense is recognized on a straight-line basis over the three-year vesting period. The fair value of the restricted shares is the quoted market value of the Company’s common stock on the grant date, and the share-based compensation expense is recognized on a straight-line basis over the vesting period. For certain performance shares, the fair value is the quoted market value of the Company’s common stock on the grant date less the present value of the expected dividends not received during the relevant period. For these performance shares, the share-based compensation expense is recognized on a straight-line basis over the vesting period based on the projected assessment of the level of performance that will be achieved. The fair value of other performance shares that have a financial target of the Company’s total shareholder return as compared to the total shareholder return of a selected peer group, is estimated on the grant date using a Monte Carlo simulation model. The share-based compensation expense is recognized on a straight-line basis over the vesting period. All share-based compensation expense is recognized in salaries, wages and employee benefits in the Consolidated Statements of Comprehensive Income. Refer to Note 6, Stock Incentive Plan , for further discussion. New Accounting Standards Adopted In November 2023, the FASB issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which expands reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses regularly provided to the chief operating decision maker. The guidance in this ASU is effective for all public entities for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company adopted this guidance for the year ended December 31, 2024. Recently Issued Accounting Standards Not Yet Adopted In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The guidance in this ASU expands the disclosure requirements for income taxes by requiring greater disaggregation of information in the income tax rate reconciliation and disaggregation of income taxes paid by jurisdiction. The guidance in this ASU is effective for all public entities for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the effects adoption of this guidance will have on our consolidated financial statements. 2. Discontinued Operations and Held for Sale Sale of Final Mile On December 20, 2023, the Company completed the sale of the Final Mile business for estimated total cash consideration of $ 260,916 . The results of operations of Final Mile, have been presented under the caption “Income (loss) from discontinued operations, net of tax” in the Consolidated Statements of Comprehensive Income for the years ended December 31, 2024, 2023 and 2022. A final net working capital settlement of $ 6,387 was the only activity during the year ended December 31, 2024. F-20 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) A summary of the results of operations classified as a discontinued operations, net of tax, in the Consolidated Statements of Comprehensive Income for the years ended December 31, 2023 and 2022 is as follows: Year Ended December 31, 2023 December 31, 2022 Operating revenue $ 273,873 $ 293,769 Operating expenses: Purchased transportation 158,233 176,137 Salaries, wages and employee benefits 51,304 45,211 Operating leases 12,325 11,804 Depreciation and amortization 5,212 4,834 Insurance and claims 2,586 2,281 Fuel expense 305 627 Other operating expenses 36,842 34,490 Total operating expenses 266,807 275,384 Income from discontinued operations 7,066 18,385 Gain (loss) on sale of business 155,829 — Income from discontinued operations before income taxes 162,895 18,385 Income tax expense 38,347 4,608 Income (loss) from discontinued operations, net of tax $ 124,548 $ 13,777 F-21 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 3. Acquisitions Acquisition of Omni 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”). 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. 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 (which includes pre-acquisition Omni costs of approximately $ 80 million) and (b) 14,015 shares of the Company’s outstanding common stock, on an as-converted and as-exchanged basis (the “Equity Consideration”) consisting of: (i) 1,910 shares of common stock (of which 1,210 were issued upon conversion of the Series C Preferred Units upon approval of the Company’s shareholders at the 2024 Annual Shareholders Meeting held on June 3, 2024 (the “Conversion Approval”)) and (ii) 12,105 Opco Class B Units (as defined below) and corresponding Series B Preferred Units (as defined below), which are exchangeable into shares of Common Stock (of which 7,670 units were issued upon conversion of the units of Opco (defined below) designated as “Opco Series C-2 Preferred Units” upon the Conversion Approval. The Equity Consideration represents, as of December 31, 2024, 34 % of the Company’s outstanding common stock on a fully-diluted and as-exchanged basis. Please refer to sections hereinafter in relation to Series B, Series C, and Series C-2. 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 equity holders of Omni (“Omni Holders”) hold a portion of the Equity Consideration in the form of units of Opco designated as “Class B Units” (“Opco Class B Units”) and corresponding Series B 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”). 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. 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 purchase represents planned operational synergies, expanded geographic reach of our services, and strategic market positioning. The results of Omni have been included in the 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. Details of consideration paid are included in the Purchase Price Allocation table within this footnote. Details of debt related items for the transaction are included in the debt footnote. F-22 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 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. 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) a rate to be fixed at Closing (which equals 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. Series C-2 units carried consistent economic terms as Series C. All shares were converted in June of 2024. Due Diligence, Transaction and Integration Costs For the year ended December 31, 2024 and 2023, the Company recorded $ 81,467 and $ 57,490 , respectively, of due diligence, transaction and integration costs incurred in connection with the acquisition of Omni. These costs were recorded in “Other operating expenses” in the Consolidated Statements of Comprehensive Income. F-23 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Business Combination Accounting - Omni Logistics We accounted for the Omni purchase using the acquisition method of accounting under U.S. generally accepted accounting Assets acquired and liabilities assumed as of the acquisition date are presented in the following table: January 26, 2024 Opening Balance Sheet as Reported at March 31, 2024 Adjustments January 26, 2024 Opening Balance Sheet as Reported at December 31, 2024 Consideration Transferred Cash consideration paid $ 100,499 $ — $ 100,499 Liabilities under tax receivable agreement 13,270 — 13,270 Common shares 32,795 ( 1,967 ) 30,828 Series B preferred shares 207,880 ( 12,473 ) 195,407 Series C preferred shares 56,713 ( 3,403 ) 53,310 Opco C-2 preferred units 359,493 ( 21,570 ) 337,923 Extinguishment of Omni's indebtedness 1,543,003 — 1,543,003 Total purchase price (fair value of consideration) 2,313,653 ( 39,413 ) 2,274,240 Fair Value of Assets Acquired and Liabilities Assumed Cash and cash equivalents acquired 78,260 ( 10,977 ) 67,283 Accounts receivable 181,570 10,441 192,011 Property and equipment 75,292 14,082 89,374 Other assets 35,639 ( 3,084 ) 32,555 Operating lease right-of-use assets 234,025 13,665 247,690 Customer relationships 1,062,729 ( 158,929 ) 903,800 Non-compete agreements 42,509 ( 19,109 ) 23,400 Trademarks and other 42,510 ( 19,410 ) 23,100 Total assets acquired 1,752,534 ( 173,321 ) 1,579,213 Current liabilities 156,408 ( 368 ) 156,040 Finance lease obligations 14,606 2,977 17,583 Operating lease liabilities 234,025 13,844 247,869 Other liabilities 643 ( 559 ) 84 Deferred income taxes 133,673 22,127 155,800 Total liabilities assumed 539,355 38,021 577,376 Goodwill $ 1,100,474 $ 171,929 $ 1,272,403 The estimated useful life of Omni acquired intangible assets as of the acquisition date are summarized in the following table: Years Customer relationships 14 years Non-compete agreements 4 years Trademarks and other 5 years F-24 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 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): Year Ended December 31, 2024 December 31, 2023 Pro forma revenue $ 2,556,262 $ 2,659,431 Pro forma net loss from continuing operations ( 1,190,392 ) ( 159,425 ) The pro forma financial information adjusts the 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. The one year acquisition measurement period closed on the anniversary of the transaction. Acquisition of Land Air Express In January 2023, the Company acquired certain assets of Land Air Express, Inc. (“Land Air”) for $ 56,567 . 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 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 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. Land Air January 31, 2023 Tangible assets: Property and equipment $ 738 Total tangible assets 738 Intangible assets: Customer relationships 1 35,200 Goodwill 20,629 Total intangible assets 55,829 Total assets acquired 56,567 Net assets acquired 2 $ 56,567 1 Estimated useful life of 15 years 2 No liabilities were assumed in relation to the Land Air transaction. F-25 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 4. Indebtedness Long-term debt consisted of the following as of December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Term Loan, expiring 2030 1 $ 1,045,000 $ — Senior Secured Notes, maturing 2031 1 725,000 — Debt issuance discount ( 54,067 ) — Debt issuance costs ( 40,003 ) — Total long-term debt $ 1,675,930 $ — 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. 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 therewith, GN Bondco, LLC, a Delaware limited liability company and wholly owned subsidiary of Omni (the “Escrow Issuer” and consolidated VIE) launched 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. Upon the closing of the Omni Acquisition, 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. The 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. 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 therewith, GN Loanco, LLC, a Delaware limited liability company and wholly owned subsidiary of Omni (the “Escrow Loan Borrower”), entered into a credit agreement (the “Credit Agreement”) with Citibank, N.A., as administrative agent and collateral agent and as initial term loan lender. 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 the Revolving Credit Facility. No borrowings under the Revolving Credit Facility were made in connection with the Omni Acquisition. 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 the highest of the following: (i) the prime rate; (ii) 0.50 % above the overnight federal funds rate; and (iii) the one-month SOFR plus 1.00 %. The applicable margin for 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. F-26 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 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 was 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 the 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). 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 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 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 Consolidated Balance Sheets. On January 25, 2024, the date of the Omni Acquisition, both GN Bondco, LLC and GN Loanco, LLC ceased operations and their debt and related funds were transferred to Opco, a consolidated subsidiary of the Company. 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 . Amendment No. 2 also amends certain other terms of the Credit Agreement in connection with the foregoing. 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. On December 30, 2024, Opco and the parties to the Credit Agreement entered into Amendment No. 3 (“Amendment No. 3”) to the Credit Agreement, which (a) modifies the financial performance covenant in the Credit Agreement by temporarily increasing the 5.50 :1.00 maximum consolidated first lien net leverage ratio permitted by the covenant to (i) 6.75 :1.00 (for the first, second and third quarters of 2025), (ii) 6.50 :1.00 (for the fourth quarter of 2025), (iii) 6.25 :1.00 (for the first quarter of 2026), (iv) 6.00 :1.00 (for the second quarter of 2026), (v) 5.75 :1.00 (for the third quarter of 2026), (vi) 5.50 :1.00 (for the third quarter of 2026 and thereafter) and (b) reduces the revolving credit commitments available under the Credit Agreement from an aggregate principal amount of $ 340,000 to an aggregate principal amount of $ 300,000 . Amendment No. 3 also amends certain other terms of the Credit Agreement in connection with the foregoing. 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. The Revolving Credit Facility’s terms also include a financial covenant which requires the Company to maintain a specific leverage ratio. As of December 31, 2024, the Company was in compliance with all aforementioned covenants. As of December 31, 2024 the Company had no outstanding borrowings under the Facility. No borrowings were made under the Facility prior to the extinguishment upon the Closing. F-27 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 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. The maturity date of the Facility was September 29, 2022. In April 2020, the Company entered into the first amendment to the Facility, which increased the maximum aggregate principal amount to $ 225,000 . The Facility could have been increased by up to $ 25,000 to a maximum aggregate principal amount of $ 250,000 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. In July 2021, the Company entered into the second amendment to the Facility, which extended the maturity date to July 20, 2026 and changed the interest rate options available under the Facility. In December 2021, the Company entered into the third amendment to the Facility, which increased the amount available for borrowing under the Facility to $ 450,000 , consisting of a $ 300,000 revolving line of credit and a term loan of $ 150,000 . 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 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. 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 December 31, 2024 and December 31, 2023, outstanding letters of credit totaled $ 23,474 and $ 19,834 , respectively. Under the Revolving Credit Facility, the outstanding letter of credit totaled $ 23,111 as of December 31, 2024. Interest Payments Cash payments for interest were $ 163,999 , $ 11,923 and $ 5,355 for the years ended December 31, 2024, 2023 and 2022 respectively. No interest was capitalized during the year ended December 31, 2024, 2023 and 2022. Interest Income In connection with the Omni acquisition, funds held in escrow earned interest prior to their release. Interest income for the year ended totaled $ 9,152 . 5. Shareholders’ Equity Preferred Stock There are 5,000 shares of preferred stock with a par value of $ 0.01 authorized, but no shares have been issued to date. Cash Dividends During the year ended December 31, 2024, no dividends were declared or paid during the year. For each quarter of 2023, the Board declared and the Company paid quarterly cash dividends of $ 0.24 per common share. Share 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. F-28 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) During the year ended December 31, 2024, the Company did not repurchase any shares. During the year ended December 31, 2023, the Company repurchased through open market transactions 883 shares of common stock for $ 93,811 , or an average of $ 106.21 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 Consolidated Balance Sheets. As of December 31, 2024, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 1,349 shar es. 6. Stock Incentive Plan Stock Incentive Plan The Company recorded share-based compensation expense as follows for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Salaries, wages and employee benefits - continuing operations $ 9,120 $ 10,090 $ 9,196 Salaries, wages and employee benefits - discontinued operation — 504 706 Total share-based compensation expense $ 9,120 $ 10,594 $ 9,902 In May 2016, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 3,370 common shares. As of December 31, 2024, approximately 1,280 shares remain available for grant under the Omnibus Plan. Stock Options Certain executives are eligible to receive grants of stock options. Employees may exercise the stock options at anytime after the grant is vested but no later than seven years after the date of grant. Stock options vest over a three-year period from the date of grant. For stock option awards, under the Omnibus Plan, the exercise price is equal to the price of the Company’s common stock on the date of grant. Share-based compensation expense associated with these awards is amortized ratably over the vesting period. The Company estimated the fair value of the grants using the Black-Scholes option-pricing model. The weighted average grant-date fair value of the stock option awards granted under the Omnibus Plan and the weighted average assumptions under the Black-Scholes option-pricing model were as follows for the years ended December 31, 2024, 2023 and 2022. December 31, 2024 December 31, 2023 December 31, 2022 Weighted average grant-date fair value $ — $ 39.75 $ 28.91 Weighted average assumptions under Black-Scholes option model: Expected dividend yield — % 0.8 % 0.9 % Expected stock price volatility — % 32.5 % 28.7 % Risk-free interest rate — % 3.8 % 1.9 % Expected life of awards (years) 0 5.6 5.6 F-29 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Stock option transactions during the year ended December 31, 2024 on a continuing operations basis were as follows: Number of Shares Weighted Average Exercise Price Outstanding as of January 1 $ 370 $ 76.83 Granted — — Exercised — — Forfeited or Canceled ( 90 ) 76.06 Outstanding as of December 31 $ 280 $ 77.08 As of December 31, 2024, the weighted average remaining contractual life of stock options outstanding was approximately two years and exercisable was approximately two years . The total fair value of stock options vested during 2024, 2023, 2022 was $ 0 , $ 0 , and $ 855 , respectively. As of December 31, 2024, the total share-based compensation expense related to unvested stock options not yet recognized was $ 161 , and the weighted average period over which it is expected to be recognized is approximately one year . The following table sets forth the exercise price range, number of shares, weighted average exercise price and remaining contractual lives by groups of similar price on a continuing operations basis as of December 31, 2024: Stock Options Outstanding Stock Options Exercisable Range of Exercise Prices Number of Shares Weighted Average Remaining Contractual Life (in years) Weighted Average Exercise Price Exercisable as of December 31, 2024 Weighted Average Exercise Price $ 58.40 - $ 59.89 33 0.1 $ 58.54 33 $ 58.54 $ 64.26 - $ 75.05 175 1.5 67.02 175 67.02 100.93 - 115.42 72 4.5 109.75 61 109.43 280 $ 77.08 269 $ 75.68 As of December 31, 2024 , the total intrinsic value of both outstanding and exercisable stock options was $ 0 . The total intrinsic value of stock options exercised during 2024, 2023 and 2022 was $ 0 , $ 0 and $ 142 , respectively. Restricted Shares The Company’s primary long-term incentive plan is a restricted share award plan that entitles employees to receive a share of the Company’s common stock subject to vesting requirements based on continued employment. Shares granted under the restricted share award plan are restricted from sale or transfer until vesting, and the restrictions lapse in three equal installments beginning one year after the date of grant. As of December 31, 2024, there were no dividends paid on a current basis throughout the vesting period. Share-based compensation expense associated with these awards is amortized ratably over the requisite service period. All forfeitures are recognized as incurred. F-30 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Restricted share transactions on a continuing operations basis for the year ended December 31, 2024 were as follows: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of January 1 133 $ 104.87 Granted 481 30.66 Vested ( 115 ) 71.15 Forfeited ( 117 ) 48.70 Outstanding as of December 31 382 $ 38.78 The weighted average grant-date fair value of the restricted shares granted under the Omnibus Plan during the years ended December 31, 2024 , 2023 and 2022 were $ 30.66 , $ 114.46 and $ 105.52 , respectively. The total fair value of restricted shares that vested during 2024, 2023 and 2022 was $ 4,088 , $ 7,833 , and $ 9,246 , respectively. As of December 31, 2024, the total share-based compensation expense related to restricted shares not yet recognized was $ 9,243 , and the weighted average period over which it is expected to be recognized is approxi mately two ye ars . Performance Shares Certain executives and key employees are eligible to receive grants of performance awards. The performance share agreement provides for awards based on achieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, and the Company’s total shareholder return as compared to the total shareholder return of a selected peer group, as determined by the Board. Performance targets are set at the beginning of each three-year measurement period. The share awards are earned over the vesting period, and the number of shares earned is determined based on the cumulative results for the measurement period. The performance agreement provides for employees to earn 0 % to 200 % of the target awards depending on the actual performance achieved, with no shares earned if performance is below the established minimum target. Performance shares do not receive dividends until the shares are vested. Awards earned are paid in shares of common stock of the Company at the end of the vesting period. Share-based compensation expense associated with these awards is amortized ratably over the vesting period. Depending on the financial target, share-based compensation expense is determined based on the projected assessment of the level of performance that will be achieved. All forfeitures are recognized as incurred. The grant-date fair value of performance shares granted with a financial target based on the Company’s total shareholder return was estimated using a Monte Carlo simulation model. The weighted average grant-date fair value of performance awards granted under the Omnibus Plan and the weighted average assumptions under the Monte Carlo simulation model were as follows for the years ended December 31, 2024, 2023 and 2022: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Weighted average grant-date fair value $ 11.87 $ 120.27 $ 127.29 Weighted average assumptions under the Monte Carlo simulation model: Expected stock price volatility 42.8 % 37.8 % 35.5 % Weighted average risk-free interest rate 4.7 % 4.2 % 1.6 % F-31 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Performance award transactions for the year ended December 31, 2024 on a continuing operations basis were as follows assuming target levels of performance: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of January 1 61 $ 105.88 Granted 416 11.87 Additional shares awarded based on actual performance level achieved 14 92.89 Earned ( 39 ) 88.01 Forfeited or unearned ( 113 ) 33.34 Outstanding as of December 31 339 $ 15.88 As of December 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 will be achieved, was $ 3,507 , and the weighted average period over which it is expected to be recognized is approximately 2 years. Total tax shortfall realized for tax deductions in the United S tates related to the exercise of stock options, vesting of restricted stock and vesting of performance awards under the Omnibus Plan was $ 4,660 , $ 2,518 , and $ 1,012 for the years ended December 31, 2024, 2023 and 2022, respectively. Employee Stock Purchase Plan Under the 2005 Employee Stock Purchase Plan (the “ESPP”), the Company is authorized to issue up to a remaining 259 shares of common stock to employees. These shares may be issued at a price equal to 90 % of the lesser of the market value on the first day or the last day of each six -month purchase period. Common stock purchases are paid for through periodic payroll deductions and/or up to two lump sum contributions. Employee stock purchase plan activity and related information was as follows on a continuing operations basis: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Shares purchased by participants under the ESPP 44 10 8 Average purchase price $ 17.16 $ 69.81 $ 82.48 Weighted average fair value of each purchase under the ESPP granted 1 $ 1.91 $ 7.76 $ 9.17 Share-based compensation expense for ESPP $ 84 $ 76 $ 78 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 common shares may be issued. As of December 31, 2024, approximately 20 shares remain 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. Each director may elect to defer receipt of the common shares until the director departs from the Board. If a director elects to defer receipt, the Company will issue deferred stock units in which the director does not have voting rights or other incidents of ownership until the shares are issued. Each deferred stock unit is eligible for a dividend equivalent in the form of additional restricted stock units for each cash dividend paid by the Company. F-32 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Director restricted share transactions for the year ended December 31, 2024 were a s follows: Number of Shares Weighted Average Grant Date Fair Value Outstanding as of January 1 14 $ 96.10 Granted 26 23.58 Vested ( 22 ) 71.79 Forfeited — — Outstanding as of December 31 18 $ 18.67 Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Share-based compensation expense for restricted shares $ 984 $ 1,329 $ 1,387 The total fair value of restricted shares that vested during 2024, 2023 and 2022 was $ 488 , $ 1,424 , and $ 1,436 , respectively. As of December 31, 2024, the total share-based compensation expense related to the restricted shares not yet recognized was $ 198 , and the weighted average period over which it is expected to be recognized is less than one year . 7. Income Taxes The Company is taxed as a corporation and pays corporate federal and state taxes on income allocated to it from Opco based on the Company’s economic interest in Opco. Opco’s members, including the Company, are liable for federal, state and local income taxes based on their share of Opco’s pass-through taxable income. Opco is not a taxable entity for federal income tax purposes. In addition, certain subsidiaries of Opco are corporations that are subject to federal, state and non-U.S income taxes. The earliest period the Company is subject to examination of federal income tax returns by the Internal Revenue Service is 2021. The state income tax returns and non-U.S. tax filings of the Company are subject to examination by the applicable taxing authorities for various periods, generally up to four years after they are filed. The Company's income tax (benefit) expense for continuing operations during the years ended December 31, 2024, 2023 and 2022 were the following: 2024 2023 2022 Current: Federal $ 3,625 $ 18,444 $ 43,327 State 178 4,285 12,026 Foreign 4,716 — — Total Current Tax Expense 8,519 22,729 55,353 Deferred: Federal ( 113,588 ) ( 6,268 ) 6,317 State ( 19,922 ) ( 2,625 ) 1,369 Foreign — — — Total Deferred Taxes ( 133,510 ) ( 8,893 ) 7,686 Total Income Tax Expense (Benefit) $ ( 124,991 ) $ 13,836 $ 63,039 F-33 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) A reconciliation of income taxes computed at the U.S. federal statutory income tax r ate (21.0% for 2024, 2023 and 2022) to the provision for income taxes reflected in the Company’s Consolidated Statements of Co mprehensive Income for the years ended December 31, 2024, 2023 and 2022 is as follows: 2024 2023 2022 Tax expense at the statutory rate $ ( 262,466 ) $ 11,894 $ 50,915 State income taxes, net of federal income tax benefit ( 19,538 ) 1,561 10,189 Share-based compensation ( 16 ) ( 537 ) ( 840 ) Other permanent differences 1,743 ( 36 ) ( 30 ) Non-deductible compensation 156 1,190 1,435 Non-controlling interest 65,772 — — Federal income tax credits — ( 34 ) ( 107 ) Foreign Tax Rate Differential ( 1,019 ) — — Impairment 42,081 — — Change in Valuation Allowance 57,614 — — Other ( 9,318 ) ( 202 ) 1,477 $ ( 124,991 ) $ 13,836 $ 63,039 The significant components of the deferred tax assets and liabilities at December 31, 2024 and 2023 were as follows: December 31, 2024 December 31, 2023 Deferred tax assets: Accrued expenses $ — $ 12,006 Allowance for doubtful accounts 47 565 Operating lease liabilities 1,318 29,658 Due diligence and transaction costs — 13,953 Share-based compensation 2,297 4,995 Accruals for income tax contingencies 42 129 Capital Contributions 1 — Net operating loss carryforwards 12,617 634 Foreign Tax Credit 894 — Interest Disallowance 23,827 — Unrealized Gain/Loss 14 — Investment in Partnership 36,179 — Total gross deferred tax assets 77,236 61,940 Valuation allowance ( 72,508 ) ( 395 ) Total net deferred tax assets 4,728 61,545 Deferred tax liabilities: Tax over book depreciation 4,047 33,373 Prepaid expenses 39 10,807 Operating lease right-of-use assets 1,391 28,559 Goodwill — 23,744 Intangible assets 37,420 7,262 Total deferred tax liabilities 42,897 103,745 Net deferred tax liabilities $ ( 38,169 ) $ ( 42,200 ) F-34 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) The Company paid income taxes, net o f refunds, of $ 38,757 , $ 20,842 and $ 65,388 for the years ended December 31, 2024, 2023 and 2022, respectively. As of December 31, 2024, 2023 and 2022 the Company had state net operating loss carryforwards of $ 90,747 , $ 13,240 and $ 13,574 , respectively, that expire between 2024 and 2035. The state net operating loss carryforwards are limited to the future taxable income of separate legal entities. The Company maintains a valuation allowance to reserve against its state net operating loss carryforwards of $ 5,877 and $ 395 as of both December 31, 2024 and 2023, respectively.The Company’s state net operating loss valuation allowance increased in 2024 due to additional NOLs generated. The Company has a federal net operating loss carryforward of $ 38,499 . The Company’s federal net operating loss carryforward can be carried forward indefinitely. The Company also recorded a valuation allowance against its U.S. Federal deferred tax assets, including its outside basis difference in Opco, Federal net operating loss carryforward, and IRC section 163(j) interest limitation carryforward. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The Company assessed the likelihood that its deferred tax assets would be recovered from estimated future taxable income and available tax planning strategies. In making this assessment, all available evidence was considered including economic climate, as well as reasonable tax planning strategies. A reconciliation of the beginning and ending amount of unrecognized tax benefits as of and during the years ended December 31, 2024 and 2023 is as follows: Balance at December 31, 2022 198 Reductions for settlement with state taxing authorities ( 66 ) Additions for tax positions of current year 21 Balance at December 31, 2023 $ 153 Reductions for settlement with state taxing authorities ( 66 ) Reductions for tax positions of prior years ( 213 ) Additions from acquisition of Omni Newco, LLC 2,257 Balance at December 31, 2024 $ 2,131 The Company recognizes income tax benefits from uncert ain tax positions where the realization of the ultimate benefit is uncertain. As of December 31, 2024 and 2023, the Company had $ 2,131 and $ 153 , respectively, of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized. At December 31, 2024 and 2023, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 394 an d $ 82 , respectively. The Company recognizes interest and penalties, if any, related to unrecognized tax benefits in “Interest expense, net” and “Other operating expenses”, respectively. In connection with the Omni Acquisition, the Company entered into a Tax Receivable Agreement with certain Omni Holders. As of December 31, 2024, the Company recognized a Tax Receivable Agreement liability of $ 13,295 , which equals the amount of Tax Receivable Agreement liability included in the Omni Purchase Price Allocation. The Company generated additional tax benefits subject to the Tax Receivable Agreement of $ 74,217 during 2024. The Company recorded a valuation allowance against any deferred tax assets associated with those tax benefits. Consequently, the Company concluded additional Tax Receivable Agreement payments related to current year tax benefits would not be probable based on estimates of future taxable income over the term of the Tax Receivable Agreement. 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. 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. The Organization for Economic Co-operation and Development (“OECD”), continues to put forth various initiatives, including Pillar Two rules which include the introduction of a global minimum tax at a rate of 15%. European Union member states agreed to implement the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for F-35 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) different aspects of the directive and most have already enacted legislation. A number of other countries are also implementing similar legislation. As of December 31, 2024, based on the countries in which we do business that have enacted legislation effective January 1, 2024, the impact of these rules to our financial statements was not material. This may change as other countries enact similar legislation and further guidance is released. We continue to closely monitor regulatory developments to assess potential impacts. In general, it is the practice and intention of the Company to reinvest the earnings of its non-U.S. subsidiaries in those operations. As of December 31, 2024, the Company has not recorded a provision for U.S. or additional foreign withholding taxes on investments in foreign subsidiaries that are indefinitely reinvested. Generally, such amounts become subject to U.S. taxation upon the remittance of dividends and under certain other circumstances. 8. Leases The Company leases certain land, buildings, equipment and office equipment under finance and operating leases. Equipment includes tractors, straight trucks, forklifts and trailers. Equipment under a finance lease is amortized over the shorter of the lease term or its estimated useful life. The Company subleases certain facilities to independent third parties. Since the Company is not relieved of its obligation under these leases, a right-of-use lease asset and corresponding operating lease liability is recorded. Sublease rental income was $ 5,457 , $ 2,991 and $ 2,762 in 2024, 2023 and 2022, respectively. The Company does not recognize a right-of-use asset or lease liability with respect to operating leases with an initial lease term of 12 months or less, and recognizes expense on such leases on a straight-line basis over the lease term. The Company does not account for lease components separately from nonlease components. The Company has certain leases that include one or more options to renew, with renewal periods ranging from one to 25 years. The exercise of the lease renewal options is at the discretion of the Company and is included in the determination of the right-of-use asset and operating lease liability when the option is reasonably certain of being exercised. The depreciable life of right-of-use assets and leasehold improvements is limited by the expected lease term. The Company has certain lease agreements for equipment that include variable rental payments based on estimated mileage. The variable rental payments are adjusted for periodically based on actual mileage. In addition, the Company has certain lease agreements that include variable rental payments that are adjusted periodically for inflation based on the index rate as defined by the applicable government authority. The Company ’ s leases generally do not provide an implicit rate, and therefore, the Company applies its incremental borrowing rate using information available at lease commencement or modification to determine the present value of lease payments. The incremental borrowing rate is an estimate based on the interest rate the Company would pay to borrow an amount equal to the lease payments on a collateralized basis and over a similar term, within a similar economic environment. The Company’s lease agreements do not contain any residual value guarantees or restrictive covenants. The Company has contracts with Leased Capacity Providers. Since the contracts explicitly identify the tractors operated by the Leased Capacity Providers, the Company determined the contracts contain an embedded lease. The compensation of Leased Capacity Providers, as specified in the contract, is variable based upon a rate per shipm ent and a rate per mile. The variable amounts are excluded from the calculation of the right-of-use lease asset and corresponding operating lease liability and are disclosed as variable lease costs. Variable lease costs related to the embedded leases were $ 434,689 , $ 409,080 and $ 440,756 , for the years ended December 31, 2024, 2023, and 2022, respectively, and were recorded in “Purchased transportation” in the Consolidated Statements of Comprehensive Income. F-36 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Total lease assets and liabilities as of December 31, 2024 and 2023 were as follows: Lease Assets Classification December 31, 2024 December 31, 2023 Operating lease right-of-use assets Operating lease right-of-use assets $ 410,084 $ 111,552 Finance lease assets Property and equipment, net 1 44,363 38,015 Total leased assets $ 454,447 $ 149,567 Lease Liabilities Classification December 31, 2024 December 31, 2023 Current: Operating Current portion of operating lease liabilities $ 96,440 $ 44,344 Finance Current portion of debt and finance lease obligations 16,930 12,645 Noncurrent: Operating Operating lease liabilities, less current portion 325,640 71,598 Finance Finance lease obligations, less current portion 30,858 26,736 Total leased liabilities $ 469,868 $ 155,323 1 Finance lease assets are recorded net of accumulated depreciation of $ 30,805 a nd $ 22,051 as of December 31, 2024 and 2023, respectively. Total lease cost for 2024 and 2023 was as follows: Year Ended Classification December 31, 2024 December 31, 2023 Operating lease cost Operating leases $ 122,854 $ 54,604 Short-term lease cost Operating leases 14,623 13,672 Variable lease cost Purchased transportation, operating leases and other operating expenses 434,689 428,385 Sublease income Operating revenue ( 5,457 ) ( 2,991 ) Finance lease cost: Amortization of leased assets Depreciation and amortization 20,194 11,102 Interest on leased liabilities Interest expense, net 3,383 1,395 Total lease cost $ 590,286 $ 506,167 F-37 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Future minimum lease payments under noncancelable operating and finance leases with remaining terms greater than one year as of December 31, 2024 were as follows: Operating Leases Finance Leases 2025 120,844 19,414 2026 102,130 15,772 2027 78,133 11,305 2028 64,976 4,509 2029 53,885 758 Thereafter 81,821 184 Total minimum lease payments 501,789 51,942 Less: imputed interest ( 79,709 ) ( 4,154 ) Present value of future minimum lease payments 422,080 47,788 Less: current portion of lease obligations ( 96,440 ) ( 16,930 ) Long-term lease obligations $ 325,640 $ 30,858 The following table summarizes the weighted-average remaining lease term and weighted average discount rate: December 31, 2024 December 31, 2023 Weighted average remaining lease term (in years): Operating leases 5.1 3.0 Finance leases 3.0 3.6 Weighted average discount rate: Operating leases 6.4 % 3.4 % Finance leases 5.8 % 5.5 % The following table summarizes the supplemental cash flow information for 2024 and 2023: Year Ended December 31, 2024 December 31, 2023 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 114,574 $ 54,462 Operating cash flows from finance leases 3,384 1,395 Financing cash flows from finance leases 18,323 11,074 Right-of-use assets obtained in exchange for finance lease liabilities $ — $ — Right-of-use assets obtained in exchange for operating lease liabilities 153,009 29,884 Leased assets obtained in exchange for finance lease obligations 12,404 25,217 9. Commitments and Contingencies Commitments As of December 31, 2024, the Company had unconditional purchase obligations of $ 3,260 to pu rchase forklifts and other equipment during 2025. F-38 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Contingencies On September 26, 2023, Rodney Bell, Michael A. Roberts and Theresa Woods, (collectively, the "Plaintiffs"), three of our shareholders, filed a complaint against the Company and certain of its directors and officers in the Third District Chancery Court sitting in Greeneville, Tennessee (the "Shareholder Complaint"). The Shareholder Complaint alleges, among other things, that the Company’s shareholders had 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, 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. Upon receiving leave of the court, on May 15, 2024, the Plaintiffs filed the amended complaint (“Second Amended Complaint”). Like the earlier complaints, the Second Amended Complaint challenges the directors’ determination not to subject the Omni Acquisition to a shareholder vote and alleges that, in so doing, the Company and certain of its current and former directors violated Tennessee corporate law. The Second Amended Complaint further alleges that certain of the Company’s current and former directors breached their fiduciary duties to shareholders by depriving them of the right to vote on the Omni Acquisition. Thereafter, on June 14, 2024, defendants removed the case to the United States District Court for the Eastern District of Tennessee, Greeneville Division. Plaintiffs have filed a motion to remand the case to the Third District Chancer Court, and the federal court’s determination on plaintiffs’ motion remains pending. Defendants contest the merits of the Second Amended Complaint and are in the process of defending the matter. The Company is party to various legal claims and actions incidental to its business, including claims related to vehicle liability, workers’ compensation, property damage and employee medical benefits. The Company accrues for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated. Based on the knowledge of the facts, the Company believes the resolution of such incidental claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our consolidated financial statements. Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and related events unfold. Insurance coverage provides the Company with primary and excess coverage for claims related to vehicle liability, workers’ compensation, property damage and employee medical benefits. For vehicle liability, the Company retains a portion of the risk. Below is a summary of the Company’s risk retention on vehicle liability insurance coverage maintained by the Company up to $ 10,000 (in thousands): Company Risk Retention Frequency Layer Policy Term Expedited Freight LTL business $ 5,000 Occurrence/Accident¹ $ 0 to $ 5,000 10/1/2024 to 10/1/2025 Truckload business $ 5,000 Occurrence/Accident¹ $ 0 to $ 5,000 10/1/2024 to 10/1/2025 LTL, Truckload and Intermodal businesses $ 5,000 Policy Term Aggregate² $ 5,000 to $ 10,000 10/1/2024 to 10/1/2025 Intermodal $ 1,000 Occurrence/Accident¹ $ 0 to $ 1,000 10/1/2024 to 10/1/2025 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. ² During the Policy Term, the Company is responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Company Risk Retention before insurance will contribute. Also, from time to time, when brokering freight, the Company may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and the Company maintains third-party liability insurance coverage with a $ 100 deductible per occurrence for its brokered services. Additionally, the Company maintains workers’ compensation insurance with a self-insured retention of $ 500 per occurrence. F-39 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Insurance coverage in excess of the self-insured retention limit is an important part of the Company’s risk management process. The Company accrues for the costs of the uninsured portion of pending claims within the self-insured retention based on the nature and severity of individual claims and historical claims development trends. The Company believes the recorded reserves are sufficient for all incurred claims up to the self-insured retention limits, including an estimate for claims incurred but not reported. However, estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult, and the Company may fail to establish sufficient insurance reserves and adequately estimate for future insurance claims. Since the ultimate resolution of outstanding claims as well as claims incurred but not reported is uncertain, it is possible that the reserves recorded for these losses could change materially in the near term. 10. Employee Benefit Plan The Company sponsors a qualified defined contribution plan covering substantially all employees. Under the defined contribution plan, the Company contributes 25.0 % of the employee’s contribution up to a maximum of 6.0 % of annual compensation, subject to certain limits. The Company contributed $ 4,524 , $ 2,001 and $ 1,952 for the years ended December 31, 2024, 2023 and 2022, respectively. 11. Fair Value of Financial Instruments 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 December 31, 2024 and December 31, 2023 are summarized below: As of December 31, 2024 Level 1 Level 2 Level 3 Total Liabilities under tax receivable agreement $ — $ — $ 13,295 $ 13,295 As of December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities under tax receivable agreement $ — $ — $ — $ — Cash, cash equivalents and restricted cash equivalents, accounts receivable, other receivables, and accounts payable are valued at their carrying amounts in the Company’s Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments. As of December 31, 2024, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 46,606 , compared to its carrying value of $ 47,788 . As of December 31, 2023, the estimated fair value of the Company’s finance l ease 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 . F-40 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 12. Segment Reporting Our chief operating decision-maker, who is our Chief Executive Officer, analyzes the results of our business through the following reportable segments: Expedited Freight, Omni, and Intermodal. Our chief operating decision-maker evaluates the operating results and performance of our segments through segment profit. These financial metrics are used to view operating trends, perform analytical comparisons and benchmark performance between periods and to monitor budget-to-actual variances on a monthly basis. To manage operations and make decisions regarding resource allocations, our chief operating decision-maker is regularly provided and reviews expense information necessary to make decisions to meet customer demand for our services. The accounting policies applied to each segment are the same as those in Note 1, Operations and Summary of Significant Accounting Policies , except for certain self-insurance loss reserves related to vehicle liability and workers’ compensation. Each segment is allocated an insurance premium and deductible that corresponds to the self-insured retention limit for that particular segment. Any self-insurance loss exposure beyond the deductible allocated to each segment is recorded in Corporate. No single customer accounted for more than 10% of the Company’s consolidated revenues from continuing operations for the years ended December 31, 2024, 2023 and 2022. Year Ended December 31, 2024 Expedited Freight Omni Logistics Intermodal Corporate Consolidated External revenues $ 1,044,938 $ 1,196,841 $ 232,319 $ 164 $ 2,474,262 Intersegment revenues 70,225 — 513 — 70,738 1,115,163 1,196,841 232,832 164 2,545,000 Reconciliation of revenue Elimination of intersegmental revenues ( 70,738 ) Total consolidated revenues $ 2,474,262 Less: Purchase transportation 546,458 701,035 73,814 — Salaries, wages and employee benefits 242,411 215,518 58,714 19,764 Operating leases 63,398 96,500 21,599 699 Depreciation and amortization 41,858 83,542 18,440 139 Insurance and claims 43,716 12,297 10,251 ( 1,582 ) Fuel expense 9,733 3,149 8,578 — Other operating expenses 99,638 101,206 22,511 86,153 Impairment of goodwill — 1,028,397 — — Segment profit (loss) 67,951 ( 1,044,803 ) 18,925 ( 105,009 ) ( 1,062,936 ) Reconciliation of segment profit or loss Interest expense, net 189,215 Foreign exchange loss (gain) ( 1,093 ) Other operations ( 1,226 ) Loss before income taxes $ ( 1,249,832 ) F-41 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Year Ended December 31, 2023 Expedited Freight Intermodal Corporate Consolidated External revenues $ 1,096,810 $ 273,925 $ — $ 1,370,735 Intersegment revenues 148 118 — 266 1,096,958 274,043 — 1,371,001 Reconciliation of revenue Elimination of intersegmental revenues ( 266 ) Total consolidated revenues $ 1,370,735 Less: Purchase transportation 511,254 74,941 — Salaries, wages and employee benefits 226,528 66,925 ( 5,621 ) Operating leases 61,728 25,685 — Depreciation and amortization 37,414 19,991 — Insurance and claims 38,294 10,320 1,519 Fuel expense 10,884 11,121 — Other operating expenses 94,545 39,733 57,530 Segment profit (loss) 116,311 25,327 ( 53,428 ) 88,210 Reconciliation of segment profit or loss Interest expense, net ( 31,571 ) Foreign exchange loss (gain) — Other operations — Income before income taxes $ 56,639 F-42 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) Year Ended December 31, 2022 Expedited Freight Intermodal Corporate Consolidated External revenues $ 1,259,936 $ 419,698 $ — $ 1,679,634 Intersegment revenues 185 20 — 205 1,260,121 419,718 — 1,679,839 Reconciliation of revenue Elimination of intersegmental revenues ( 205 ) Total consolidated revenues 1,679,839 $ 1,679,634 Less: Purchase transportation 624,994 105,656 34 Salaries, wages and employee benefits 233,876 73,406 4,523 Operating leases 53,339 31,950 ( 1 ) Depreciation and amortization 27,058 15,393 ( 101 ) Insurance and claims 33,924 9,087 ( 4,468 ) Fuel expense 10,962 15,993 — Other operating expenses 83,385 111,359 ( 1,853 ) Segment profit (loss) 192,583 56,874 ( 1,866 ) 247,591 Reconciliation of segment profit or loss Interest expense, net ( 5,138 ) Foreign exchange loss (gain) — Other operations — Income before income taxes $ 242,453 Revenue from the individual services within the Expedited Freight segment for the years ended December 31, 2024, 2023 and 2022 were as follows: Year Ended December 31, 2024 December 31, 2023 December 31, 2022 Expedited Freight revenues: Network $ 854,138 $ 845,949 $ 947,817 Truckload 170,455 159,513 221,979 Other 90,570 91,496 90,325 Total $ 1,115,163 $ 1,096,958 $ 1,260,121 Assets from each segment for the years ended December 31, 2024, 2023 were as follows: December 31, 2024 December 31, 2023 Expedited Freight $ 691,369 $ 661,270 Omni Logistics 1,726,088 — Intermodal 257,323 270,421 Corporate 127,861 2,047,901 Eliminations — ( 59 ) Consolidated total assets $ 2,802,641 $ 2,979,533 F-43 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 13. Quarterly Results of Operations (Unaudited) The following is a summary of the quarterly results of operations for the years ended December 31, 2024 and 2023: 2024 March 31 June 30 September 30 December 31 Operating revenue $ 541,813 $ 643,666 $ 655,937 $ 632,846 Net income (loss) from continuing operations $ ( 88,794 ) $ ( 966,471 ) $ ( 34,198 ) $ ( 35,378 ) Income from discontinued operations, net of tax — ( 4,876 ) ( 1,137 ) ( 374 ) Net (loss) income attributable to noncontrolling interest $ ( 27,082 ) $ ( 325,914 ) $ 38,073 $ 664 Net (loss) income attributable to Forward Air $ ( 61,712 ) $ ( 645,433 ) $ ( 73,408 ) $ ( 36,416 ) Basic net income (loss) per share: Continuing operations $ ( 2.81 ) $ ( 23.29 ) $ ( 2.62 ) $ ( 1.23 ) Discontinued operations — ( 0.18 ) ( 0.04 ) ( 0.01 ) Net income per share 1 $ ( 2.81 ) $ ( 23.47 ) $ ( 2.66 ) $ ( 1.24 ) Diluted net income (loss) per share: Continuing operations $ ( 2.81 ) $ ( 23.29 ) $ ( 2.62 ) $ ( 1.23 ) Discontinued operations — ( 0.18 ) ( 0.04 ) ( 0.01 ) Net income per share 1 $ ( 2.81 ) $ ( 23.47 ) $ ( 2.66 ) $ ( 1.24 ) The Company’s December 31, 2024 interim period includes an immaterial correction of an error that increases net loss from continuing operations by $ 30,300 , primarily as a result of recording a decrease to recorded goodwill impairment of $ 44,900 and a decrease in the recorded tax benefit of $ 65,500 . These amounts relate to correcting adjustments made to the acquired Omni deferred tax liabilities as of January 25, 2024 and the related impact on the June 30th goodwill impairment charge. Additionally, the net loss from continuing operations includes a correction of an error related to increased amortization expense for certain software service agreements. The Company has evaluated the effects of the corrections described above, in accordance with guidance in ASC 250, "Accounting Change and Error Correction". The Company concluded such corrections to be immaterial to previously issued interim financial statements. F-44 Forward Air Corporation Notes to Consolidated Financial Statements (Continued) December 31, 2024 (In thousands, except per share data) 2023 March 31 June 30 September 30 December 31 Operating revenue $ 357,709 $ 333,622 $ 340,976 $ 338,428 Net income from continuing operations $ 33,904 $ 17,127 $ 6,493 $ ( 14,721 ) Income from discontinued operations, net of tax 2,464 2,824 2,795 116,465 Net income and comprehensive income $ 36,368 $ 19,951 $ 9,288 $ 101,744 Basic net income per share: Continuing operations $ 1.28 $ 0.66 $ 0.25 $ ( 0.58 ) Discontinued operations 0.09 0.11 0.11 4.51 Net income per share1 $ 1.37 $ 0.76 $ 0.36 $ 3.93 Diluted net income per share: Continuing operations $ 1.27 $ 0.65 $ 0.25 $ ( 0.58 ) Discontinued operations 0.09 0.11 0.11 4.51 Net income per share 1 $ 1.37 $ 0.76 $ 0.36 $ 3.93 1 Rounding may impact summation of amounts. F-45 Forward Air Corporation Schedule II — Valuation and Qualifying Accounts (In thousands) Additions Balance at Beginning of Period Charged to Costs and Expenses Charged to Other Operating Revenue Deductions Balance at End of Period Year ended December 31, 2024 Allowance for doubtful accounts $ 1,124 $ 4,099 $ — $ 2,608 2 $ 2,615 Allowance for revenue adjustments 1 1,082 — 3,635 4,063 3 654 Deferred tax valuation allowance 395 72,113 — — 72,508 2,601 76,212 3,635 6,671 75,777 Year ended December 31, 2023 Allowance for doubtful accounts $ 1,499 $ 21 $ — $ 396 2 $ 1,124 Allowance for revenue adjustments 1 1,630 — 5,091 5,639 3 1,082 Deferred tax valuation allowance 4,648 ( 4,253 ) — — 395 7,777 ( 4,232 ) 5,091 6,035 2,601 Year ended December 31, 2022 Allowance for doubtful accounts $ 1,707 $ ( 46 ) $ — $ 162 2 $ 1,499 Allowance for revenue adjustments 1 1,526 — 6,426 6,322 3 1,630 Deferred tax valuation allowance 4,625 23 — — 4,648 7,858 ( 23 ) 6,426 6,484 7,777 1 Represents an allowance for revenue adjustments resulting from future billing rate changes. 2 Represents uncollectible accounts written off, net of recoveries. 3 Represents adjustments to billed accounts receivable. 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