Item 2. Management’s Discussion and Analysis
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Overview
We are a leading asset-light freight provider of transportation services, including LTL, truckload and intermodal drayage services across the United States and in Canada and Mexico. We offer premium services that typically require precision execution, such as expedited transit, delivery during tight time windows and special handling. We utilize an asset-light strategy to minimize our investments in equipment and facilities and to reduce our capital expenditures. Globally, we provide customized asset-light, high-touch logistics and supply chain management solutions with deep customer relationships in high-growth end markets.
Our services are classified into three reportable segments: Expedited Freight, Omni Logistics and Intermodal.
Our Expedited Freight segment provides expedited regional, inter-regional and national LTL services. Expedited Freight also offers customers local pick-up and delivery and other services including truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.
Our Omni Logistics segment provides a full suite of global logistics services. Services include air and ocean freight consolidation and forwarding, customs brokerage, warehousing and distribution, time-definite transportation services and other supply chain solutions.
Our 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 CFS warehouse and handling services, and in select locations, linehaul and LTL services.
Our operations, particularly our network of hubs and terminals, represent substantial fixed costs. Consequently, our ability to increase our earnings depends in significant part on our ability to increase the amount of freight and the revenue per pound or shipment for the freight shipped or moved through our network. Additionally, our earnings depend on the growth of other services, such as LTL pickup and delivery, which will allow us to maintain revenue growth in a challenging freight environment. We continue to focus on creating synergies across our services, particularly with services offered in our Expedited Freight reportable segment. Synergistic opportunities include the ability to share resources, in particular our fleet resources.
We monitor and analyze a number of key operating statistics in order to manage our business and evaluate our financial and operating performance. These key operating statistics are defined below and are referred to throughout the discussion of the financial results of our Expedited Freight, Omni Logistics and Intermodal reportable segments. Our key operating statistics should not be interpreted as better measurements of our results than income from operations as determined under GAAP.
As we continue to integrate the Omni and Forward businesses, we are also developing how we organize and manage our product offerings. While we continue to manage the business by our disclosed segments below, we have information available to estimate revenue for key product groups for the period ended December 31, 2024. Estimated revenue for ground transportation, air & ocean forwarding, intermodal drayage, and warehousing/value-added service approximated 70%, 12%, 9%
and 9%, respectively during 2024.
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Within our Expedited Freight reportable segment, our primary revenue focus is to optimize density, which is to obtain appropriate pricing of our services that allows for profitable shipments and tonnage growth within our existing LTL network. Increases in density allow us to maximize our asset utilization and labor productivity, which we measure over many different functional areas of our operations including linehaul load factor and door pounds handled per hour. In addition to our focus on density and operating efficiencies, it is critical for us to obtain an appropriate yield, which is measured as revenue per hundredweight, on the shipments we handle to offset our cost inflation and support our ongoing investments in capacity and technology. Revenue per hundredweight is also a commonly-used indicator for general pricing trends in the LTL industry and can be influenced by many other factors, such as changes in fuel surcharges, weight per shipment and length of haul. Therefore, changes in revenue per hundredweight may not necessarily indicate actual changes in underlying base rates. We regularly monitor the components of our pricing, including base freight rates, accessorial charges and fuel surcharges. The fuel surcharge is generally designed to offset fluctuations in the cost of the petroleum-based products used in our operations and is indexed to diesel fuel prices published by the U.S. Department of Energy. The impact of fuel on our results of operations depends on the relationship between the applicable surcharge, the fuel efficiency of our Company drivers, and the load factor achieved by our operation. Fluctuations in fuel prices in either direction could have a positive or negative impact on our margins, particularly in our LTL business where the weight of a shipment subject to the fuel surcharge on a given trailer can vary materially. We believe our yield management process focused on account level profitability, and ongoing improvements in operating efficiencies, are both key components of our ability to grow profitably.
The key operating statistics necessary to understand the operating results of our Expedited Fright reportable segment are described below in more detail:
Tonnage - Total weight of shipments in pounds. The level of freight tonnage is affected by economic cycles and conditions, customers’ business cycles, changes in customers’ business practices and capacity in the truckload market.
Weight Per Shipment - Total pounds divided by the number of shipments. Fluctuations in weight per shipment can indicate changes in the mix of freight we receive from our customers, as well as changes in the number of units included in a shipment. Generally, increases in weight per shipment indicate higher demand and overall increased economic activity. Changes in weight per shipment can also be influenced by shifts between LTL and other modes of transportation, such as truckload, in response to capacity, service and pricing issues. Fluctuations in weight per shipment generally have an inverse effect on our revenue per hundredweight, as a decrease in weight per shipment will typically cause an increase in revenue per hundredweight.
Revenue Per Hundredweight - Network revenue per every 100 pounds of shipment weight. Our LTL transportation services are generally priced based on weight, commodity, and distance. Our pricing policies are reflective of the services we provide, and can be influenced by competitive market conditions. Changes in the freight profile factors such as average shipment size, average length of haul, freight density, and customer and geographic mix can impact the revenue per hundredweight. Fuel surcharges and intercompany revenue between Network and Truckload are included in this measurement.
Revenue Per Shipment - Network revenue divided by the number of shipments. Fuel surcharges and intercompany revenue between Network and Truckload are included in this measurement.
Average Length of Haul - Total miles between origin and destination service centers for all shipments, with miles based on the size of shipments. Length of haul is used to analyze our tonnage and pricing trends for shipments with similar characteristics. Changes in length of haul generally have a direct effect on our revenue per hundredweight, as an increase in length of haul will typically cause an increase in revenue per hundredweight.
Within our Intermodal reportable segment, our primary revenue focus is to increase the number of shipments. The key operating statistic necessary to understand the operating results of our Intermodal reportable segment is described below in more detail:
Drayage Revenue Per Shipment - Intermodal revenue divided by the number of drayage shipments. Revenue derived from container freight station warehouse and handling, and linehaul and LTL services is excluded from this measurement. Fuel surcharges and accessorial charges are included in this measurement.
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Trends and Developments
Economy
Our business is highly susceptible to changes in economic conditions. Our products and services are directly tied to the production and sale of goods and, more generally, to the global economy. Participants in the transportation industry have historically experienced cyclical fluctuations in financial results due to economic recessions, downturns in the business cycles of customers, volatility in the prices charged by third-party carriers, interest rate fluctuations and other U.S. and global macroeconomic developments. During economic downturns, reductions in overall demand for transportation services will likely reduce demand for our services and exert downward pressure on our rates and margins. In periods of strong economic growth, overall demand may exceed the available supply of transportation resources. While this may present an opportunity to increase economies of scale in our network and enhanced pricing and margins, these benefits may be lessened by increased network congestion and operating inefficiencies.
Like other providers of freight transportation services, our business has been impacted by the macroeconomic conditions of the past year. Industry freight volumes, as measured by the Cass Freight Index, decreased in first quarter of 2025 compared to the comparable period in 2024. Recent global disruptions, including changes to tariff rates, as described below, have had an impact on freight demand, which has led to an overall continued decrease in total number of shipments. Such disruptions are expected to continue with a resolution timeline remaining unclear. Intermodal volumes, heavily influenced by United States imports, have increased due to a number of factors that impact import levels. For Truckload, capacity levels relative to demand has created a sustained market of depressed spot market truckload rates.
Amid broader volatility in the global economy, the U.S. government has recently imposed significant widespread baseline and country-specific tariffs on imported goods from China, Canada, and other countries. While the implementation of certain country-specific tariffs with most countries has been delayed as negotiations progress, the tariffs imposed on China remain, and China has imposed reciprocal tariffs in response. While the ultimate impact of tariff policy changes remains unclear, the Company is actively monitoring these developments and remains committed to taking appropriate measures to maintain its competitiveness and adapt to changing economic conditions. However, global equity market values, including the Company’s common stock, have been under pressure subsequent to the end of our first quarter of 2025 by these changing economic conditions, but not at a level where the Company considers indicators of impairment to exist at any of our reporting units. Such conditions could in the future cause continued decreases in the market value of the Company’s common stock and create risk and uncertainties in the carrying value of our reporting units, which may lead to goodwill being impaired when we perform our annual impairment test during the second quarter of 2025.
Strategic Review
In January 2025, the Board announced that it had initiated a comprehensive review of strategic alternatives to maximize shareholder value. The Board will consider a range of options, including a potential sale, merger or other strategic or financial transaction relative to the long-term value potential of the Company on a standalone basis. The Board has retained Goldman Sachs & Co. LLC to serve as its financial advisor. The Board has not set a timetable for the conclusion of this review, nor has it made any decisions related to any further actions or potential strategic alternatives at this time. There can be no assurance that any transaction or other strategic outcome will be approved by the Board or otherwise consummated. The Company does not intend to disclose developments relating to this process until it determines that further disclosure is appropriate or necessary.
Factors Affecting Comparability
See Note 2, Acquisitions, to our Condensed Consolidated Financial Statements for more information about our acquisitions.
Omni Logistics revenues and segment loss from January 25, 2024 through March 31, 2024 are included in our condensed consolidated statements of comprehensive loss for the three months ended March 31, 2024. The changes in our results of operations for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024 are primarily driven by fewer days of ownership of Omni in the prior year period as compared to the current year period.
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Results from Operations
The following table sets forth our consolidated financial data for the three months ended March 31, 2025 and 2024 (unaudited and in thousands):
Three Months Ended
March 31, 2025 March 31, 2024 Change Percent Change
Operating revenues:
Expedited Freight $ 249,381 $ 273,295 $ (23,914) (8.8) %
Omni Logistics 323,470 224,838 98,632 43.9
Intermodal 62,492 56,292 6,200 11.0
Corporate 142 — 142 —
Eliminations and other operations (22,204) (12,612) (9,592) (76.1)
Operating revenues 613,281 541,813 71,468 13.2
Operating expenses:
Purchased transportation 304,262 277,015 27,247 9.8
Salaries, wages and employee benefits 141,915 128,867 13,048 10.1
Operating leases 48,792 38,803 9,989 25.7
Depreciation and amortization 37,360 31,786 5,574 17.5
Insurance and claims 15,007 12,881 2,126 16.5
Fuel expense 5,649 5,246 403 7.7
Other operating expenses 55,533 112,947 (57,414) (50.8)
Total operating expenses 608,518 607,545 973 0.2
Income (loss) from operations:
Expedited Freight 15,634 19,498 (3,864) (19.8)
Omni Logistics 3,375 (28,585) 31,960 111.8
Intermodal 5,542 3,586 1,956 54.5
Other Operations (19,788) (60,231) 40,443 67.1
Income (loss) from operations 4,763 (65,732) 70,495 107.2
Other income and expenses:
Interest expense, net (45,547) (40,753) 4,794 11.8
Foreign exchange loss (922) (668) 254 38.0
Other income, net 104 9 95 1,055.6
Total other expense (46,365) (41,412) 4,953 12.0
Net loss before income taxes (41,602) (107,144) 65,542 61.2
Income tax (benefit) expense 19,589 (18,350) 37,939 206.8
Net loss (61,191) (88,794) 27,603 31.1
Net loss attributable to non-controlling interest (10,554) (27,082) 16,528 61.0
Net loss attributable to Forward Air $ (50,637) $ (61,712) $ 11,075 17.9 %
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Operating Revenues
Operating revenues increased $71,468, or 13.2%, to $613,281 for the three months ended March 31, 2025 compared to $541,813 for the three months ended March 31, 2024. The increase was primarily due to an increase of $98,632 from the Omni Logistics segment due to the extra twenty-four days included in 2025 as compared to 2024. The results for our reportable segments are discussed in detail in the following sections.
Operating Expenses
Operating expenses increased $973, or 0.2%, to $608,518 for the three months ended March 31, 2025 compared to $607,545 for the three months ended March 31, 2024. The increase was primarily due to an increase of $66,672 from the Omni Logistics segment due to the extra twenty-four days included in 2025 as compared to 2024, mostly offset by decreases in acquisitions and integration transaction costs associated with the Omni Acquisition as well as decreases in our Expedited Freight segment.
Income (Loss) from Operations and Segment Operations
Income from operations increased $70,495, or 107.2%, to $4,763 of income for the three months ended March 31, 2025 compared to $65,732 of loss for the three months ended March 31, 2024. The increase was primarily due to increased operating revenues with minimal increase associated with operating expenses as noted above.
Interest Expense, net
Interest expense, net was $45,547 for the three months ended March 31, 2025 compared to $40,753 for the three months ended March 31, 2024 due to the Omni acquisition on January 25, 2024.
Income Taxes
The effective tax rate for the three months ended March 31, 2025 was (47.1)% compared to 17.1% for the three months ended March 31, 2024. The effective tax rate for the three months ended March 31, 2025 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of interest expense disallowances under IRC Section 162(j) for which a full valuation allowance is recorded on the deferred tax asset, noncontrolling interest, and state local income taxes. The effective tax rate for the three months ended March 31, 2024 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of noncontrolling interest, non-deductible executive compensation, excess tax benefits realized on share-based awards, partially offset by state income taxes, net of the federal benefit, and foreign taxes.
Net Loss
As a result of the foregoing factors, net loss decreased $27,603, or 31.1%, to $61,191 of loss for the three months ended March 31, 2025 compared to $88,794 of loss for the three months ended March 31, 2024.
Net Loss Attributable to Noncontrolling Interest
Noncontrolling interest in the three months ended March 31, 2025 and 2024 has been allocated based on the requirements of the umbrella partnership C corporation Clue Opco LLC where only foreign taxes are attributable to the noncontrolling interest when distributing the net losses among the partnership interests. The decrease in net loss attributable to noncontrolling interest for the three months ended March 31, 2025 compared to three months ended March 31, 2024 is being driven by the decrease in net loss and the decreasing number of noncontrolling units outstanding for the respective periods. Activity during the three months ended March 31, 2024 prior to the Omni transaction did not impact net loss attributable to noncontrolling interest.
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Expedited Freight - Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024
The following table sets forth the financial data of our Expedited Freight segment for the three months ended March 31, 2025 and 2024 (unaudited and in thousands):
Three Months Ended
March 31, 2025 Percent of Revenue March 31, 2024 Percent of Revenue Change Percent Change
Operating revenues:
Network 1
$ 190,162 76.3 % $ 214,493 78.5 % $ (24,331) (11.3) %
Truckload 39,255 15.7 37,055 13.6 2,200 5.9
Other 19,964 8.0 21,747 7.9 (1,783) (8.2)
Total operating revenues 249,381 100.0 273,295 100.0 (23,914) (8.8)
Operating expenses:
Purchased transportation 120,680 48.4 127,760 46.7 (7,080) (5.5)
Salaries, wages and employee benefits 52,577 21.1 62,553 22.9 (9,976) (15.9)
Operating leases 15,433 6.2 14,982 5.5 451 3.0
Depreciation and amortization 10,379 4.2 10,290 3.8 89 0.9
Insurance and claims 10,308 4.1 10,652 3.9 (344) (3.2)
Fuel expense 2,471 1.0 2,581 0.9 (110) (4.3)
Other operating expenses 21,899 8.7 24,979 9.2 (3,080) (12.3)
Total operating expenses 233,747 93.7 253,797 92.9 (20,050) (7.9)
Income from operations $ 15,634 6.3 % $ 19,498 7.1 % $ (3,864) (19.8) %
1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial and Truckload revenue.
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Expedited Freight Operating Statistics
Three Months Ended
March 31, 2025 March 31, 2024 Percent Change
Business days 63 64 (1.6) %
Tonnage 1,2
Total pounds 610,635 684,995 (10.9)
Pounds per day 9,693 10,703 (9.4)
Shipments 1,2
Total shipments 727 828 (12.2)
Shipments per day 11.5 12.9 (10.9)
Weight per shipment 840 827 1.6
Revenue per hundredweight 3
$ 31.19 $ 31.32 (0.4)
Revenue per hundredweight, ex fuel 3
$ 24.76 $ 24.15 2.5
Revenue per shipment 3
$ 262.04 $ 259.14 1.1
Revenue per shipment, ex fuel 3
$ 208.03 $ 199.78 4.1
1 In thousands
2 Excludes accessorial and Truckload products
3 Includes intercompany revenue between the Network and Truckload revenue streams
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Operating Revenues
Operating revenues decreased $23,914, or 8.8%, to $249,381 for the three months ended March 31, 2025 from $273,295 for the three months ended March 31, 2024. Network revenue decreased due to 10.9% lower tonnage and a 12.2% decrease in total shipments as compared to same period in 2024. These decreases were primarily due to a decreased economic activity in the industry for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024. Revenue per hundredweight excluding fuel improved by 2.5%, partially offsetting the impacts of decreased tonnage.
Purchased Transportation
Purchased transportation decreased $7,080, or 5.5%, to $120,680 for the three months ended March 31, 2025 from $127,760 for the three months ended March 31, 2024. Purchased transportation was 48.4% of Expedited Freight operating revenues for the three months ended March 31, 2025 compared to 46.7% for the same period in 2024. Expedited Freight purchased transportation includes Leased Capacity Providers, third-party motor carriers, and transportation intermediaries, while Company-employed drivers are included in salaries, wages and employee benefits. The decrease in purchased transportation was primarily due to decreased shipments for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Salaries, Wages and Employee Benefits
Salaries, wages and employee benefits decreased $9,976, or 15.9%, to $52,577 for the three months ended March 31, 2025 from $62,553 for the three months ended March 31, 2024. Salaries, wages and employee benefits were 21.1% of operating revenues for the three months ended March 31, 2025 compared to 22.9% for the same period in 2024. The decrease in salaries, wages and employee benefits expense was primarily due to a decrease in Company-employed drivers and dock workers in response to fewer shipments for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, as well as headcount reductions as a result of acquisition integration synergies.
Other Operating Expenses
Other operating expenses decreased $3,080, or 12.3%, to $21,899 for the three months ended March 31, 2025 from $24,979 for the three months ended March 31, 2024. Other operating expenses were 8.7% of operating revenues for the three months ended March 31, 2025 compared to 9.2% for the same period in 2024. Other operating expenses include contract labor, equipment maintenance, facility expenses, legal and professional fees, and other over-the-road costs. The decrease in other operating expenses was primarily due to acquisition integration synergies as well as reduction in shipments for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Income from Operations
Income from operations decreased $3,864, or 19.8%, to $15,634 for the three months ended March 31, 2025 compared to $19,498 for the three months ended March 31, 2024. Income from operations was 6.3% of operating revenues for the three months ended March 31, 2025 compared to 7.1% for the same period in 2024. The decrease in income from operations as a percentage of operating revenues was driven by lower freight volumes which were not fully offset by cost decreases for the three months ended March 31, 2025, as compared to three months ended March 31, 2024.
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Omni Logistics - Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024
The following table sets forth the financial data of our Omni Logistics for the three months ended March 31, 2025 and 2024 (unaudited and in thousands):
Three Months Ended
March 31, 2025 Percent of Revenue March 31, 2024 Percent of Revenue Change Percent Change
Operating revenue $ 323,470 100.0 % $ 224,838 100.0 % 98,632 43.9 %
Operating expenses:
Purchased transportation 185,734 57.4 144,424 64.2 41,310 28.6
Salaries, wages and employee benefits 56,783 17.6 48,775 21.7 8,008 16.4
Operating leases 27,090 8.4 19,127 8.5 7,963 41.6
Depreciation and amortization 22,230 6.9 16,869 7.5 5,361 31.8
Insurance and claims 2,615 0.8 2,053 0.9 562 27.4
Fuel expense 1,017 0.3 304 0.1 713 234.5
Other operating expenses 24,626 7.6 21,871 9.8 2,755 12.6
Total operating expenses 320,095 99.0 253,423 112.7 66,672 26.3
Income (loss) from operations 3,375 1.0 % (28,585) (12.7) % 31,960 111.8 %
Operating Revenues
Operating revenues increased $98,632, or 43.9%, to $323,470 for the three months ended March 31, 2025 from $224,838 for the three months ended March 31, 2024 mainly due to the increase in ownership days during the current year period, but revenues per day increased during 2025 due to increased demand for our services, specifically increases in contract logistics.
Purchased Transportation
Purchased transportation increased $41,310, or 28.6%, to $185,734 for the three months ended March 31, 2025 from $144,424 for the three months ended March 31, 2024. Purchased transportation was 57.4% of operating revenues for the three months ended March 31, 2025 compared to 64.2% for the same period in 2024. Purchased transportation primarily increased mainly due to the increase in ownership days during the current year period, but decreased as a percentage of revenue due to a shift in product mix, which shift in product mix consisted of an increase in contract logistics and value-added services that require lower purchase transportation levels as compared to ground, air and ocean services.
Salaries, Wages and Employee Benefits
Salaries, wages and employee benefits increased $8,008 or 16.4%, to $56,783 for the three months ended March 31, 2025 from $48,775 for the three months ended March 31, 2024. Salaries, wages and employee benefits were 17.6% of operating revenues for the three months ended March 31, 2025 compared to 21.7% for the same period in 2024. While salaries, wages and employee benefits increased mainly due to the increase in ownership days during the current year period, the rate of increase was lower than the revenue increases at Omni Logistics due to reduced headcount as a result of acquisition integration synergies.
Other Operating Expenses
Other operating expenses increased $2,755, or 12.6%, to $24,626 for the three months ended March 31, 2025 from $21,871 for the three months ended March 31, 2024. Other operating expenses were 7.6% of operating revenues for the three months ended March 31, 2025 compared to 9.8% for the same period in 2024. While other operating expenses increased mainly due to the increase in ownership days during the current year period, the rate of increase was lower than the revenue increases at Omni Logistics due to acquisition integration synergies.
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Income from Operations
Income from operations increased $31,960 or 111.8%, to $3,375 for the three months ended March 31, 2025 compared to $28,585 of loss for the three months ended March 31, 2024. The increase in income from operations was mainly due to the increase in ownership days during the current year period and operating expenses having a lower rate of increase relative to the increase in operating revenues due to acquisition integration synergies.
Intermodal - Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024
The following table sets forth the financial data of our Intermodal segment for the three months ended March 31, 2025 and 2024 (unaudited and in thousands):
Three Months Ended
March 31, 2025 Percent of Revenue March 31, 2024 Percent of Revenue Change Percent Change
Operating revenues $ 62,492 100.0 % $ 56,292 100.0 % $ 6,200 11.0 %
Operating expenses:
Purchased transportation 20,176 32.3 17,443 31.0 2,733 15.7
Salaries, wages and employee benefits 15,931 25.5 15,082 26.8 849 5.6
Operating leases 5,778 9.2 4,692 8.3 1,086 23.1
Depreciation and amortization 4,720 7.6 4,627 8.2 93 2.0
Insurance and claims 2,791 4.5 2,606 4.6 185 7.1
Fuel expense 2,155 3.4 2,361 4.2 (206) (8.7)
Other operating expenses 5,399 8.6 5,895 10.5 (496) (8.4)
Total operating expenses 56,950 91.1 52,706 93.6 4,244 8.1
Income from operations $ 5,542 8.9 % $ 3,586 6.4 % $ 1,956 54.5 %
Intermodal Operating Statistics
Three Months Ended
March 31, 2025 March 31, 2024 Percent Change
Drayage shipments 64,449 62,659 2.9 %
Drayage revenue per shipment $ 883 $ 822 7.4 %
Operating Revenues
Operating revenues increased $6,200, or 11.0%, to $62,492 for the three months ended March 31, 2025 from $56,292 for the three months ended March 31, 2024. The increase in operating revenues was primarily due to a 2.9% increase in drayage shipments and drayage revenue per shipment of 7.4% as compared to the same period in 2024. The increase also includes higher intermodal yard storage and chassis rental revenues.
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Purchased Transportation
Purchased transportation increased $2,733, or 15.7%, to $20,176 for the three months ended March 31, 2025 from $17,443 for the three months ended March 31, 2024. Purchased transportation was 32.3% of operating revenues for the three months ended March 31, 2025 compared to 31.0% for the same period in 2024. Purchased transportation includes Leased Capacity Providers and third-party motor carriers, while Company-employed drivers are included in salaries, wages and employee benefits. Purchased transportation expenses increased due to the rise in drayage shipment orders for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Salaries, Wages and Employee Benefits
Salaries, wages and employee benefits increased $849, or 5.6%, to $15,931 for the three months ended March 31, 2025 compared to $15,082 for the three months ended March 31, 2024. Salaries, wages and employee benefits were 25.5% of operating revenues for the three months ended March 31, 2025 compared to 26.8% for the same period in 2024. The increase in salaries, wages and employee benefits exists primarily due to the increased shipping volume for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Operating Leases
Operating leases increased $1,086, or 23.1%, to $5,778 for the three months ended March 31, 2025 compared to $4,692 for the three months ended March 31, 2024. Operating leases were 9.2% of operating revenues for the three months ended March 31, 2025 compared to 8.3% for the same period in 2024. The increase in operating leases expense was primarily due to higher real estate lease costs for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Other Operating Expenses
Other operating expenses decreased $496, or 8.4%, to $5,399 for the three months ended March 31, 2025 from $5,895 for the three months ended March 31, 2024. Other operating expenses were 8.6% of operating revenues for the three months ended March 31, 2025 compared to 10.5% for the same period in 2024. The decrease in other operating expenses as a percentage of revenue was primarily due to improved overall spend management for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024.
Income from Operations
Income from operations increased $1,956, or 54.5%, to $5,542 for the three months ended March 31, 2025 compared to $3,586 for the three months ended March 31, 2024. Income from operations was 8.9% of operating revenues for the three months ended March 31, 2025 compared to 6.4% for the same period in 2024. The increase in income from operations as a percentage of operating revenues was primarily due to an increase in the volume of drayage shipments as well as higher revenue per shipment for the three months ended March 31, 2025 as compared to three months ended March 31, 2024.
Corporate - Three Months Ended March 31, 2025 compared to Three Months Ended March 31, 2024
Corporate included $19,788 of operating loss during the three months ended March 31, 2025 compared to $60,231 of operating loss during the three months ended March 31, 2024. The decrease in the operating loss was primarily due to $13,926 of professional fees incurred in 2025 for transaction and integration costs in connection with the Omni Acquisition as compared to $61,924 in 2024.
Liquidity and Capital Resources
We have historically financed our working capital needs, including capital expenditures, with available cash, cash flows from operations and borrowings under the revolving credit portion of our Credit Agreement. We believe that availability of borrowings under our Credit Agreement together with available cash and internally generated funds, will be sufficient to support our working capital, capital expenditures and debt service requirements over the next twelve months. As previously disclosed and more fully described above and in Note 2, Acquisitions, to the Condensed Consolidated Financial Statements, we incurred significant indebtedness in connection with the Omni Acquisition. This substantial level of debt could have important consequences to our business, including, but not limited to the factors as more fully discussed in the risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2024, Item 1A, “Risk Factors” - “Risks Relating to our Indebtedness”.
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Cash Flows
Net cash provided by operating activities was $27,615 for the three months ended March 31, 2025 compared to net cash used in operating activities of $51,719 for the three months ended March 31, 2024. The increase in net cash used in operating activities was primarily due to the change in net loss after consideration of non-cash items and an improvement of cash flow from working capital accounts.
Net cash used in investing activities was $11,239 for the three months ended March 31, 2025 compared to $1,569,452 for the three months ended March 31, 2024. Capital expenditures for the three months ended March 31, 2025 and for the three months ended March 31, 2024 were $11,906 and $4,970, respectively, which primarily related to the purchase of technology and operating equipment. Investing activities of operations for the three months ended Mach 31, 2024 included the Omni Acquisition for a purchase price of $2,274,240.
Net cash used in financing activities of operations was $5,325 for the three months ended March 31, 2025 compared to $158,726 for the three months ended March 31, 2024. The change in the net cash used in financing activities for the three months ended March 31, 2025 primarily consisted of repayments on finance lease obligations, where the same period in 2024 included repayment of borrowings, payment of debt issuance costs and the payment of earn-out liabilities.
Forward-Looking Statements
This report contains “forward-looking statements,” as defined in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding In this Form 10-Q, forward-looking statements include, but are not limited to, any statements regarding: (i) any projections of earnings, revenues, other financial items or related accounting treatment, or cost reduction measures, including any impact of the Omni Acquisition on our financial statements; (ii) future performance, including any expectations about our ability to increase shipments; (iii) our ability to maintain compliance with the covenants of our indebtedness instruments; (iv) our yield management process, any improvements in operating efficiencies and our ability to create synergies across our services; (v) fuel shortages, changes in fuel prices and volatility in fuel surcharge revenue, and the impact on our business; (vi) consumer demand and inventory levels, and the impact on freight volumes; (vii) future insurance, claims and litigation and any associated estimates or projections; (viii) our ability to accelerate the expansion of the Company’s terminal footprint; (ix) certain tax and accounting matters, including the impact on our financial statements and our ability realize remaining net deferred tax assets; (x) intended expansion through acquisitions or greenfield startups, and the impact of any such acquisition on our business; (xi) our ability to use key performance metrics and key operating statistics to gauge growth strategies; (xii) future business, economic conditions or performance, as well as industry projections; (xiii) competition, including our specific advantages, the capabilities of our segments, including the integration of services and our geographic location; (xiv) expectations regarding plans, strategies, and objectives of management for future operations; (xv) our beliefs regarding the effect on our condensed consolidated financial statements resulting from the resolution of claims and pending litigation; (xvi) our beliefs regarding our ability to support our working capital, capital expenditures and debt service requirements over the next twelve months; (xvii) our beliefs regarding internal control over financial reporting and the implementation of our remediation plan to address material weaknesses; (xviii) our beliefs regarding the potential impact of tariffs on our financial position, results of operations and/or cash flows and our reliance on any the regions that are subject to the recent tariff increases and (xix) any belief and any statements of assumptions underlying any of the foregoing.
Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the outcome and related impact of the Omni Acquisition, continued weakening of the freight environment, future debt and financing levels, the outcome of any legal proceedings related to the Omni Acquisition, our substantial indebtedness, our ability to manage our growth and ability to grow, in part, through acquisitions while being able to successfully integrate such acquisitions, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party motor carriers needed to serve our customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence
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of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws, the cost of new equipment, the impact and efficacy of our disclosure controls and procedures, and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2024. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.