Forward Air (FWRD) Q4 2025 Earnings Transcript
Forward Air (FWRD) Q4 2025 Earnings Transcript
Motley Fool Transcribing, The Motley FoolMon, February 23, 2026 at 10:58 PM UTC
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Monday, February 23, 2026 at 4:30 p.m. ET
CALL PARTICIPANTS -
President and Chief Executive Officer — Shawn Stewart
Chief Financial Officer — Jamie G. Pierson
TAKEAWAYS -
Consolidated EBITDA -- $77,000,000 for the quarter, up from $72,000,000, and $307,000,000 for the year, compared to $311,000,000 in the prior year.
Adjusted EBITDA -- $293,000,000 for the year, an increase of $40,000,000 over the prior year’s $253,000,000.
Cost Actions and Non-Cash Charges -- Operating expenses in the quarter included a $20,000,000 non-cash software impairment charge, excluded in credit agreement EBITDA calculations.
Expedited Freight Segment EBITDA -- $25,000,000 for the quarter, compared to $18,000,000; margin rose 350 basis points to 10.1% from 6.6%.
Expedited Freight Full-Year Margin -- Improved to 10.9% from 9.8% through yield enhancements and cost structure alignment after shedding unprofitable freight.
OmniLogistics Segment Full-Year EBITDA -- Reached $124,000,000, almost double the prior year’s $67,000,000, with margin up to 9.2% from 5.6%.
OmniLogistics Quarterly Results -- Achieved highest quarterly revenue, reported EBITDA, and margin since January 2024 acquisition, with $36,000,000 EBITDA and 10% margin, up from $32,000,000 and 9.8%.
Intermodal Segment Quarterly EBITDA -- $7,000,000 and a 14.2% margin, both down from $10,000,000 and 17.5%, as port activity slowed and revenue per shipment fell.
Intermodal Full-Year Results -- $35,000,000 EBITDA, stable versus $37,000,000; margin at 15.1%, compared to 16% previously.
Full-Year Cash Flow from Operations -- Generated $44,000,000, reversing the previous year’s use of $69,000,000, marking a $113,000,000 improvement.
Liquidity Position -- $367,000,000 total, with $106,000,000 in cash and $261,000,000 available under the revolver; compared to $105,000,000 in cash and $382,000,000 of liquidity at year-end 2024.
Strategic Initiatives -- Unified U.S. domestic ground operations into the One Ground Network and launched a Latin America regional structure spanning five countries, anchored by the Miami Gateway.
Leadership Additions -- Appointed Fabio Mendonique as President of Latin America, Joanna Zhu as President of Asia Pacific, and Lance Sons as Chief Information Officer, each with nearly or over 30 years' industry experience.
ERP and IT Transformation -- Rolled out the first phase of the ONE ERP financial system, with completion targeted by year-end; a unified global HRIS launch is also planned for 2026.
Operating Leverage -- CFO Pierson stated, "every single additional shipment added to the system should have a disproportionate positive contribution to the bottom line" due to prior cost reductions and created excess network capacity.
Revenue Reporting -- Management increased business transparency by disclosing revenue by product and region to transition away from legacy reporting structures.
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RISKS -
Management cited a "challenging freight environment" persisting throughout the year and continued declines in tonnage, particularly in the Expedited and Intermodal segments.
CFO Pierson explicitly noted, "I did not see any meaningful positive sign" for an industry recovery as of year-end, cautioning that "rejections do give me hope that we are reaching an inflection point," but meaningful improvement depends on sustained favorable indicators.
The Intermodal segment experienced shipment and revenue per shipment declines, with fourth-quarter EBITDA and margin down from the prior year, attributed to "Trade-related softness" and "typical seasonality."
CFO Pierson stated, "about $166,000,000 in interest and another $25,000,000, plus or minus, in financing leases and another $27,000,000 in CapEx," emphasizing significant financial commitments as a threshold for future cash generation.
Management is nearing conclusion of a comprehensive strategic alternatives review, noting progress despite industry and economic headwinds. Significant earnings improvements occurred within OmniLogistics, where reported EBITDA nearly doubled and margin expanded by 360 basis points, driven by diversified operations and leadership overhaul. Broad transparency enhancements were implemented, including revenue breakdowns by product and region, reflecting a transition to performance-based reporting structures. The company implemented the One Ground Network and new Latin America organization, aligning all domestic service lines and expanding its international footprint. Key technology and personnel upgrades began, advancing integration across financial, human resources, and operational data systems for global standardization.
The ONE ERP system began phased implementation during the quarter, centralizing financial data and expected to streamline reporting and drive efficiency by year-end.
Despite volume and pricing pressure in the Intermodal segment, management highlighted resilience in EBITDA margin due to storage revenue at depot yards offsetting lower shipment activity.
Leadership appointments in Latin America and Asia Pacific signal an accelerated focus on global growth, particularly in high-value verticals such as data centers, medical, and complex tech logistics.
CFO Pierson noted that operating results have "around between $73,000,000 to $79,000,000 in consolidated EBITDA every single quarter," indicating steady performance despite freight recession conditions.
Full-year cash generation turned positive after a prior-year deficit, with $113,000,000 improvement in cash flow from operations directly attributed to cost management and expense reductions.
Liquidity remains strong, with no major debt maturities for nearly five years, providing "a ton of cushion and a ton of time to continue improving operations" per the CFO.
INDUSTRY GLOSSARY -
PT (Power-Only Trucking): Refers to power unit (tractor/driver) operations, a variable-cost model for over-the-road transport capacity.
Drayage: Short-haul movement of containers between ports and inland destinations or storage depots in the intermodal supply chain.
HRIS (Human Resources Information System): A digital platform consolidating personnel data and management workflows globally.
One Ground Network: Forward Air's unified platform aligning all U.S. domestic ground operations—including line haul, pickup/delivery, brokerage, and expedited services—under a single leadership and operating structure.
ONE ERP: Forward Air's enterprise-wide initiative to integrate financial systems into a consolidated platform for standardized processes and reporting.
Full Conference Call Transcript
Shawn Stewart, President and Chief Executive Officer, and Jamie G. Pierson, Chief Financial Officer. By now, you should have received a press release announcing Forward Air Corporation’s fourth quarter 2025 results, which was also furnished to the SEC on Form 8-K. We have also furnished a slide presentation outlining fourth quarter 2025 earnings highlights and a business update. Both the press release and slide presentation for this call are accessible on the Investor Relations section of Forward Air Corporation’s website at investors.forwardaircorp.com. Please be aware that certain statements in the company’s press release announcement and on this conference call may be considered forward-looking statements.
This includes statements which are based on expectations, intentions, and projections regarding the company’s future performance, anticipated events or trends, and other matters that are not historical facts, including statements regarding our fiscal year 2026. These statements are not a guarantee of future performance and are subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. For additional information concerning these risks and factors, please refer to our filings with the SEC and the press release and slide presentation relating to this earnings call.
Listeners are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this call. The company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events, or otherwise, unless required by law. During the call, there may also be a discussion of financial metrics that do not conform to U.S. generally accepted accounting principles, or GAAP. Management uses non-GAAP measures internally to understand, manage, and evaluate our business and make operating decisions. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP measures are included in today’s press release and slide presentation. I will now turn the call over to Shawn.
Good afternoon, everyone, and thank you for joining us.
Shawn Stewart: I really appreciate your interest in Forward Air Corporation. There are three main topics that I would like to cover on today’s call. First, I will provide an update on our strategic alternatives review process. Second, I will review some key achievements in 2025. Third, I will share some thoughts on our 2026 priorities before turning the call over to Jamie. Regarding the strategic review, we have continued to make progress since our last update in November and believe we are nearing the conclusion. As we have said from the onset, this has been an extremely comprehensive review in an incredibly difficult logistics environment and broader economic backdrop, which has contributed to the length of the process.
When we have updates to share on the review, we will. Beyond that, we are going to remain focused on operating the company, preparing for the cycle to turn so we can take advantage of when it does, and keep today’s comments focused on the actual results. With that, let’s turn to the second topic. For the full year 2025, we reported consolidated EBITDA, which is calculated pursuant to our credit agreement, of $307,000,000 compared to $311,000,000 in 2024. As we mentioned last year, we expected the quality of our earnings to continue to improve as historical pro forma and synergy savings roll off, and that is exactly what has happened.
To that point, adjusted EBITDA in 2025 improved $40,000,000 year over year to $293,000,000 compared to $253,000,000 in 2024. I am proud of our team for holding serve and focusing on what we can control and delivering these results while actively transforming the company and in the face of a multiyear freight recession. We remain focused on the customer and used this time to completely rebuild the management team, consolidate duplicative real estate, and reduce expenses to position the company to take advantage of the tailwinds in the industry when the broader market improves.
Operationally, in 2025, we unified our U.S. domestic operations with the creation of our One Ground Network, aligning our business into a more cohesive, agile, and scalable operating model. This initiative consolidated all U.S. domestic ground operations under a single leadership structure and integrated key service lines—line haul, pickup and delivery, truckload brokerage, and expedited services—into one streamlined organization. Importantly, our sales channels will continue to operate independently, delivering the outstanding solutions, service, and customer relationships we always have. At the same time, our operations remain channel agnostic, executing consistently across the platform and delivering best-in-class on-time performance and industry-leading claims results.
In 2025, we also unveiled our new Latin America regional structure, marking a significant step in strengthening our global logistics network. This regional platform spans Mexico, Brazil, Peru, Colombia, and Chile, and is anchored by our international freight station in Miami. The Miami Gateway connects Latin America to global markets and enables us to deliver industry-leading import and export security, reliability, and service to our customers. During the year, we completed the corrective pricing actions at the Expedited Freight segment and shed some unprofitable freight from our network as a result.
Following these actions, the improvement in yield, along with aligning our cost structure with less volume in the network, this segment’s full-year reported EBITDA margin improved by 110 basis points from 9.8% in 2024 to 10.9% in 2025. As we move into 2026, we expect the volume declines to begin moderating as we lap the corrective pricing actions. In closing out my comments on 2025, in pursuit of continuing to enhance the transparency of our business, we provided detail on revenue by product, foreshadowing how we plan to go to market and transition away from reporting by legacy and legal reporting structure. During the year, we also provided insight to our revenue by region around the world.
More to come as we work out the reporting nuances, but I am extremely excited about this additional transparency. Moving to the third topic, as we enter 2026, our strategic focus remains on profitable long-term growth through the expansion of synergistic service offerings that enhance customer value and revenue quality. Our growth is contingent upon having the right team in place, including rounding out our leadership team. In late 2025, we added Fabio Mendonique as the President of Latin America. Fabio brings over 30 years of experience in business development and operations throughout Latin America and North America. Just last month, we added Joanna Zhu to the leadership team as our President of Asia Pacific.
Joanna brings a wealth of knowledge and 34 years of experience to the company, including working with two of the world’s largest logistics companies. And most recently, we announced that Lance Sons has joined the company as our new Chief Information Officer. With nearly 30 years of experience, Lance has held progressive leadership roles at a few of the largest tech-forward supply chain companies. I could not be more excited about the talent and industry experience Fabio, Joanna, and Lance bring to the company. I am confident that they will drive growth and success across the global enterprise as we enter 2026.
A priority in 2026 is to continue the progress in upgrading our tech stack as part of our broader transformation. A key component of this effort is the ONE ERP initiative, which will consolidate multiple financial systems into a single integrated platform. By bringing these systems together, we should achieve standardized reporting, consistent processes, and a single source of financial data, driving greater efficiency and effectiveness across the company. The project is planned as a phased rollout, with the first phase successfully completed earlier this month and the final phase to be completed by the end of this year. During the year, we also plan to consolidate a very decentralized global HRIS system across multiple countries into one worldwide system.
This is a transformative step as we continue to rationalize our IT systems, improve the quality of our data and decision making. By prioritizing customer service, strong leadership, and careful cost management, we believe we are positioning the company for long-term success. As most of you are aware, we have made a great deal of progress and believe we are well positioned once the freight environment improves. We are optimistic about a recovery and are committed to building on the momentum of our transformation that we have created. With that, I will turn the call over to Jamie to go through the detailed results of the fourth quarter and full year 2025.
Jamie G. Pierson: Thanks, Shawn, and good afternoon, everyone. For the fourth quarter 2025, we reported another solid $75,000,000 consolidated EBITDA quarter. Actually, to be very specific, it was a $77,000,000 quarter, and that is compared to $72,000,000 in the fourth quarter a year ago. As you heard from Shawn, for the full year, consolidated EBITDA was $307,000,000, which was in line with the $311,000,000 for 2024. As usual, we have detailed the information used to reconcile the adjusted and consolidated EBITDA results on Slide 31 of the presentation. And before you ask, as I note that you will, in the fourth quarter, our operating expenses were negatively impacted by a $20,000,000 charge for the impairment of software implementation costs.
Being a non-cash charge, as you would expect, the credit agreement allows us to add these costs back. Regarding consolidated EBITDA, for the prior three quarters, we have adjusted the previously reported amounts by the actions we took in the fourth quarter to improve our cost structure. If you will remember, the credit agreement also allows us to add back pro forma savings from these actions to be included in our historical consolidated EBITDA and requires that we spread back in time to the period in which the expense would have been incurred. As such, we appropriately adjusted the prior quarters to reflect the impacts of the cost savings.
If you would, please reference Page 12 of the slide presentation issued today, and you will be able to see what we reported in the past and for the most recent cost out and pro forma action. Turning to the segments, Expedited Freight’s fourth quarter reported EBITDA improved to $25,000,000 compared to $18,000,000 a year ago. We also saw a significant improvement in year-over-year margin, which increased by 350 basis points to 10.1% in 2025 compared to 6.6% in 2024. For the full year, despite a challenging freight environment and a decline in tonnage, we focused on charging the optimal price for freight moving through our network and actively managing expenses.
As you heard from Shawn, this strategy to focus on what we can control contributed to an improvement in Expedited Freight’s reported EBITDA margin of more than 100 basis points to 10.9% for the year compared to 9.8% in 2024. At the OmniLogistics segment, we continue to reach new heights. In the fourth quarter, this segment achieved the highest revenue, the highest reported EBITDA, and the highest reported EBITDA margin, excluding the impairment of goodwill, since the acquisition in January 2024. Reported EBITDA in 2025 improved to $36,000,000 compared to $32,000,000 a year ago. The reported EBITDA margin for the fourth quarter 2025 improved to 10% compared to 9.8% in 2024.
Looking at the OmniLogistics segment’s full-year results, reported EBITDA, again excluding the impact of goodwill, almost doubled, increasing to $124,000,000 in 2025 compared to $67,000,000 in 2024. Additionally, the margin increased significantly as well, increasing 360 basis points to 9.2% in 2025 compared to 5.6% in 2024. At Intermodal, the market, especially port activity, remained challenging in the fourth quarter. Trade-related softness among several core customers along with typical seasonality contributed to declining shipments and revenue per shipment compared to a year ago. In the fourth quarter, the Intermodal segment’s reported EBITDA and margin were $7,000,000 and 14.2%, respectively, compared to $10,000,000 and 17.5% a year ago.
On a full-year basis, the Intermodal segment’s 2025 reported EBITDA of $35,000,000 was in line with the $37,000,000 we reported in 2024. The margin remained stable as well, with a 15.1% margin in 2025 compared to 16% in 2024. Turning to cash flow, cash, and liquidity, cash used by operating activities in the fourth quarter was $23,000,000, which was the exact same amount last year. For the full year of 2025, we generated $44,000,000 of cash from operating activities compared to consuming $69,000,000 of cash used in operating activities last year, which is a $113,000,000 year-over-year improvement. As for liquidity, we ended the year with $367,000,000 comprised of $106,000,000 in cash and $261,000,000 in availability under the revolver.
This compares to $105,000,000 in cash and $382,000,000 of liquidity at the end of 2024. And as usual, I would like to leave you with a few additional thoughts. The first of which is our very consistent performance in the midst of the current backdrop. On a consolidated basis, we have been bouncing around between $73,000,000 to $79,000,000 in consolidated EBITDA every single quarter of this year, which in turn leads to the continued strength of our liquidity position.
When compared to our peers as a percent of total assets, and as a percent of total LTM revenue, we are above the industry average on both metrics, ending the year with $367,000,000 in liquidity and no meaningful maturities for almost five years gives us a ton of cushion and a ton of time to continue improving operations. As for my second point, given the current amount of excess capacity in the domestic ground network and the cost out initiatives put in place last year, every single additional shipment added to the system should have a disproportionate positive contribution to the bottom line.
And that has nothing to do with the increase in pricing that we are starting to see in the broader market. That is a long way of saying there is a significant amount of operating leverage in the domestic ground network. And the final point is the continued prioritization and maniacal focus on cash generation. As you heard earlier, cash provided by operations improved $113,000,000 in 2025 compared to 2024. On Page 23 of the earnings presentation, you will see that on a non-GAAP basis, we generated $32,000,000 operating cash flow in the fourth quarter and $209,000,000 for the full year of 2025.
In closing, I would say for the continued and highly speculated industry recovery, I am not an economist nor am I a speculator. As we ended 2025, I did not see any meaningful positive sign. That being said, since the end of the year, the recent spike in TL spot rates and the same on the tender rejections do give me hope that we are reaching an inflection point. Before declaring victory, we are going to need to see sustained PMI above 50 and continued increase in spot rates and rejections. I will now pass the call back to Shawn for closing comments before Q&A.
Shawn Stewart: Thank you, Jamie. In closing, we finished the year with momentum despite economic headwinds and a significant ongoing organizational transformation. Performing under these conditions underscored the resilience of our business and the strength of our team. I am incredibly proud of their unwavering commitment to our customers and their disciplined execution. Their ability to operate with precision while maintaining rigorous cost control has meaningfully strengthened our performance and enhanced our flexibility. This focus has not only delivered results in a challenging environment, but also positioned us well to capture opportunities as the market conditions improve. I am highly confident in the foundation we are building.
We are entering the next phase of the business from a position of strength, well equipped to drive sustainable long-term growth and to continue delivering meaningful, measurable value to our shareholders. We believe we are well positioned to benefit as freight markets stabilize and recover. As we move into Q&A, we ask that the questions focus on the state of the industry and the business. Thank you in advance. I will now turn the call over to the operator to take questions. Operator?
Operator: Thank you, Mr. Stewart. Simply press star one on your telephone keypad. If at any point your question is answered, you may remove yourself from the queue by pressing star two. We will go first today to J. Bruce Chan with Stifel.
J. Bruce Chan: Thanks, operator, and good afternoon, gents. Congrats on all the progress that you have seen so far. Maybe just to start here, it has been a while since we have had an upcycle and you have obviously had a lot of change to the Expedited Freight segment since then. So maybe you can just remind us of how your model performs in a recovery scenario, especially if there is a big truckload supply element, as you talked about, Jamie?
Just trying to get a sense here of how we should be thinking about maybe gross margin squeeze in Expedited and then in, you know, brokerage versus truckload and, you know, maybe where you are at in terms of third-party PT line haul miles?
Jamie G. Pierson: What that, Bruce, that was about five questions in one sentence. Let me see. It is good to hear from you, Bruce. Well, I guess we could do those before. Let me see if I can start from the top down. So in terms of how we perform in, I guess, a squeeze environment, I would say if you go back and look at the last, probably, five, maybe going on seven years, we outperform the space given the flexibility of our operating model. And I say this because we are, you know, fixing the terminal side and incredibly variable on the PT, which is one of your questions.
So we can add capacity, that being defined by drivers, tractors, and trailers, probably faster than just about anybody in the space. So if I went back and looked at it on a quarterly, maybe even an annual basis, we might positively comp to the industry average EBITDA margin but not by much. We do not. So but there is a time of volatility to where, at least on the ground side, we will probably outperform. That is not the same thing about warehouse, which is probably pretty flat, air and ocean, which is, given today’s announcements, anybody’s guess.
But I think that, you know, given where we are right now at 10% EBITDA margins, relative to the industry’s 20, I would suspect that we would make up a lot of that ground. That was a terrible way to end a lot of that ground. That was a double entendre. It was not intended. It is a good one.
J. Bruce Chan: Okay. That is super helpful. And maybe for my, you know, I guess, fifth or sixth question here, Omni obviously performing a lot better than expected. Can you maybe just help us to get a sense of what an appropriate midterm margin should look like there and what seasonality should look like there?
Shawn Stewart: Yeah. So, Bruce, as you know, it is a pretty diverse portfolio. So when you look at, you know, whether it be obviously ground feeding into the network or the contract logistics, air and ocean brokerage. So it is really our focused growth in all of those areas and really playing to the advantages of that diversification so that when one is up or one is down, the other one is up, et cetera. So that is really what we have seen in the success of 2025 and what we really intend to continue to push through 2026 and beyond.
We have got the right leadership with the right experience with the right focus in each one of those areas moving forward. And the other complement I would say is I call it synergy selling, but it is looking at customers that have a wallet share in one of those areas but not in the others. And we have a very robust team focused on that wallet share across the product offerings to continue to have the organic growth and further diversifying customer portfolios across those offerings. So that is really what is happening here within the Omni area.
J. Bruce Chan: Okay. But there is nothing in, you know, customs brokerage or bonded warehousing or something that should lead us to believe that you were over-earning in this period or something like that?
Shawn Stewart: No, not significantly. I mean, yes, duty drawback on the customs broker side is huge right now, all the tariff stuff. But it is not significant revenue streams. It is just an uptick. But no, nothing in particular to your point other than just growth and organic growth across the portfolio of those customers.
Jamie G. Pierson: Yeah. If you look at page—very good. Thank you—earnings presentation, Bruce. You will see our margins in the Omni segment pretty strong. So what Shawn said about growth, it could not be more spot on.
J. Bruce Chan: Got it.
Jamie G. Pierson: Perfect.
J. Bruce Chan: Thanks. I will hop back in queue.
Operator: Thank you, Bruce. We will go next now to Stephanie Moore with Jefferies.
Stephanie Moore: Great. Good afternoon. Thanks, everybody. You know, appreciate all the color, and appreciate maybe commentary you provided on the state of the underlying market as the year has progressed thus far. So maybe, you know, it would be helpful if you could provide any additional commentary in terms of what your customers are saying, especially this most recent ISM print inflecting positive for the first time in a long time. I mean, are customers actually sounding more upbeat, and obviously, any differentiation you can make amongst whether it is the LTL or Omni customers, the likes would also be helpful. Thanks.
Shawn Stewart: I think, Stephanie, from me, and I will let Jamie chime in here. I think from our customers’ experience with us on a consistent basis has given them comfort whether you are talking about the legacy Forward Air freight forwarder 3PLs. We have been very consistent with them and very active and transparent with them. And then the consistency on the Omni side of our solutioning and cross-functional service offerings over the last two years with all the changes we made. And to me, it is no differently than any of us when we are buying the service, want to go to the best and very consistent, and that will keep us coming back for more.
And that is really our recipe that is working for us. And so no real secret other than that.
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Jamie G. Pierson: Yeah. Steph, all I would say is, and I think I said it in my comments, is looking at the ISM print and especially focus on new orders that I think everyone gets super excited about seeing the new orders pop. But if you look at it, man, it has been three months over the last 36 that it has been even marginally positive over 50. And the most recent print of one, obviously, does not make a trend. We are going to need to see a consistent trend, at least a report over 50 for at least two, if not three or more months to see that is sustainable and it is not an aberration in the actual results.
Stephanie Moore: Absolutely. I think that is helpful. And then maybe sticking with Omni, I think the performance, as you noted and we could all see, has been very strong. Do you find that this is more so a function of your own kind of company-specific action? And or do you think that, you know, you are seeing some green shoots within the underlying market? Maybe just any kind of parsing out of that there as well. And then my third question, just to throw it out there and then I am done, I promise, would be do you think you are starting to see any of the synergies of kind of offering the two services starting to form in 2026?
Shawn Stewart: I would not say any green shoots other than, you know, our commercial organization has been rebuilt by Eric Brandt. I would say we have got our swagger back. We have got a detailed focus. We know what we want to do and how we perform well, and we know what we are not, and we are not going to offer those offerings. So we are staying really laser focused on selling solutions that are in our wheelhouse. And I would say to your second point, Stephanie, we are really not offering the two, the two are really one.
And although we have an indirect and a direct channel on the sell side, but operationally, what I mentioned in my openings around One Ground, that is the legacy Forward network. Everything in ground on the Omni side has rolled over into the legacy Forward side, if you will. And I do not even like to use the legacy this or legacy that, but for this call, we will. But we just talk about really focusing on the customer experience with our assets and solutions holistically, but always respecting the sales channels and making sure we do not have conflicts.
Stephanie Moore: Thanks for the time as always.
Operator: Thank you. We will go next now to Scott H. Group with Wolfe Research.
Scott H. Group: Hey. Thanks. Afternoon, guys. So I know you do not want to say too much on the process. I just want to make sure we are getting the message right. I think last quarter, you said it is taking a while, and there is maybe a churn of interested parties, maybe less interest from some and new interest from others, if I understand what you were trying to say last quarter. Maybe just an update on that. Are you still seeing that churn? Or is there some other reason why this is taking so long?
Shawn Stewart: Yeah, Scott. You know I cannot say any more than I said, but I feel confident that we are coming to conclusion here, and more to come as that rounds itself out.
Scott H. Group: Okay. I guess we are now—Jamie, your comment—we are getting more optimistic since the year started. I guess we are about two thirds of the way through Q1 now. Can you give us some update on sort of what you are seeing in the business? Like LTL tonnage, I think, was down 10%, 11% per day in Q4. What are you seeing January, February?
Jamie G. Pierson: Yes. We know, Scott, we do not give guidance on that. I always appreciate you asking. At least there is one consistency amongst the calls. But what I would say is it is probably just normal seasonality. We are not going to comment on change in tonnage or prices point in time, but you just look over the last probably two years, it is probably not that much different in the first quarter than what you would have anticipated.
Scott H. Group: Okay. Maybe I will ask one more. Maybe we can answer here. Give us some puts and takes on cash flow for this year, how you think—what should we think about CapEx? And then I think the leverage covenant starts to get a little bit tougher each quarter this year. Just any thoughts on where you think you will end the year on or how you are thinking about progress on deleveraging this year?
Jamie G. Pierson: Yeah. So what is great about 2025, Scott, is we reached that inflection point. If you look at the statement of cash flow when we file the K, you are going to see that we spent about $166,000,000 in interest and another $25,000,000, plus or minus, in financing leases and another $27,000,000 in CapEx. So once we reached that inflection point, every incremental dollar over that amount actually starts to fall straight to the bottom line in terms of cash. So we reached that point in 2025. We generated—and I know it sounds like small, but it is not—the fact that it is only $1,000,000 in increase in cash from 2024 to 2025.
It is the fact that we dug out one hell of a hole in 2024 to actually accomplish that in 2025. So we are going to continue to, you know, focus on improving or increasing sales while actually holding the operating leverage that the team has built over the last 18 months.
Scott H. Group: So but similar in terms of CapEx and all that for this year?
Jamie G. Pierson: Yes. We might have a little bit more in CapEx. But as a percent of revenue, I do not see it is going to be that demonstrably different than the past.
Operator: Thank you. We will go next now to Harrison Bauer with Susquehanna.
Harrison Bauer: Great. Thanks for taking my question. You emphasized the importance of volume driving incremental margins this year in your expedited business. It sounds like you view volume as having a higher profit contribution, you know, rather than your price-cost outlook for 2026. Can you maybe speak to the directional outlook, particularly within Expedited Freight, for pricing this year? As you begin to lap prior pricing actions, as weight per shipment improves, would you expect any mix-related pressure on net yields?
Jamie G. Pierson: Again, Harrison, probably three different questions in there. But I think what you are getting at is incremental shipment and having a disproportionate positive contribution, if I am following that correctly. Is that right?
Harrison Bauer: Yeah. You got it. And just generally what, you know, pricing, you know, within that business, what you expect if you expect volumes to be the bigger contributor to incrementals?
Jamie G. Pierson: Yes. Well, right now, we are focused more about improving the density of the network and the following profitability margin that comes out of it. And I say that as everybody knows on this call, including you, that there is a trade-off between price and volume. And given the decrease in tonnage that we have seen over the last one or two years, we have created excess capacity within the ground network.
And with all the cost-out actions, all the synergies, all the closings of the facilities, and the headcount rationalization, we have created an incredibly strong model with operating leverage whereby, all else being equal, assuming price is the same, if you drop in one incremental shipment into the network, it is much more profitable than the previous shipment. So we have got probably—it is hard to say because capacity is defined by, you know, the lowest common denominator of four or five different metrics, whether it be terminals, doors, drivers, tractors, trailers—but you add one more shipment on that trailer that is already dispatched, you have already incurred the cost for it.
It is going to be much more accretive than the prior shipment, again, all else being equal. And, obviously, if price takes off, then that is just free margin for all intents and purposes. Shawn, anything to add to that? Thanks.
Harrison Bauer: And then maybe just a follow-up along the—sticking with pricing. In Intermodal, in your drayage business, can you maybe help us understand the driver behind the notable change in the revenue per shipment this quarter? And that inflected negative, pretty different from the recent trends that you had in that business.
Jamie G. Pierson: Yeah. This one is an easy one, Harrison. I think this is a simple supply and demand. The port volumes are down somewhere between 5% to 10%. And it is not like the ground or the LTL network. It is much more, I guess, volatile in terms of the supply falling off, which is to say that it is much more elastic pricing in Intermodal than it is probably in the line haul business.
Shawn Stewart: And I would say, Harrison, there are two major revenue streams there. We have quite a few storage depots—we call depots—around the country. And so, you know, you have the dray move, lesser to the Intermodal over the rail, and your other major revenue stream outside of just normal port drayage or rail drayage is the storage of the container in our depot yard. So it just depends on what that mix is per quarter. And I would say that also helped us with the slowdown of the port drayage in Q4. We had some decent revenues on the storage side.
Jamie G. Pierson: So that is what supports the margin as well.
Harrison Bauer: Great. Thank you for the time today.
Operator: We will take a follow-up question now from J. Bruce Chan at Stifel.
J. Bruce Chan: Yes. Appreciate the follow-up, guys. Looking through the deck, I am reminded that you have some nice data center exposure in contract logistics through one of the legacy Omni opcos. Can you just maybe give us a sense of what that looks like as a percent of revenue and maybe what growth has looked like there recently?
Jamie G. Pierson: I think one of the slides depicts the percentage. Yeah, it shows—hold on one second, Bruce. If you look at Page 7, it breaks up, you know, what we are—when Shawn said, hey, we are going to be cutting the thing in terms of our product, we have this slide to show the percentage of the revenue in terms of the total for the entire fiscal year of 2025. So you will see that contract logistics is about 15%, but that is global.
Shawn Stewart: But, Bruce, this major concentration is in North America and Asia Pacific. So that is the majority where our contract logistics revenue comes from.
J. Bruce Chan: Okay. So it is fairly good. That is a good question with that data center and high-tech exposure in there.
Shawn Stewart: Say it again, Bruce?
J. Bruce Chan: So it is fair to assume that there is a good chunk of data center and high-tech exposure in there?
Shawn Stewart: It is in there, but I would not say it is a—it is a good portion of our business, obviously. But it is not the only thing in there. You are going to see—you are going to see textiles in there. You are going to see tech—outside of data center. You are going to see some automotive. So I would say it is not just in that area. Yes. And I know you have not had a chance to read it yet, Bruce. But we have been talking about under that vertical about being tech, data, medical, and then, you know, kind of a complex high-value end market.
J. Bruce Chan: Okay. Great. And then what does the growth look like in that data center business? Has that been scaling with all the activity that we have been seeing in that space?
Shawn Stewart: Yeah. For sure. I mean, we are scaling with it. There are a lot of players in the space, but we are there and we are taking every wallet share we can grab. We are pretty good at it and, you know, with the high-value, high-risk area of this business, going from our world-class warehouses on the contract logistics side into our trucks, into the clean rooms of the data centers. We are very good at the service and we will continue to gain momentum here.
Jamie G. Pierson: All right, great. Thank you.
Operator: Thank you. And, gentlemen, it appears we have no further questions today. Mr. Stewart, I would like to turn things back to you, sir, for any closing comments.
Shawn Stewart: All right. Well, thank you so much, and we really appreciate your interest and your support of us. It was a great year and we remain extremely confident in our strategy and look forward to updating on our progress next quarter—or if something happens between then. So appreciate the time today. And if you have any follow-up questions, please reach out to Tony, and we will be in touch. Thank you. Have a great week.
Operator: Thank you, gentlemen. Again, ladies and gentlemen, this concludes Forward Air Corporation’s fourth quarter and full year 2025 earnings conference call. Please disconnect your line at this time, and have a wonderful day.
Shawn Stewart: Goodbye.
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