CLEVELAND - Ancora Holdings Group, LLC, a significant shareholder of Forward Air (NASDAQ:FWRD) Corporation (NASDAQ: FWRD), has publicly addressed the Board of Directors, advocating for a strategic review and potential sale of the company. This move comes after what Ancora describes as a "lost decade" of underperformance for Forward Air, with the company's Total Shareholder Return (TSR) lagging behind relevant indexes across various time frames.
Ancora, which holds approximately 4% of Forward Air's shares, has been actively engaging with the company's leadership to suggest improvements in governance, operations, and strategy. Despite these efforts, Ancora points to the company's recent acquisition of Omni Logistics, LLC, financed through debt, as a key factor in the significant erosion of shareholder value.
The investment firm contends that Forward Air's current position necessitates a flawless execution of its turnaround strategy, which includes achieving synergies from the Omni deal, reducing costs, and addressing its leveraged balance sheet. However, Ancora expresses skepticism about the company's ability to succeed in the public market, especially with new management constrained by previous decisions and facing a potential recession.
In the letter to the Board, Ancora highlights the stark contrast between Forward Air's performance and that of the S&P 500 Index, Russell 2000 Index, and S&P 500 Air Freight & Logistics Index over the past 1-, 3-, 5-, and 10-year periods. The firm suggests that private equity interest in purchasing Forward Air could lead to a premium on the company's share price and provide relief to shareholders who have endured prolonged underperformance.
Ancora's call for a strategic review is supported by holders of approximately 22% of Forward Air's outstanding shares. The firm warns that ignoring the consensus for a review could lead to a campaign to replace several Board members at the 2025 Annual Meeting of Shareholders.
The letter concludes with Ancora expressing confidence that a strategic review process aimed at maximizing shareholder value would be well-received and indicates their willingness to assist in achieving a favorable outcome for shareholders.
This move by Ancora is based on a press release statement and reflects the firm's stance as a top shareholder seeking to influence the future direction of Forward Air Corporation.
In other recent news, Forward Air's recent financial performance and management changes have been the focus of several analyst firms. Baird has raised the price target for Forward Air shares to $17.00, acknowledging the company's efforts to reduce debt and improve profitability, despite expected operating losses in the coming quarters. The company reported a 52% rise in revenue to $542 million in Q1, primarily due to the performance of the Omni segment, but also experienced a 51% drop in adjusted EBITDA to $29 million.
Jamie Pierson has been appointed as interim Chief Financial Officer, a move seen positively by Stifel, which maintains a Hold rating and a $23.00 price target for the company. Pierson's freight expertise is expected to fill a gap in the company's leadership. Wolfe Research has upgraded Forward Air's stock rating from Underperform to Peer Perform, while maintaining its financial forecasts, projecting an adjusted EBITDA of $170 million in 2024 and $248 million in 2025.
These recent developments reflect Forward Air's strategic approach to improving its financial position and profitability, including plans to divest non-core assets in 2024 to support debt repayment. The company is also focusing on synergy capture, with cost synergies now estimated at $73.5 million, slightly down from the $75 million initially projected during the Omni acquisition. The company's current net leverage is approximately 5.1x, with $1.67 billion in net debt versus $325 million in adjusted covenant EBITDA.
InvestingPro Insights
In light of Ancora Holdings Group's recent push for a strategic review of Forward Air Corporation (NASDAQ: FWRD), a closer look at the company's financial health and stock performance through InvestingPro's lens offers valuable insights. Forward Air's market capitalization currently stands at approximately $860.64 million, reflecting the scale of the business in the competitive logistics industry.
InvestingPro data indicates significant sales growth, with a revenue increase of 34.28% over the last twelve months as of Q2 2024. This growth momentum is echoed in the quarterly figure, showing a staggering 92.93% rise in revenue for Q2 2024. Despite this, the company's P/E ratio is deeply negative at -1.36, and even more so when adjusted for the last twelve months as of Q2 2024, at -35.35, suggesting investor concerns about profitability.
Two InvestingPro Tips highlight key areas of interest for investors considering Forward Air's stock. The company operates with a significant debt burden, which has been a point of contention for Ancora. Additionally, analysts have revised their earnings expectations downwards for the upcoming period, which may reflect the challenges Forward Air faces in executing its turnaround strategy effectively.
For those seeking more detailed analysis, InvestingPro offers additional tips on Forward Air Corporation, which can be found at https://www.investing.com/pro/FWRD. These insights may prove invaluable for shareholders and potential investors as they weigh the implications of Ancora's call for a strategic review and the company's path forward.
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