Forward Air (NASDAQ: FWRD) reported Wednesday its strongest quarterly performance since completing what it described as a "messy merger" with freight forwarder Omni Logistics in January 2024. Operating results improved across all business segments during the second quarter, led by the Expedited Freight division.

Consolidated revenue reached $673 million, up 9% year over year. Consolidated adjusted EBITDA climbed 18% y/y to $93 million.

The expedited segment, which includes less-than-truckload (LTL) operations, generated $319 million in revenue, a 24% y/y increase. Tonnage rose 7%, with shipments up 2% and weight per shipment increasing 5%.

Yield, measured as revenue per hundredweight excluding fuel surcharges, declined 2% y/y. Heavier shipment weights weighed on the metric, partially offset by an undisclosed increase in length of haul. Revenue per shipment excluding fuel was up 3% y/y.

Some LTL freight that had previously shifted to a depressed truckload market has returned, contributing to higher shipment weights and revenue per shipment. That dynamic has been a recurring factor across the LTL sector as shippers reassess modal choices when truckload capacity tightens or pricing shifts.

The expedited unit posted a 10.9% operating margin, an improvement of 340 basis points y/y. EBITDA margin reached 13.6%, up 200 bps y/y. Nearly every expense line declined as a percentage of revenue, with the exception of purchased transportation, which rose 430 bps.

Omni Logistics reported revenue of $339 million, a 3% y/y increase. Adjusted EBITDA of $38 million was 28% higher y/y, with the adjusted EBITDA margin improving 220 bps to 11.2%.

Forward announced last month that it had entered a non-binding agreement with a contract logistics customer to retain half — and potentially up to 75% — of a $250 million annual contract. On its first-quarter earnings call in May, the company indicated it could potentially lose the entire account, which represents approximately 10% of Forward's annual revenue. A recent memorandum of understanding keeps the current contract in place for at least the next two years.

The potential customer loss prompted a goodwill test on the carrying value of the Omni business. Forward reported a $244 million before-tax loss from continuing operations for the second quarter, which included a $244 million noncash goodwill impairment charge. While the charge does not affect cash flow or liquidity, it reflects a downward revision in the value ascribed to the Omni acquisition.

The customer disruption also stalled a plan to sell the entire enterprise to private investors. Forward commenced a strategic review at the beginning of 2025 as investor pressure mounted following the contested merger with Omni Logistics.

After flagging the at-risk customer, Forward shifted its focus to divesting its intermodal unit and two smaller legacy Omni businesses, which generated a combined $394 million in revenue last year. One Omni business was sold during the second quarter and the other in July. The company expects to complete the sale of the intermodal business by year-end. Proceeds will be used to deleverage the balance sheet, which carried net debt of $1.66 billion at 5.2 times trailing 12-month adjusted EBITDA during the quarter.

Intermodal revenue rose 1% y/y to $60 million for the quarter. The unit reported a 16.7% EBITDA margin, an improvement of 160 bps y/y.

Operating cash flow was $46 million in the second quarter, down $6 million y/y. Liquidity stood at $401 million, nearly flat sequentially, even after the company made a $34 million semiannual interest payment during the quarter.

Net debt of $1.66 billion represented 5.2 times trailing 12-month adjusted EBITDA of $319 million, remaining below a 6x debt covenant. The completion of the intermodal sale and the trajectory of the retained customer contract are likely to be focal points for investors monitoring the company's leverage path in the coming quarters.

Shares of FWRD rose 10.7% in after-hours trading on Wednesday.

Forward Air is the only publicly traded company offering airport-to-airport ground transportation in an LTL configuration. Its contested merger with Omni Logistics remains a prominent case study for the trucking and logistics industry.