Forward Air Could Have More Activist Investor Drama on the Horizon

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Forward Air Corporation has seemingly lost its way in the fallout of its controversial acquisition of fellow logistics services provider Omni Logistics, and an activist investor may be looking to force action to reshape the new company.

Irenic Capital Management has built a stake of nearly 5 percent in Forward Air, according to a report from the Wall Street Journal. The move could signal another set of changes to a company that already saw its pre-acquisition CEO Tom Schmitt leave the position in February.

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According to the WSJ, Irenic privately sent a letter to Forward Air’s directors this month calling for a board shakeup and a strategic review to consider a range of options including a sale.

This is the second time since late 2023 where an activist investor sought changes at the company, when Ancora Holdings called for Forward Air to replace Schmitt and some of its board members. Ancora later led a similar effort at Norfolk Southern.

In late April, Forward Air hired a new CEO, Shawn Stewart, to replace Schmitt. Stewart’s pedigree includes leading Ceva Logistics’ North America division from April 2020 to March 2024, where he headed a team that generated $5 billion in sales.

Now, the financial direction of the company is still up in the air.

Forward Air’s chief financial officer, Rebecca Garbrick, said she was stepping down from the company on May 20, less than two weeks after a rough earnings report which saw the company incur net losses of $88.8 million in its first quarter.

An ongoing weak freight market including excess carrier capacity and pressure on pricing brought revenue per shipment excluding fuel up just 0.7 percent over the same period last year. The company’s intermodal and truckload brokerage services saw an 8 percent decline in revenues and a 41 percent decline in adjusted EBITDA in the quarter.

If there was at least one positive for Forward Air in the quarter, it was that it doesn’t seem it has lost customers or salespeople in the wake of the Omni deal, which was valued at $2.1 billion upon closing. This was a concern during the back-and-forth when both Forward and Omni Logistics were engaged in dueling lawsuits over the future of the acquisition, with some customers were worried that the former would essentially be acquiring a competitor.

“I’m pleased to report that the answers on customer attrition and salespeople attrition is still positive,” said Michael Hance, the interim CEO of Forward Air prior to Stewart’s appointment, during the May 8 earnings call. “We have not seen customer attrition.”