Research Update: Forward Air Corp. Downgraded To 'B' From 'B+' On Weakened Performance; Outlook Negative; Debt Ratings Also Lowered

Ongoing weakness in the freight industry is contributing to weaker-than-expected performance across all of Forward Air Corp.'s operating segments. In addition, we believe the company faces execution challenges associated with cost-savings initiatives and its Omni integration, which pose further downside risk to credit measures and liquidity. We now expect Forward's funds from operations (FFO) to debt metric to remain below 10% over the next 12-18 months, our previous downside threshold for the rating. We therefore lowered our issuer credit rating on Forward to 'B' from 'B+' and our issue-level rating on its senior secured debt to 'B' from 'B+'. The negative outlook reflects uncertainty around Forward's ability to maintain FFO to debt above 6% and limit potential pressure on liquidity,

...- Ongoing weakness in the freight industry is contributing to weaker-than-expected performance across all of Forward Air Corp.'s operating segments. - In addition, we believe the company faces execution challenges associated with cost-savings initiatives and its Omni integration, which pose further downside risk to credit measures and liquidity. - We now expect Forward's funds from operations (FFO) to debt metric to remain below 10% over the next 12-18 months, our previous downside threshold for the rating. - We therefore lowered our issuer credit rating on Forward to 'B' from 'B+' and our issue-level rating on its senior secured debt to 'B' from 'B+'. - The negative outlook reflects uncertainty around Forward's ability to maintain FFO to debt above 6% and limit potential pressure on liquidity, primarily given the current weakness in the freight industry and execution risk in achieving cost synergies over the next 12 months....

Research Update