Activist investor Ancora Holdings is circling Forward Air (FWRD), citing a laundry list of issues to fix that have caused the company to badly lag its LTL peers from a financial and shareholder performance standpoint.
FWRD is known for its core asset-light, expedited airport LTL service (accounting for two-thirds, or more, of profits), which has underperformed in recent years as the company embarked on a M&A-focused growth strategy, as opposed to focusing on its core business and optimizing its margins and returns. Ancora believes that the current management team has poorly executed, lost focus and destroyed shareholder capital on dilutive acquisitions.
Now the original co-founder, Scott Niswonger, as well as the company’s former CFO, Andrew Clarke, have joined together with Ancora Advisors and nominated four board members. Given its long indirect history with the company, Ancora has intimate knowledge of the operations and has a detailed plan to fix the issues it deems most pressing, while potentially delivering big upside for shareholders in the process.
Essentially, Ancora wants FWRD to return to its old roots. The plan focuses on several pillars: returning focus to core LTL operations; selling off recent noncore and dilutive acquisitions; yield/pricing improvement; cost cuts; improved employee productivity; balance sheet optimization (higher leverage target); and front-loaded share buybacks.
FWRD as a stock has already run up a lot, likely due to investor excitement over future potential for improvements, but we think there is still plenty of long-term upside left should Ancora successfully execute on many (or even some) of its plans. We attempt to demonstrate this by providing a high-level analysis on the long-term upside potential in our sum-of-the-parts valuation.
Read the full report here.
