Forward Air (FWRD) risk factors, FY2024 10-K

Risks Relating to Our Business and Operations

1. 01Overall economic conditions that reduce freight volumes could have a material adverse impact on our operating results and ability to achieve growth
2. 02Inflation may increase our operating expenses and lower profitability
3. 03Volatility in fuel prices, shortages of fuel or the ineffectiveness of our fuel surcharge program could have a material adverse effect on our results of operations and profitability
4. 04The Omni Acquisition may not achieve its intended benefits, and certain difficulties, costs or expenses may outweigh such intended benefits
5. 05We will incur significant transaction, merger-related and integration costs in connection with the Omni Acquisition
6. 06If we have difficulty attracting and retaining Leased Capacity Providers, other third-party transportation capacity providers, or freight handlers, our profitability and results of operations could be adversely affected
7. 07Higher prices by Leased Capacity Providers and other third-party transportation capacity providers could adversely impact our margins and operating results
8. 08Because a portion of our costs are fixed, any factors that result in a decrease in the volume or revenue per pound of freight shipped through our networks will adversely affect our results of operations
9. 09Changes to our senior management team and other key personnel, including turnover of our top executives, could have an adverse effect on our business, operating results and financial condition
10. 10We cannot assure you that our evaluation of strategic alternatives will result in any particular outcome, and the perceived uncertainties related to the Company could adversely affect our business and our stockholders
11. 11Our profitability could be negatively impacted if our pricing structure proves to be inaccurate or off-market
12. 12We derive a significant portion of our revenue from a few major customers, the loss of one or more of which could have a material adverse effect on our business
13. 13Our business is subject to seasonal trends
14. 14Our results of operations may be affected by harsh weather conditions, disasters and pandemics
15. 15Labor shortages and increased turnover or increases in employee and employee-related costs could adversely affect our ability to attract and retain qualified employees
16. 16We have recorded impairment charges in current and past periods and may record additional impairment charges in future periods
17. 17We operate in highly competitive and fragmented segments of our industry, and our business will suffer if we are unable to adequately address downward pricing pressures and other factors that may adversely affect our results of operations, growth prospects and profitability
18. 18Difficulty in forecasting timing or volumes of customer shipments could adversely impact our margins and operating results and lead to difficulties in predicting liquidity
19. 19Our international operations subject us to operational and financial risks
20. 20The occurrence or consequences of any of these factors may restrict our ability to operate in the affected region and/or decrease the profitability of our operations in that region
21. 21Our business and operations could be negatively affected by securities litigation or shareholder activism, which could impact the trading price and volatility of our common stock
22. 22Our increased direct sales efforts through our Omni sales force to direct shippers and beneficial cargo owners could be viewed as a competitive threat by our current domestic forwarder customers
23. 23Reductions in the available supply or increases in the cost of new equipment may adversely impact our profitability and cash flows
24. 24Because our Intermodal business depends heavily on freight transiting seaports and railheads, our operating results and financial condition are likely to be adversely affected by any reduction or deterioration in service at seaports or railheads
25. 25We may have difficulty effectively managing our growth, which could adversely affect our business, results of operations and financial condition
26. 26We may not make future acquisitions or, if we do, we may not realize the anticipated benefits of future acquisitions and integration of these acquisitions may disrupt our business and occupy management

Risks Relating to Omni Acquisition

1. 27Our Up-C structure places significant limitations on our cash flow because our principal asset is our interest in Opco, and, accordingly, we depend on distributions from Opco to pay our taxes and expenses, including payments under the Tax Receivable Agreement
2. 28We may not be able to retain customers or suppliers, or customers or suppliers may seek to modify contractual obligations with us, which could have an adverse effect on our business and operations. Third parties may terminate or alter existing contracts or relationships with us
3. 29Prior to the Omni Acquisition, Omni was privately-held, and the transition to being a part of a public company, along with our combined ability to manage our expanded business, may require significant resources and management attention
4. 30In addition, our future success depends, in part, upon our ability to continue to manage this expanded business, which could pose substantial challenges for management, including challenges related to the management and monitoring of diverse, complex operations and associated increased costs
5. 31Our management is committed to take comprehensive actions to remediate the material weakness in internal control over financial reporting. We are in the process of developing and implementing remediation plans to address the material weakness described above
6. 32Omni Holders are a significant holder of our common stock following completion of the Omni Acquisition
7. 33We will be required to pay Omni Holders for certain tax savings we may realize, and we expect that the payments we will be required to make may be substantial

Risks Relating to our Indebtedness

1. 34In connection with the Omni Acquisition, our debt consists of $725 million pursuant to senior secured notes and $1,045 million in senior secured term loans
2. 35The instruments governing our indebtedness impose certain restrictions on our business
3. 36If we do not comply with the terms of our debt instruments, they could be terminated and amounts thereunder could become due and payable
4. 37Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial debt

Risks Relating to Information Technology and Systems

1. 38If we fail to maintain our information technology systems, or if we fail to successfully implement new technology or enhancements, we may be at a competitive disadvantage and experience a decrease in revenues
2. 39Our business is subject to cybersecurity risks
3. 40Issues related to the intellectual property rights on which our business depends, whether related to our failure to enforce our own rights or infringement claims brought by others, could have a material adverse effect on our business, financial condition and results of operations

Risks Relating to Regulatory Environment

1. 41Claims for property damage, personal injuries or workers’ compensation and related expenses could significantly reduce our earnings
2. 42Under DOT regulations, we are liable for bodily injury and property damage caused by Leased Capacity Providers and employee drivers while they are operating equipment under our various motor carrier authorities. The potential liability associated with any accident can be severe and occurrences are unpredictable
3. 43² During the Policy Term, the Company is responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Company Risk Retention before insurance will contribute
4. 44We face risks related to self-insurance and third-party insurance that can be volatile to our earnings
5. 45Our failure to comply with various applicable federal and state employment and labor laws and regulations could have a material, adverse impact on our business, financial condition and results of operations
6. 46We operate in a regulated industry, and increased costs of compliance with, or liability for violation of, existing or future regulations and enforcement could have a material adverse effect on our business
7. 47the economics of our business by requiring changes in operating practices or influencing the demand for, and the cost of providing, transportation services
8. 48The FMCSA’s CSA and SMS initiatives could adversely impact our ability to hire qualified drivers or contract with qualified Leased Capacity Providers or third-party motor carriers, meet our growth projections and maintain our customer relationships, each of which could adversely impact our results of operations
9. 49We are subject to various environmental laws and regulations, including legislative and regulatory responses to climate change; and costs of compliance with, or liabilities for violations of, existing or future laws and regulations could significantly increase our costs of doing business
10. 50Risks and requirements related to transacting business in foreign countries may result in increased liabilities, including penalties and fines as well as reputational harm
11. 51We may be subject to governmental export and import controls that could impair our ability to compete in international markets and subject us to liability if it violates such controls
12. 52If our employees were to unionize, our operating costs would likely increase
13. 53Our charter and bylaws and provisions of Tennessee law could discourage or prevent a takeover that may be considered favorable