S&P prunes Forward Air

S&P said it lowered its ratings on Forward Air Corp. and its senior secured debt to B+ from BB-. The 3 recovery rating is unchanged, indicating meaningful (50%-70%; rounded estimate: 60%) recovery in default.

“The downgrade reflects our expectation for weaker metrics than originally anticipated in the near term as Forward Air works through integration and a weaker-than-expected earnings contribution from Omni Logistics. Pro forma for the transaction we previously forecast S&P Global Ratings-adjusted debt to EBITDA of 9.7x for 2023 and 5.6x for 2024 (6.3x and 3.4x, respectively, excluding preferred shares from the adjusted debt calculation),” the agency said in a press release.

S&P said it now estimates S&P Global Ratings-adjusted debt to EBITDA of 8.6x in 2023 and 6.2x in 2024 (7.2x and 5.1x, respectively, excluding preferred shares) and FFO to debt at 4.5% in 2023 and 8.2% in 2024 (5.4% and 9.9%, respectively, excluding preferred shares).

The outlook is stable.

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