Forward Air Corporation (NASDAQ:FWRD) today reported results for the quarter ended March 31, 2010.
Operating revenue for the quarter ended March 31, 2010 increased 10.8% to $107.0 million from $96.6 million for the first quarter of 2009. Income from operations was $6.1 million, compared with a $5.0 million loss from operations for the same quarter of 2009. As a percent of operating revenue, income from operations increased to 5.7%. Net income during the period increased by $6.5 million to $3.4 million from a $3.1 million net loss for the first quarter of 2009. Net income per diluted share for the first quarter of 2010 was $0.12 compared with a $0.11 net loss per share in the same quarter of 2009.
The first quarter of 2009 included a $7.2 million non-cash, pre-tax impairment charge. Excluding the $7.2 million non-cash, pre-tax impairment charge from the results of operations for the first quarter of 2009, income from operations for the first quarter of 2010 increased $4.0 million from $2.1 million for the first quarter of 2009, and net income for the first quarter of 2010 increased $2.2 million from $1.2 million for the first quarter of 2009. Similarly, earnings per diluted share for the first quarter of 2010 increased $0.08 compared to the adjusted earnings per diluted share of $0.04 for the first quarter of 2009.
Bruce A. Campbell, Chairman, President, and CEO, said, "We are pleased to report that the trends of improved freight volumes and resulting profitability we experienced in the fourth quarter of 2009 continued throughout the first quarter of 2010. These continuing trends provide further encouragement that we have entered a period of sustained recovery.”
“Our airport-to-airport network, Forward Air Complete pick-up and delivery as well as TLX expedited truckload brokerage were all solid contributors within our Forward Air, Inc. business segment. Our Forward Air Solutions pool distribution segment, while posting a loss for the first quarter, on the strength of better volumes did generate a profit in March. Since the first quarter is traditionally the weakest period, we are hopeful this may be a sign that the consumer is finally returning to retail sales.”
In closing Mr. Campbell said, “Again this quarter please allow me to thank our team of employees and independent owner operators for their contributions to our solid quarterly results. It was their efforts that allowed us to weather the economic storm and emerge on the other side a much stronger company.”
Commenting on the Company’s guidance for the second quarter, Rodney L. Bell, Senior Vice President and CFO, said, “Starting May 1, 2010 we will begin experiencing the benefit of a general rate increase on the linehaul portion of our airport-to-airport network. Inclusive of this partial quarter benefit, we anticipate that our second quarter 2010 revenues will increase in the range of 13 to 18% over the comparable 2009 period, and we expect income per diluted share to be between $0.20 and $0.24 per share.”
Review of Financial Results
Forward Air will hold a conference call to discuss first quarter 2010 results on Thursday, April 22, 2010 at 9:00 a.m. EST. The Company’s conference call will be available online at www.forwardair.com or by dialing 800.841.9385. A replay of the conference call will be available at www.forwardair.com beginning shortly after the completion of the live call.
About Forward Air Corporation
Forward Air Corporation operates two business segments, Forward Air, Inc. and Forward Air Solutions, Inc.
Forward Air, Inc. is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of terminals located on or near major airports in 84 cities in the United States and Canada. It provides these services as a cost-effective alternative to air transportation of cargo that must be delivered at a specific time but is relatively less time-sensitive than traditional air freight or when air transportation is not economical.
Forward Air Solutions, Inc. is a provider of pool distribution services. Pool distribution involves the consolidation and shipment of several smaller less-than-truckload shipments to a common area or region. Once at the regional destination, the loads are deconsolidated, then grouped with other shipments with common delivery points, and delivered in a very precise, time-sensitive manner. Our pool distribution network consists of terminals and service locations in 19 cities within the Mid-Atlantic, Southeast, Midwest and Southwestern United States.
| Forward Air Corporation | ||||||||
| Condensed Consolidated Statements of Operations | ||||||||
| (In thousands, except per share data) | ||||||||
(Unaudited) | ||||||||
| Three months ended | ||||||||
| March 31, | March 31, | |||||||
| 2010 | 2009 | |||||||
| Operating revenue: | ||||||||
| Forward Air | ||||||||
| Airport-to-airport | $ | 70,888 | $ | 63,055 | ||||
| Logistics | 13,855 | 13,044 | ||||||
| Other | 5,875 | 5,867 | ||||||
| Forward Air Solutions | ||||||||
| Pool distribution | 16,359 | 14,650 | ||||||
| Total operating revenue | 106,977 | 96,616 | ||||||
| Operating expenses: | ||||||||
| Purchased transportation | ||||||||
| Forward Air | ||||||||
| Airport-to-airport | 28,799 | 26,153 | ||||||
| Logistics | 10,768 | 10,279 | ||||||
| Other | 1,492 | 1,064 | ||||||
| Forward Air Solutions | ||||||||
| Pool distribution | 3,442 | 2,632 | ||||||
| Total purchased transportation | 44,501 | 40,128 | ||||||
| Salaries, wages and employee benefits | 30,670 | 29,056 | ||||||
| Operating leases | 6,629 | 6,989 | ||||||
| Depreciation and amortization | 4,949 | 4,858 | ||||||
| Insurance and claims | 2,331 | 2,716 | ||||||
| Fuel expense | 2,058 | 1,682 | ||||||
| Other operating expenses | 9,784 | 9,056 | ||||||
| Impairment of goodwill and other intangible assets | -- | 7,157 | ||||||
| Total operating expenses | 100,922 | 101,642 | ||||||
| Income (loss) from operations | 6,055 | (5,026 | ) | |||||
| Other income (expense): | ||||||||
| Interest expense | (185 | ) | (141 | ) | ||||
| Other, net | 30 | (22 | ) | |||||
| Total other expense | (155 | ) | (163 | ) | ||||
| Income (loss) before income taxes | 5,900 | (5,189 | ) | |||||
| Income taxes | 2,481 | (2,085 | ) | |||||
| Net income (loss) | $ | 3,419 | $ | (3,104 | ) | |||
| Net income (loss) per share: | ||||||||
| Basic | $ | 0.12 | $ | (0.11 | ) | |||
| Diluted | $ | 0.12 | $ | (0.11 | ) | |||
| Weighted average shares outstanding: | ||||||||
| Basic | 28,951 | 28,906 | ||||||
| Diluted | 29,074 | 28,906 | ||||||
| Dividends per share: | $ | 0.07 | $ | 0.07 | ||||
| Forward Air Corporation | |||||||||||
| Reconciliation of U.S. GAAP Financial Results to Adjusted Financial Results | |||||||||||
| (In thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
| Three months ended | |||||||||||
| Adjusted | |||||||||||
| March 31, | Impairment | March 31, | |||||||||
| 2009 (1) | Charge | 2009 | |||||||||
| (Loss) income from operations | $ | (5,026 | ) | $ | 7,157 | $ | 2,131 | ||||
| Income taxes | (2,085 | ) | (2,875 | ) | 790 | ||||||
| Net (loss) income | (3,104 | ) | 4,282 | 1,178 | |||||||
| Diluted/weighted average shares outstanding | 28,906 | 28,963 | |||||||||
| Net (loss) income per share: | $ | (0.11 | ) | $ | 0.04 | ||||||
| (1) - As reported in accordance with United States generally accepted accounting principles. | |||||||||||
| Forward Air Corporation | ||||||
| Condensed Consolidated Balance Sheets | ||||||
| (In thousands) | ||||||
| (Unaudited) | ||||||
| March 31, | December 31, | |||||
| 2010 | 2009 (a) | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 44,612 | $ | 42,035 | ||
| Accounts receivable, net | 58,425 | 55,720 | ||||
| Other current assets | 7,688 | 9,471 | ||||
| Total current assets | 110,725 | 107,226 | ||||
| Property and equipment | 208,654 | 204,716 | ||||
| Less accumulated depreciation and amortization | 78,323 | 75,990 | ||||
| Total property and equipment, net | 130,331 | 128,726 | ||||
| Goodwill and other acquired intangibles: | ||||||
| Goodwill | 43,332 | 43,332 | ||||
| Other acquired intangibles, net | 34,701 | 35,849 | ||||
| Total goodwill and other acquired intangibles | 78,033 | 79,181 | ||||
| Other assets | 1,534 | 1,597 | ||||
| Total assets | $ | 320,623 | $ | 316,730 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 9,837 | $ | 10,333 | ||
| Accrued expenses | 20,745 | 18,531 | ||||
| Current portion of debt and capital lease obligations | 835 | 919 | ||||
| Total current liabilities | 31,417 | 29,783 | ||||
| Debt and capital lease obligations, less current portion | 51,992 | 52,169 | ||||
| Other long-term liabilities | 4,623 | 4,485 | ||||
| Deferred income taxes | 4,889 | 5,786 | ||||
| Shareholders’ equity: | ||||||
| Common stock | 290 | 290 | ||||
| Additional paid-in capital | 18,436 | 16,631 | ||||
| Retained earnings | 208,976 | 207,586 | ||||
| Total shareholders’ equity | 227,702 | 224,507 | ||||
| Total liabilities and shareholders’ equity | $ | 320,623 | $ | 316,730 | ||
(a) Taken from audited financial statements, which are not presented in their entirety. | ||||||
| Forward Air Corporation | ||||||||
| Condensed Consolidated Statements of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Three Months Ended | ||||||||
| March 31, | March 31, | |||||||
| 2010 | 2009 | |||||||
| Operating activities: | ||||||||
| Net income (loss) | $ | 3,419 | $ | (3,104 | ) | |||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 4,949 | 4,858 | ||||||
| Impairment of goodwill and other intangible assets | -- | 7,157 | ||||||
| Share-based compensation | 1,763 | 1,780 | ||||||
| Loss on disposal of property and equipment | 1 | 9 | ||||||
| Provision for loss (recovery) on receivables | 90 | (35 | ) | |||||
| Provision for revenue adjustments | 423 | 794 | ||||||
| Deferred income taxes | (873 | ) | (1,960 | ) | ||||
| Tax benefit for stock options exercised | (4 | ) | -- | |||||
| Changes in operating assets and liabilities, | ||||||||
| Accounts receivable | (3,218 | ) | 8,006 | |||||
| Prepaid expenses and other current assets | 1,786 | 705 | ||||||
| Accounts payable and accrued expenses | 1,856 | (1,751 | ) | |||||
| Net cash provided by operating activities | 10,192 | 16,459 | ||||||
| Investing activities: | ||||||||
| Proceeds from disposal of property and equipment | 20 | 127 | ||||||
| Purchases of property and equipment | (5,426 | ) | (4,737 | ) | ||||
| Other | 39 | (112 | ) | |||||
| Net cash used in investing activities | (5,367 | ) | (4,722 | ) | ||||
| Financing activities: | ||||||||
| Payments of debt and capital lease obligations | (261 | ) | (336 | ) | ||||
| Proceeds from exercise of stock options | 38 | -- | ||||||
| Payments of cash dividends | (2,029 | ) | (2,025 | ) | ||||
| Cash settlement of share-based awards for minimum tax withholdings | -- | (228 | ) | |||||
| Tax benefit for stock options exercised | 4 | -- | ||||||
| Net cash used in financing activities | (2,248 | ) | (2,589 | ) | ||||
| Net increase in cash | 2,577 | 9,148 | ||||||
| Cash at beginning of period | 42,035 | 22,093 | ||||||
| Cash at end of period | $ | 44,612 | $ | 31,241 | ||||
| Forward Air Corporation | |||||||||||||||||||||||
| Segment Information | |||||||||||||||||||||||
| (In millions) | |||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||
| Three months ended | |||||||||||||||||||||||
| March 31, | Percent of | March 31, | Percent of | Percent | |||||||||||||||||||
| 2010 | Revenue | 2009 | Revenue | Change | Change | ||||||||||||||||||
| Operating revenue | |||||||||||||||||||||||
| Forward Air | $ | 90.9 | 85.0 | % | $ | 82.1 | 85.0 | % | $ | 8.8 | 10.7 | % | |||||||||||
| FASI | 16.4 | 15.3 | 14.8 | 15.3 | 1.6 | 10.8 | |||||||||||||||||
| Intercompany Eliminations | (0.3 | ) | (0.3 | ) | (0.3 | ) | (0.3 | ) | -- | -- | |||||||||||||
| Total | 107.0 | 100.0 | 96.6 | 100.0 | 10.4 | 10.8 | |||||||||||||||||
| Purchased transportation | |||||||||||||||||||||||
| Forward Air | 41.1 | 45.2 | 37.6 | 45.8 | 3.5 | 9.3 | |||||||||||||||||
| FASI | 3.7 | 22.6 | 2.8 | 19.0 | 0.9 | 32.1 | |||||||||||||||||
| Intercompany Eliminations | (0.3 | ) | 100.0 | (0.3 | ) | 100.0 | -- | -- | |||||||||||||||
| Total | 44.5 | 41.6 | 40.1 | 41.5 | 4.4 | 11.0 | |||||||||||||||||
| Salaries, wages and employee benefits | |||||||||||||||||||||||
| Forward Air | 23.4 | 25.7 | 21.5 | 26.2 | 1.9 | 8.8 | |||||||||||||||||
| FASI | 7.3 | 44.5 | 7.6 | 51.3 | (0.3 | ) | (3.9 | ) | |||||||||||||||
| Total | 30.7 | 28.7 | 29.1 | 30.1 | 1.6 | 5.5 | |||||||||||||||||
| Operating leases | |||||||||||||||||||||||
| Forward Air | 4.5 | 5.0 | 4.8 | 5.8 | (0.3 | ) | (6.3 | ) | |||||||||||||||
| FASI | 2.1 | 12.8 | 2.2 | 14.8 | (0.1 | ) | (4.5 | ) | |||||||||||||||
| Total | 6.6 | 6.2 | 7.0 | 7.2 | (0.4 | ) | (5.7 | ) | |||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Forward Air | 4.0 | 4.4 | 3.9 | 4.8 | 0.1 | 2.6 | |||||||||||||||||
| FASI | 0.9 | 5.5 | 0.9 | 6.1 | -- | -- | |||||||||||||||||
| Total | 4.9 | 4.6 | 4.8 | 5.0 | 0.1 | 2.1 | |||||||||||||||||
| Insurance and claims | |||||||||||||||||||||||
| Forward Air | 1.8 | 2.0 | 2.2 | 2.7 | (0.4 | ) | (18.2 | ) | |||||||||||||||
| FASI | 0.5 | 3.0 | 0.5 | 3.4 | -- | -- | |||||||||||||||||
| Total | 2.3 | 2.1 | 2.7 | 2.8 | (0.4 | ) | (14.8 | ) | |||||||||||||||
| Fuel expense | |||||||||||||||||||||||
| Forward Air | 0.9 | 1.0 | 0.7 | 0.9 | 0.2 | 28.6 | |||||||||||||||||
| FASI | 1.2 | 7.3 | 1.0 | 6.8 | 0.2 | 20.0 | |||||||||||||||||
| Total | 2.1 | 2.0 | 1.7 | 1.8 | 0.4 | 23.5 | |||||||||||||||||
| Other operating expenses | |||||||||||||||||||||||
| Forward Air | 8.0 | 8.8 | 7.4 | 9.0 | 0.6 | 8.1 | |||||||||||||||||
| FASI | 1.8 | 11.0 | 1.6 | 10.8 | 0.2 | 12.5 | |||||||||||||||||
| Total | 9.8 | 9.1 | 9.0 | 9.3 | 0.8 | 8.9 | |||||||||||||||||
| Impairment of goodwill | |||||||||||||||||||||||
| and other intangible assets | |||||||||||||||||||||||
| Forward Air | -- | -- | 0.2 | 0.2 | (0.2 | ) | (100.0 | ) | |||||||||||||||
| FASI | -- | -- | 7.0 | 47.3 | (7.0 | ) | (100.0 | ) | |||||||||||||||
| Total | -- | -- | 7.2 | 7.5 | (7.2 | ) | (100.0 | ) | |||||||||||||||
| Income (loss) from operations | |||||||||||||||||||||||
| Forward Air | 7.2 | 7.9 | 3.8 | 4.6 | 3.4 | 89.5 | |||||||||||||||||
| FASI | (1.1 | ) | (6.7 | ) | (8.8 | ) | (59.5 | ) | 7.7 | (87.5 | ) | ||||||||||||
| Total | $ | 6.1 | 5.7 | % | $ | (5.0 | ) | (5.2 | ) | % | $ | 11.1 | (222.0 | ) | % | ||||||||
Forward Air Corporation | ||||||||||||
| Forward Air Inc. Operating Statistics | ||||||||||||
| Three months ended | ||||||||||||
| March 31, | March 31, | Percent | ||||||||||
| 2010 | 2009 | Change | ||||||||||
| Operating ratio | 92.1 | % | 95.4 | % | (3.5 | ) | % | |||||
| Business days | 63.0 | 63.0 | -- | |||||||||
| Business weeks | 12.6 | 12.6 | -- | |||||||||
| Airport-to-airport: | ||||||||||||
| Tonnage | ||||||||||||
| Total pounds ¹ | 378,625 | 338,602 | 11.8 | |||||||||
| Average weekly pounds ¹ | 30,050 | 26,873 | 11.8 | |||||||||
| Linehaul shipments | ||||||||||||
| Total linehaul | 546,313 | 502,890 | 8.6 | |||||||||
| Average weekly | 43,358 | 39,912 | 8.6 | |||||||||
| Forward Air Complete shipments | 69,106 | 53,889 | 28.2 | |||||||||
| As a percentage of linehaul shipments | 12.6 | % | 10.7 | % | 17.8 | |||||||
| Average linehaul shipment size | 693 | 673 | 3.0 | |||||||||
| Revenue per pound ² | ||||||||||||
| Linehaul yield | $ | 15.93 | $ | 16.61 | (3.6 | ) | ||||||
| Fuel surcharge impact | 1.09 | 0.73 | 1.9 | |||||||||
| Forward Air Complete impact | 1.74 | 1.32 | 2.2 | |||||||||
| Total airport-to-airport yield | $ | 18.76 | $ | 18.66 | 0.5 | |||||||
| Logistics: | ||||||||||||
| Miles | ||||||||||||
| Owner operator ¹ | 5,937 | 5,594 | 6.1 | |||||||||
| Third party ¹ | 2,738 | 2,621 | 4.5 | |||||||||
| Total Miles | 8,675 | 8,215 | 5.6 | |||||||||
| Revenue per mile | $ | 1.61 | $ | 1.61 | -- | |||||||
| Cost per mile | $ | 1.24 | $ | 1.25 | (0.8 | ) | % | |||||
| ¹ - In thousands | ||||||||||||
| ² - In cents per pound; percentage change is expressed as a percent of total yield. | ||||||||||||
Important Information
This press release contains “forward-looking statements,” as defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than historical information or statements of current condition and relate to future events or our future financial performance. Some forward-looking statements may be identified by use of such terms as “believes,” “anticipates,” “intends,” “plans,” “estimates,” “projects” or “expects.” Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, our inability to maintain our historical growth rate because of a decreased volume of freight moving through our network or decreased average revenue per pound of freight moving through our network, increasing competition and pricing pressure, surplus inventories, loss of a major customer, the creditworthiness of our customers and their ability to pay for services rendered, our ability to secure terminal facilities in desirable locations at reasonable rates, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, claims for property damage, personal injuries or workers’ compensation, employment matters including rising health care costs, enforcement of and changes in governmental regulations, environmental and tax matters, the handling of hazardous materials, the availability and compensation of qualified independent owner-operators and freight handlers needed to serve our transportation needs and our inability to successfully integrate acquisitions. As a result of the foregoing, no assurance can be given as to future financial condition, cash flows or results of operations. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Contacts:
Rodney L. Bell, 423-636-7000
rbell@forwardair.com
