Forward Air Corporation (NASDAQ:FWRD) today reported record revenue, operating income, net income and diluted earnings per share for the second quarter and six months ended June 30, 2008.
Operating revenue for the quarter ended June 30, 2008 increased 30.5% to $121.6 million from $93.1 million for the same quarter in 2007. Income from operations was $20.3 million, compared with $18.3 million in the prior-year quarter, an increase of 10.6%. As a percent of operating revenue, income from operations decreased to 16.7% from 19.7% for the same quarter last year. Net income during the period increased by $0.6 million, or 5.5%, to $12.1 million from $11.5 million in the prior-year quarter. Income per diluted share from operations for the second quarter of 2008 was $0.42 compared with $0.38 in the prior-year quarter, an increase of 10.5%.
Operating revenue for the six months ended June 30, 2008 increased 27.1% to $229.5 million from $180.5 million for the same period in 2007. Income from operations was $36.9 million, compared with $34.2 million in the prior-year period, an increase of 8.1%. As a percent of operating revenue, income from operations decreased to 16.1% for the first six months of 2008 from 18.9% in 2007. Net income during the period increased 1.6% to $22.1 million from $21.8 million in the prior-year period. Income per diluted share from operations for the first six months of 2008 was $0.76 compared with $0.72 in the prior-year period, an increase of 5.6%.
Bruce Campbell, Chairman, President and CEO, commented, “Within our Forward Air, Inc operating segment, which includes our core airport-to-airport network, we experienced continued success with our Completing the Model strategic initiatives. Most notably, our TLX truckload brokerage and our Forward Air Complete door-to-door pick-up and delivery offering were key contributors. The success of these initiatives along with improved freight volumes and disciplined cost control by our team enabled us to post record results in the most challenging of economic times.”
Commenting further, Mr. Campbell said, “Our Forward Air Solutions segment, which is our pool distribution offering, continued executing their 2008 growth plan by expanding their geographic footprint into Texas. Two of the new locations, Dallas and Houston, resulted from our previously announced (March 17, 2008) asset purchase of Pinch Transport (and related companies) while the third new location, San Antonio, was a de novo expansion, driven by strong customer demand. We will continue to emphasize our geographic expansion strategy in this important product line for the balance of 2008.”
In commenting on the third quarter, Rodney L. Bell, Senior Vice President and CFO, said, “We anticipate third quarter year-over-year revenue growth in the 22 to 27% range. Additionally, we expect income per diluted share for the third quarter to be $0.40 to $0.44.
Review of Financial Results
Forward Air will hold a conference call to discuss second quarter 2008 results on Tuesday, July 22, 2008 at 9:00 a.m. EDT. The Company’s conference call will be available online at www.forwardair.com or by dialing 866.356.4441. 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
Forward Air is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of 83 terminals located on or near major airports in the United States and Canada. The Company 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 Corporation | ||||||||||||||||
| Condensed Consolidated Statements of Income | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
| (Unaudited) | ||||||||||||||||
| Three months ended | Six months ended | |||||||||||||||
| June 30, | June 30, | June 30, | June 30, | |||||||||||||
| 2008 | 2007 | 2008 | 2007 | |||||||||||||
| Operating revenue: | ||||||||||||||||
| Forward Air | ||||||||||||||||
| Airport-to-airport | $ | 89,187 | $ | 77,237 | $ | 171,246 | $ | 151,458 | ||||||||
| Logistics | 14,838 | 10,680 | 27,091 | 18,865 | ||||||||||||
| Other | 6,188 | 5,230 | 11,977 | 10,178 | ||||||||||||
| Forward Air Solutions | ||||||||||||||||
| Pool distribution | 11,350 | -- | 19,187 | -- | ||||||||||||
| Total operating revenue | 121,563 | 93,147 | 229,501 | 180,501 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Purchased transportation | ||||||||||||||||
| Forward Air | ||||||||||||||||
| Airport-to-airport | 33,472 | 29,739 | 65,011 | 60,271 | ||||||||||||
| Logistics | 10,818 | 8,150 | 19,998 | 14,296 | ||||||||||||
| Other | 1,572 | 1,477 | 3,205 | 2,773 | ||||||||||||
| Forward Air Solutions | ||||||||||||||||
| Pool distribution | 2,069 | -- | 3,242 | -- | ||||||||||||
Total purchased transportation | 47,931 | 39,366 | 91,456 | 77,340 | ||||||||||||
| Salaries, wages and employee benefits | 29,404 | 19,964 | 55,851 | 38,977 | ||||||||||||
| Operating leases | 5,884 | 3,882 | 10,735 | 7,617 | ||||||||||||
| Depreciation and amortization | 3,998 | 2,494 | 7,696 | 4,874 | ||||||||||||
| Insurance and claims | 1,614 | 1,900 | 3,874 | 3,602 | ||||||||||||
| Fuel expense | 3,289 | 271 | 5,413 | 509 | ||||||||||||
| Other operating expenses | 9,181 | 6,957 | 17,564 | 13,429 | ||||||||||||
| Total operating expenses | 101,301 | 74,834 | 192,589 | 146,348 | ||||||||||||
| Income from operations | 20,262 | 18,313 | 36,912 | 34,153 | ||||||||||||
| Other income (expense): | ||||||||||||||||
| Interest expense | (328 | ) | (41 | ) | (629 | ) | (81 | ) | ||||||||
| Other, net | 56 | 469 | 210 | 1,221 | ||||||||||||
| Total other income (expense) | (272 | ) | 428 | (419 | ) | 1,140 | ||||||||||
| Income before income taxes | 19,990 | 18,741 | 36,493 | 35,293 | ||||||||||||
| Income taxes | 7,888 | 7,266 | 14,383 | 13,525 | ||||||||||||
| Net income | $ | 12,102 | $ | 11,475 | $ | 22,110 | $ | 21,768 | ||||||||
| Net income per share: | ||||||||||||||||
| Basic | $ | 0.42 | $ | 0.38 | $ | 0.77 | $ | 0.72 | ||||||||
| Diluted | $ | 0.42 | $ | 0.38 | $ | 0.76 | $ | 0.72 | ||||||||
| Dividends | $ | 0.07 | $ | 0.07 | $ | 0.14 | $ | 0.14 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 28,805 | 29,805 | 28,737 | 30,070 | ||||||||||||
| Diluted | 29,126 | 30,162 | 29,041 | 30,412 | ||||||||||||
| Forward Air Corporation | ||||||
| Condensed Consolidated Balance Sheet | ||||||
| (In thousands, except per share data) | ||||||
| (Unaudited) | ||||||
| June 30, | December 31, | |||||
| 2008 | 2007 (a) | |||||
| Assets | ||||||
| Current assets: | ||||||
| Cash | $ | 1,082 | $ | 4,909 | ||
| Accounts receivable, net | 75,973 | 59,734 | ||||
| Other current assets | 9,153 | 6,807 | ||||
| Total current assets | 86,208 | 71,450 | ||||
| Property and equipment | 160,988 | 158,354 | ||||
| Less accumulated depreciation and amortization | 57,240 | 55,322 | ||||
| Total property and equipment, net | 103,748 | 103,032 | ||||
| Goodwill and other acquired intangibles: | ||||||
| Goodwill | 45,045 | 36,053 | ||||
| Other acquired intangibles, net | 37,067 | 29,991 | ||||
| Total goodwill and other acquired intangibles | 82,112 | 66,044 | ||||
| Other assets | 1,955 | 1,358 | ||||
| Total assets | $ | 274,023 | $ | 241,884 | ||
| Liabilities and Shareholders’ Equity | ||||||
| Current liabilities: | ||||||
| Accounts payable | $ | 13,512 | $ | 11,714 | ||
| Accrued expenses | 16,688 | 14,274 | ||||
| Current portion of debt and capital lease obligations | 592 | 830 | ||||
| Total current liabilities | 30,792 | 26,818 | ||||
| Debt and capital lease obligations, less current portion | 36,441 | 31,486 | ||||
| Other long-term liabilities | 2,740 | 4,476 | ||||
| Deferred income taxes | 8,138 | 7,371 | ||||
| Shareholders’ equity: | ||||||
| Common stock | 288 | 286 | ||||
| Additional paid-in capital | 6,106 | -- | ||||
| Retained earnings | 189,518 | 171,447 | ||||
| Total shareholders’ equity | 195,912 | 171,733 | ||||
| Total liabilities and shareholders’ equity | $ | 274,023 | $ | 241,884 | ||
(a) Taken from audited financial statements, which are not presented in their entirety | ||||||
| Forward Air Corporation | ||||||||
| Condensed Consolidated Statement of Cash Flows | ||||||||
| (In thousands) | ||||||||
| (Unaudited) | ||||||||
| Six months ended | ||||||||
| June 30, | June 30, | |||||||
| 2008 | 2007 | |||||||
| Operating activities: | ||||||||
| Net Income | $ | 22,110 | $ | 21,768 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 7,696 | 4,874 | ||||||
| Share-based compensation | 3,120 | 1,483 | ||||||
| Loss (gain) on sale of property and equipment | 21 | (235 | ) | |||||
| Provision for loss (recovery) on receivables | 113 | (114 | ) | |||||
| Provision for revenue adjustments | 1,904 | 1,165 | ||||||
| Deferred income taxes | 1,428 | 1,514 | ||||||
| Tax benefit for stock options exercised | (1,079 | ) | (8 | ) | ||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (18,301 | ) | (4,312 | ) | ||||
| Prepaid expenses and other current assets | (2,371 | ) | 1,347 | |||||
| Accounts payable and accrued expenses | 2,514 | (2,240 | ) | |||||
| Net cash provided by operating activities | 17,155 | 25,242 | ||||||
| Investing activities: | ||||||||
| Proceeds from disposal of property and equipment | 33 | 273 | ||||||
| Purchases of property and equipment | (5,355 | ) | (38,535 | ) | ||||
| Proceeds from sales or maturities of available-for-sale securities | -- | 126,635 | ||||||
| Purchases of available-for-sale securities | -- | (75,560 | ) | |||||
| Acquisition of business | (18,646 | ) | -- | |||||
| Other | (93 | ) | (676 | ) | ||||
| Net cash (used in) provided by investing activities | (24,061 | ) | 12,137 | |||||
| Financing activities | ||||||||
| Payments on debt and capital lease obligations | (870 | ) | (19 | ) | ||||
| Borrowings on line of credit | 30,000 | -- | ||||||
| Payments on line of credit | (25,000 | ) | -- | |||||
| Proceeds from exercise of stock options | 2,138 | 275 | ||||||
| Payments of cash dividends | (4,036 | ) | (4,222 | ) | ||||
| Common stock issued under employee stock purchase plan | 145 | 138 | ||||||
| Repurchase of common stock | -- | (31,220 | ) | |||||
| Cash settlement of share-based awards for minimum tax withholdings | (377 | ) | (234 | ) | ||||
| Tax benefit for stock options exercised | 1,079 | 8 | ||||||
| Net cash provided by (used in) financing activities | 3,079 | (35,274 | ) | |||||
| Net (decrease) increase in cash | (3,827 | ) | 2,105 | |||||
| Cash at beginning of period | 4,909 | 8,231 | ||||||
| Cash at end of period | $ | 1,082 | $ | 10,336 | ||||
| Forward Air Corporation | |||||||||||||
| Segment Information | |||||||||||||
| (In millions) | |||||||||||||
| (Unaudited) | |||||||||||||
| Three months ended | |||||||||||||
| June 30, | Percent of | June 30, | Percent of | ||||||||||
| 2008 | Revenue | 2007 | Revenue | ||||||||||
| Operating revenue | |||||||||||||
| Forward Air | $ | 110.9 | 91.2 | % | $ | 93.1 | 100.0 | % | |||||
| FASI | 11.4 | 9.4 | -- | -- | |||||||||
| Intercompany Eliminations | (0.7 | ) | (0.6 | ) | -- | -- | |||||||
| Total | 121.6 | 100.0 | 93.1 | 100.0 | |||||||||
| Purchased transportation | |||||||||||||
| Forward Air | 45.9 | 41.4 | 39.4 | 42.3 | |||||||||
| FASI | 2.7 | 23.7 | -- | -- | |||||||||
| Intercompany Eliminations | (0.7 | ) | 100.0 | -- | -- | ||||||||
| Total | 47.9 | 39.4 | 39.4 | 42.3 | |||||||||
| Salaries, wages and employee benefits | |||||||||||||
| Forward Air | 24.7 | 22.3 | 19.9 | 21.4 | |||||||||
| FASI | 4.7 | 41.2 | -- | -- | |||||||||
| Total | 29.4 | 24.2 | 19.9 | 21.4 | |||||||||
| Operating leases | |||||||||||||
| Forward Air | 4.6 | 4.2 | 3.9 | 4.2 | |||||||||
| FASI | 1.3 | 11.4 | -- | -- | |||||||||
| Total | 5.9 | 4.8 | 3.9 | 4.2 | |||||||||
| Depreciation and amortization | |||||||||||||
| Forward Air | 3.6 | 3.2 | 2.5 | 2.7 | |||||||||
| FASI | 0.4 | 3.5 | -- | -- | |||||||||
| Total | 4.0 | 3.3 | 2.5 | 2.7 | |||||||||
| Insurance and claims | |||||||||||||
| Forward Air | 1.6 | 1.4 | 1.9 | 2.0 | |||||||||
| FASI | -- | -- | -- | -- | |||||||||
| Total | 1.6 | 1.3 | 1.9 | 2.0 | |||||||||
| Fuel expense | |||||||||||||
| Forward Air | 1.8 | 1.6 | 0.3 | 0.3 | |||||||||
| FASI | 1.5 | 13.2 | -- | -- | |||||||||
| Total | 3.3 | 2.7 | 0.3 | 0.3 | |||||||||
| Other operating expenses | |||||||||||||
| Forward Air | 8.0 | 7.2 | 6.9 | 7.4 | |||||||||
| FASI | 1.2 | 10.5 | -- | -- | |||||||||
| Total | 9.2 | 7.6 | 6.9 | 7.4 | |||||||||
| Income (loss) from operations | |||||||||||||
| Forward Air | 20.7 | 18.7 | 18.3 | 19.7 | |||||||||
| FASI | (0.4 | ) | (3.5 | ) | -- | -- | |||||||
| Total | $ | 20.3 | 16.7 | % | $ | 18.3 | 19.7 | % | |||||
| Forward Air Corporation | |||||||||||||
| Segment Information | |||||||||||||
| (In millions) | |||||||||||||
| (Unaudited) | |||||||||||||
| Six months ended | |||||||||||||
| June 30, | Percent of | June 30, | Percent of | ||||||||||
| 2008 | Revenue | 2007 | Revenue | ||||||||||
| Operating revenue | |||||||||||||
| Forward Air | $ | 211.2 | 92.0 | % | $ | 180.5 | 100.0 | % | |||||
| FASI | 19.2 | 8.4 | -- | -- | |||||||||
| Intercompany Eliminations | (0.9 | ) | (0.4 | ) | -- | -- | |||||||
| Total | 229.5 | 100.0 | 180.5 | 100.0 | |||||||||
| Purchased transportation | |||||||||||||
| Forward Air | 88.2 | 41.8 | 77.4 | 42.9 | |||||||||
| FASI | 4.1 | 21.4 | -- | -- | |||||||||
| Intercompany Eliminations | (0.9 | ) | 100.0 | -- | -- | ||||||||
| Total | 91.4 | 39.8 | 77.4 | 42.9 | |||||||||
| Salaries, wages and employee benefits | |||||||||||||
| Forward Air | 47.3 | 22.4 | 38.9 | 21.6 | |||||||||
| FASI | 8.6 | 44.8 | -- | -- | |||||||||
| Total | 55.9 | 24.3 | 38.9 | 21.6 | |||||||||
| Operating leases | |||||||||||||
| Forward Air | 8.9 | 4.2 | 7.6 | 4.2 | |||||||||
| FASI | 1.8 | 9.4 | -- | -- | |||||||||
| Total | 10.7 | 4.7 | 7.6 | 4.2 | |||||||||
| Depreciation and amortization | |||||||||||||
| Forward Air | 7.0 | 3.3 | 4.9 | 2.7 | |||||||||
| FASI | 0.7 | 3.6 | -- | -- | |||||||||
| Total | 7.7 | 3.4 | 4.9 | 2.7 | |||||||||
| Insurance and claims | |||||||||||||
| Forward Air | 3.4 | 1.6 | 3.6 | 2.0 | |||||||||
| FASI | 0.5 | 2.6 | -- | -- | |||||||||
| Total | 3.9 | 1.7 | 3.6 | 2.0 | |||||||||
| Fuel expense | |||||||||||||
| Forward Air | 3.1 | 1.4 | 0.5 | 0.3 | |||||||||
| FASI | 2.3 | 12.0 | -- | -- | |||||||||
| Total | 5.4 | 2.4 | 0.5 | 0.3 | |||||||||
| Other operating expenses | |||||||||||||
| Forward Air | 15.4 | 7.3 | 13.4 | 7.4 | |||||||||
| FASI | 2.1 | 10.9 | -- | -- | |||||||||
| Total | 17.5 | 7.6 | 13.4 | 7.4 | |||||||||
| Income (loss) from operations | |||||||||||||
| Forward Air | 37.9 | 18.0 | 34.2 | 18.9 | |||||||||
| FASI | (0.9 | ) | (4.7 | ) | -- | -- | |||||||
| Total | $ | 37.0 | 16.1 | % | $ | 34.2 | 18.9 | % | |||||
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
