Forward Air Corporation Reports First Quarter 2007 Results
Forward Air Corporation Reports First Quarter 2007 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)--
Forward Air Corporation (NASDAQ:FWRD) today reported results for the first quarter ended March 31, 2007.
Operating revenue for the quarter ended March 31, 2007 increased 6.1% to $87.4 million from $82.3 million for the same quarter in 2006. Income from operations was $15.8 million, compared with $17.0 million in the prior-year quarter, a decrease of 6.5%. As a percent of operating revenue, income from operations declined to 18.2% from 20.7% for the same quarter last year. Net income for the quarter ended March 31, 2007 was $10.3 million, compared with $11.0 million in the prior-year quarter. Income per diluted share from operations for the first quarter of 2007 was $0.34 compared with $0.35 in the prior-year quarter, a decrease of 2.9%.
Bruce Campbell, President and CEO, commented, "Without question, the first quarter of 2007 presented many challenges for the Forward Air team. The chief challenge for our team was trying to effectively manage and control our purchased transportation costs in light of the difficult operating conditions. These increased costs drove lower operating margins for the quarter than we had anticipated. We have implemented new procedures which should result in an immediate improvement in our management of purchased transportation costs going forward. Fortunately, our strict cost discipline in other key operating expense areas proved effective during the quarter despite the environment."
Commenting further, "While our system weight volume for the quarter was flat, we continued to experience an increase in shipment count, which was effectively offset by a smaller average weight per shipment. During the quarter, we were very encouraged by the results achieved and progress made in our 'Completing the Model' initiatives, especially our logistics initiative, which once again produced excellent results."
Rodney L. Bell, Senior Vice President and CFO, said, "The Company's cash flows from operations were strong in the first quarter generating $10.4 million, which was a 16.6% increase from the $8.9 million generated in the first quarter of 2006. We spent approximately $22.2 million in the quarter completing our Chicago facility and purchasing the land for our Dallas facility."
Review of Financial Results
Forward Air will hold a conference call to discuss first quarter 2007 results on Tuesday, April 24, 2007 at 9:00 a.m. EDT. 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 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 81 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 Statements of Income (Unaudited)
(In thousands, except per share data)
Three months ended
------------------
3/31/07 3/31/06
--------- --------
Operating revenue $87,353 $82,330
Operating expenses:
Purchased transportation 37,974 32,436
Salaries, wages and employee benefits 19,013 18,793
Operating leases 3,735 3,446
Depreciation and amortization 2,380 2,399
Insurance and claims 1,702 1,481
Other operating expenses 6,710 6,819
--------- --------
Total operating expenses 71,514 65,374
--------- --------
Income from operations 15,839 16,956
Other income (expense):
Interest expense (40) (25)
Other, net 753 634
--------- --------
Total other income 713 609
--------- --------
Income before income taxes 16,552 17,565
Income taxes 6,259 6,557
--------- --------
Net income $10,293 $11,008
========= ========
Income per share:
Basic $ 0.34 $ 0.35
========= ========
Diluted $ 0.34 $ 0.35
========= ========
FORWARD AIR CORPORATION
Condensed Consolidated Balance Sheets
(In thousands, except share data)
3/31/07 12/31/06
----------- -----------
(Unaudited) Audited (a)
Assets
Current assets:
Cash $ 5,435 $ 8,231
Short-term investments 42,075 61,650
Accounts receivable, less allowance of $810
in 2007 and $860 in 2006 48,908 48,486
Other current assets 10,247 9,196
----------- -----------
Total current assets 106,665 127,563
Property and equipment 126,356 101,190
Less accumulated depreciation and
amortization 49,374 47,875
----------- -----------
Total property and equipment, net 76,982 53,315
Goodwill and other acquired intangibles:
Goodwill 15,588 15,588
Other acquired intangibles, net of
accumulated amortization of $2,338 in 2007
and $2,019 in 2006 10,912 10,731
----------- -----------
Total goodwill and other acquired intangibles 26,500 26,319
Other assets 2,705 5,817
----------- -----------
Total assets $212,852 $213,014
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 6,777 $ 7,949
Accrued expenses 9,905 11,144
Current portion of capital lease obligations 41 40
----------- -----------
Total current liabilities 16,723 19,133
Capital lease obligations, less current
portion 786 796
Other long-term liabilities 2,345 1,271
Deferred income taxes 7,558 6,587
Shareholders' equity:
Common stock, $0.01 par value:
Authorized shares - 50,000,000
Issued and outstanding shares - 30,167,408
in 2007 and 30,372,082 in 2006 302 304
Retained earnings 185,138 184,923
----------- -----------
Total shareholders' equity 185,440 185,227
----------- -----------
Total liabilities and shareholders' equity $212,852 $213,014
=========== ===========
(a) Taken from audited financial statements, which are not presented
in their entirety.
FORWARD AIR CORPORATION
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Three months ended
-------------------
3/31/07 3/31/06
--------- ---------
Operating activities:
Net income $ 10,293 $ 11,008
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,380 2,399
Share-based compensation 593 224
Gain on sale of property and equipment (62) (191)
Provision for (recovery) loss on receivables (93) 39
Provision for revenue adjustments 655 593
Deferred income taxes 1,797 327
Increase in income taxes payable for stock
options exercised 7 (394)
Changes in operating assets and liabilities
Accounts receivable (952) (1,013)
Prepaid expenses and other current assets (440) (128)
Accounts payable and accrued expenses (2,734) (5,682)
Income taxes (1,024) 1,753
--------- ---------
Net cash provided by operating activities 10,420 8,935
Investing activities:
Proceeds from disposal of property and equipment 188 3,105
Purchases of property and equipment (22,570) (2,421)
Proceeds from sales or maturities of available-
for-sale securities 64,095 45,700
Purchases of available-for-sale securities (44,520) (46,155)
Other (704) (25)
--------- ---------
Net cash (used in) provided by investing
activities (3,511) 204
Financing activities:
Payments of capital lease obligations (9) (9)
Payments on line of credit -- (1,504)
Proceeds from exercise of stock options 196 1,431
Payments of cash dividends (2,127) (2,200)
Repurchase of common stock (7,538) (4,400)
Cash settlement of share-based awards for minimum
tax withholdings (220) --
Increase in income taxes payable for stock options
exercised (7) 394
--------- ---------
Net cash used in financing activities (9,705) (6,288)
--------- ---------
Net (decrease) increase in cash (2,796) 2,851
Cash at beginning of period 8,231 332
--------- ---------
Cash at end of period $ 5,435 $ 3,183
========= =========
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.
Source: Forward Air Corporation
Released April 23, 2007