Forward Air Corporation Reports Fourth Quarter and Fiscal 2007 Results
Forward Air Corporation Reports Fourth Quarter and Fiscal 2007 Results
Forward Air Reports Record Quarterly and Annual Revenues and Quarterly EPS Forward Air Announces Appointment of Michael P. McLean as Chief Accounting Officer
GREENEVILLE, Tenn.--(BUSINESS WIRE)--
Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth quarter and fiscal year ended December 31, 2007.
Operating revenue for the quarter ended December 31, 2007 increased 22.8% to a record $114.5 million from $93.2 million for the same quarter in 2006. Income from operations was $20.0 million, compared with $18.9 million in the prior-year quarter, an increase of 5.9%. As a percent of operating revenue, income from operations declined to 17.5% from 20.3% for the same quarter last year. Net income for the quarter ended December 31, 2007 was $12.4 million, compared with $12.2 million in the prior-year quarter. Net income per diluted share increased 7.5% for the fourth quarter of 2007 to a record $0.43 compared to $0.40 in the prior-year quarter.
Operating revenue for the year ended December 31, 2007 increased 11.3% to $392.7 million from $352.8 million for the same period in 2006. Income from operations was $71.0 million, compared with $75.4 million in the prior year, a decrease of 5.8%. As a percent of operating revenue, income from operations decreased to 18.1% from 21.4% in 2006. Net income during the year decreased 8.2% to $44.9 million from $48.9 million in the prior year. Net income per diluted share for 2007 was $1.50 compared with $1.55 in 2006, a decrease of 3.2%.
Commenting on the Company's fourth quarter results, Bruce A. Campbell, President and CEO, said, "We are most pleased with our performance in the fourth quarter. Our team, in addition to maintaining our standard operating discipline, was able to successfully complete the acquisition of Black Hawk Freight Services, as well as selectively obtain business from a fallen competitor."
Commenting further, Mr. Campbell said, "Without a doubt, 2007 presented one of the most-challenging freight environments in the history of our Company. However, due to our business model being at its current scale and the ability of our team to quickly react to change, we were able to mitigate the impact of a slowing economy once again producing one of the best operating ratios in the industry. We continue to be even more vigilant controlling costs as we anticipate the current operating conditions to persist throughout 2008."
Rodney L. Bell, Senior Vice President and CFO, said, "Early in 2007, we announced and began implementation of our "Completing the Model" strategic initiative which was designed to supplement the growth in our core airport-to-airport business with other faster growth-potential complementary transportation services. We knew that while these ancillary services had good margins, they lacked the superior margins enjoyed in our core business. Depending upon our business mix, we anticipate our 2008 margins will be comparable to those experienced in the fourth quarter of 2007."
Commenting further Mr. Bell said, "Once again, we posted a record year for cash flows generated from operations. Year-over-year, we were able to increase cash flows from operations 18.9% to $62.4 million further exhibiting the strength of our operating model. Our guidance for the first quarter is as follows: Revenue should be within a growth range over the prior year first quarter of 8 to 12%. Net income per diluted share should be within $0.32 to $0.36."
Lastly, Mr. Bell commented, "We are pleased to announce the appointment of Michael P. McLean as Chief Accounting Officer. In his relatively short time with our Company, Mike has proven himself an invaluable member of our management team. Mr. McLean has been Vice President and Controller since May 2006 and will continue in that capacity. Mr. McLean is a Certified Public Accountant who joined the Company as Vice President, Accounting in February 2006.
Review of Financial Results
Forward Air will hold a conference call to discuss fourth quarter and fiscal year 2007 results on Tuesday, February 12, 2008 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
Forward Air is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of 85 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 Year Ended
------------------ -----------------
December December December December
31, 31, 31, 31,
2007 2006 2007 2006
--------- -------- -------- --------
Operating revenue:
Forward Air
Airport-to-airport $ 86,034 $ 78,433 $313,162 $301,551
Logistics 11,976 9,357 42,626 31,321
Other 5,524 5,418 20,923 19,886
Forward Air Solutions (FASI)
Pool distribution 10,956 -- 16,026 --
--------- -------- -------- -------
Total operating revenue 114,490 93,208 392,737 352,758
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 33,608 32,796 123,658 119,011
Logistics 9,176 7,041 32,727 22,767
Other 1,737 1,375 6,049 4,943
Forward Air Solutions (FASI)
Pool distribution 1,292 -- 2,003 --
--------- -------- -------- --------
Total purchased
transportation 45,813 41,212 164,437 146,721
Salaries, wages and employee
benefits 27,800 18,941 88,803 74,448
Operating leases 4,670 3,839 16,761 14,458
Depreciation and
amortization 3,095 2,400 10,824 8,934
Insurance and claims 2,434 1,220 7,685 5,967
Other operating expenses 10,687 6,711 33,179 26,834
--------- -------- -------- --------
Total operating expenses 94,499 74,323 321,689 277,362
--------- -------- -------- --------
Income from operations 19,991 18,885 71,048 75,396
Other income (expense):
Interest expense (355) (23) (491) (81)
Other, net 231 915 1,756 3,229
--------- -------- -------- --------
Total other (expense) income (124) 892 1,265 3,148
--------- -------- -------- --------
Income before income taxes 19,867 19,777 72,313 78,544
Income taxes 7,463 7,608 27,388 29,621
--------- -------- -------- --------
Net income $ 12,404 $ 12,169 $ 44,925 $ 48,923
--------- -------- -------- --------
Net income per share:
Basic $ 0.43 $ 0.40 $ 1.52 $ 1.57
========= ======== ======== ========
Diluted $ 0.43 $ 0.40 $ 1.50 $ 1.55
========= ======== ======== ========
Weighted average shares
outstanding
Basic 28,832 30,453 29,609 31,091
Diluted 29,154 30,803 29,962 31,521
Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
December 31, December 31,
2007 2006
------------ ------------
Assets
Current assets:
Cash $ 4,909 $ 8,231
Short-term investments 522 61,650
Accounts receivable, net 59,734 48,486
Other current assets 6,285 9,196
------------ ------------
Total current assets 71,450 127,563
Property and equipment 158,354 101,190
Less accumulated depreciation and
amortization 55,322 47,875
------------ ------------
Total property and equipment, net 103,032 53,315
Goodwill and other acquired intangibles:
Goodwill 36,053 15,588
Other acquired intangibles, net 29,991 10,731
------------ ------------
Total goodwill and other acquired
intangibles 66,044 26,319
Other assets 1,358 5,817
------------ ------------
Total assets $ 241,884 $ 213,014
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 11,714 $ 7,949
Accrued expenses 14,274 11,144
Current portion of capital lease and note
obligations 830 40
------------ ------------
Total current liabilities 26,818 19,133
Capital lease and note obligations, less
current portion 1,486 796
Other long-term liabilities 4,476 1,271
Senior credit facility 30,000 --
Deferred income taxes 7,371 6,587
Shareholders' equity:
Common stock 286 304
Retained earnings 171,447 184,923
------------ ------------
Total shareholders' equity 171,733 185,227
------------ ------------
Total liabilities and shareholders' equity $ 241,884 $ 213,014
============ ============
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Year Ended
-------------------------
December 31, December 31,
2007 2006
------------ ------------
Operating activities:
Net income $ 44,925 $ 48,923
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 10,824 8,934
Share-based compensation 3,710 1,307
Gain on sale of property and equipment (172) (42)
Recovery on receivables (33) (223)
Provision for revenue adjustments 2,237 2,095
Deferred income taxes 596 (136)
Tax benefit of stock options exercised (1,261) (1,967)
Changes in operating assets and
liabilities:
Accounts receivable (11,399) (6,516)
Other current assets 291 407
Accounts payable and accrued expenses 12,675 (315)
----------- -----------
Net cash provided by operating activities 62,393 52,467
Investing activities:
Proceeds from disposal of property and
equipment 574 3,665
Purchases of property and equipment (47,026) (15,454)
Deposits in escrow for construction of
facilities -- (4,793)
Proceeds from sales or maturities of
available-for-sale securities 143,410 229,330
Purchases of available-for-sale securities (82,282) (211,980)
Acquisition of businesses (48,627) --
Other (119) 26
----------- -----------
Net cash (used in) provided by investing
activities (34,070) 794
Financing activities:
Payments on line of credit (10,000) (1,504)
Borrowings under line of credit 40,000 --
Payments of capital lease obligations (493) (39)
Proceeds from exercise of stock options 1,017 4,362
Dividends (8,305) (8,694)
Proceeds from common stock issued under
employee stock purchase plan 259 268
Repurchase of common stock (55,384) (41,722)
Tax benefit of stock options exercised 1,261 1,967
----------- -----------
Net cash used in financing activities (31,645) (45,362)
----------- -----------
Net (decrease) increase in cash (3,322) 7,899
Cash at beginning of year 8,231 332
----------- -----------
Cash at end of year $ 4,909 $ 8,231
=========== ===========
Forward Air Corporation
Segment Information
(In thousands)
(Unaudited)
Three Months Ended December 31,
---------------------------------------------------
Percent Percent
of of %
2007 Revenue 2006 Revenue Change Change
------- ------- ------ ------- ------ ------
Operating Revenue
Forward Air $103,534 90.4% $93,208 100.0% $10,326 11.1%
FASI 10,956 9.6 -- -- 10,956 100.0
-------- ------- ------- ------- ------- ------
Total 114,490 100.0 93,208 100.0 21,282 22.8
-------- ------- ------- ------- ------- ------
Purchased
Transportation
Forward Air 44,530 43.0 41,212 44.2 3,318 8.1
FASI 1,283 11.7 -- -- 1,283 100.0
-------- ------- ------- ------- ------- ------
Total 45,813 40.0 41,212 44.2 4,601 11.2
-------- ------- ------- ------- ------- ------
Salaries, wages and
employee benefits
Forward Air 23,230 22.4 18,941 20.3 4,289 22.6
FASI 4,570 41.7 -- -- 4,570 100.0
-------- ------- ------- ------- ------- ------
Total 27,800 24.3 18,941 20.3 8,859 46.8
-------- ------- ------- ------- ------- ------
Operating Leases
Forward Air 4,055 3.9 3,839 4.1 216 5.6
FASI 615 5.6 -- -- 615 100.0
-------- ------- ------- ------- ------- ------
Total 4,670 4.1 3,839 4.1 831 21.6
-------- ------- ------- ------- ------- ------
Depreciation and
Amortization
Forward Air 2,903 2.8 2,400 2.6 503 21.0
FASI 192 1.8 -- -- 192 100.0
-------- ------- ------- ------- ------- ------
Total 3,095 2.7 2,400 2.6 695 29.0
-------- ------- ------- ------- ------- ------
Insurance and
claims
Forward Air 2,074 2.0 1,220 1.3 854 70.0
FASI 360 3.3 -- -- 360 100.0
-------- ------- ------- ------- ------- ------
Total 2,434 2.1 1,220 1.3 1,214 99.5
-------- ------- ------- ------- ------- ------
Other operating
expenses
Forward Air 8,700 8.4 6,711 7.2 1,989 29.6
FASI 1,987 18.1 -- -- 1,987 100.0
-------- ------- ------- ------- ------- ------
Total 10,687 9.3 6,711 7.2 3,976 59.2
-------- ------- ------- ------- ------- ------
Income from
operations
Forward Air 18,042 17.5 18,885 20.3 (843) (4.5)
FASI 1,949 17.8 -- -- 1,949 100.0
-------- ------- ------- ------- ------- ------
Total $ 19,991 17.5% $18,885 20.3% $ 1,106 5.9%
======== ======= ======= ======= ======= ======
Forward Air Corporation
Segment Information
(In thousands)
(Unaudited)
Year Ended December 31,
----------------------------------------------------
Percent Percent
of of %
2007 Revenue 2006 Revenue Change Change
------- ------- ------- ------- ------ ------
Operating Revenue
Forward Air $376,711 95.9% $352,758 100.0% $23,953 6.8 %
FASI 16,026 4.1 -- -- 16,026 100.0
-------- ------- -------- ------- ------- ------
Total 392,737 100.0 352,758 100.0 39,979 11.3
-------- ------- -------- ------- ------- ------
Purchased
Transportation
Forward Air 162,434 43.1 146,721 41.6 15,713 10.7
FASI 2,003 12.5 -- -- 2,003 100.0
-------- ------- -------- ------- ------- ------
Total 164,437 41.9 146,721 41.6 17,716 12.1
-------- ------- -------- ------- ------- ------
Salaries, wages
and employee
benefits
Forward Air 81,973 21.8 74,448 21.1 7,525 10.1
FASI 6,830 42.6 -- -- 6,830 100.0
-------- ------- -------- ------- ------- ------
Total 88,803 22.6 74,448 21.1 14,355 19.3
-------- ------- -------- ------- ------- ------
Operating Leases
Forward Air 15,791 4.2 14,458 4.1 1,333 9.2
FASI 970 6.1 -- -- 970 100.0
-------- ------- -------- ------- ------- ------
Total 16,761 4.3 14,458 4.1 2,303 15.9
-------- ------- -------- ------- ------- ------
Depreciation and
Amortization
Forward Air 10,372 2.7 8,934 2.5 1,438 16.1
FASI 452 2.8 -- -- 452 100.0
-------- ------- -------- ------- ------- ------
Total 10,824 2.8 8,934 2.5 1,890 21.2
-------- ------- -------- ------- ------- ------
Insurance and
claims
Forward Air 7,176 1.9 5,967 1.7 1,209 20.3
FASI 509 3.2 -- -- 509 100.0
-------- ------- -------- ------- ------- ------
Total 7,685 1.9 5,967 1.7 1,718 28.8
-------- ------- -------- ------- ------- ------
Other operating
expenses
Forward Air 30,335 8.1 26,834 7.6 3,501 13.0
FASI 2,844 17.7 -- -- 2,844 100.0
-------- ------- -------- ------- ------- ------
Total 33,179 8.4 26,834 7.6 6,345 23.6
-------- ------- -------- ------- ------- ------
Income from
operations
Forward Air 68,630 18.2 75,396 21.4 (6,766) (9.0)
FASI 2,418 15.1 -- -- 2,418 100.0
-------- ------- -------- ------- ------- ------
Total $ 71,048 18.1% $ 75,396 21.4% $(4,348) (5.8)%
======== ======= ======== ======= ======= ======
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 February 11, 2008