Forward Air Corporation Reports First Quarter 2011 Results

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the three months ended March 31, 2011.

Operating revenue for the quarter ended March 31, 2011 increased 12.3% to $120.2 million from $107.0 million for the same quarter in 2010. Income from operations was $13.3 million, compared with $6.1 million in the prior-year quarter. As a percent of operating revenue, income from operations increased to 11.1% from 5.7% for the same quarter last year. Net income during the period increased to $7.9 million from $3.4 million in the prior-year quarter. Income per diluted share for the first quarter of 2011 was $0.27 compared with $0.12 in the prior-year quarter.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the first quarter said, "We were very pleased with out first quarter performance. Our operating income and income per diluted share exceeded last year's by 118% and 125% respectively driven, in large part, by the exceptional performance of our airport-to-airport service offering. Ongoing low inventory levels and tightening capacity has increased the demand for our expedited time-definite service mode of transportation and we believe this provides for substantial growth potential for the foreseeable future."

Commenting further, Mr. Campbell said, "Our Forward Air Solutions business segment results were driven by traditionally weak first quarter demand compounded by horrible weather early this year. Unlike our core business, specialty retail sales that are missed due to bad weather are typically not recaptured. With the majority of our cost control initiatives in place, Solutions stands poised for profitability as volumes return from existing customers and we build density from new business wins."

In closing, Mr. Campbell said, "As we have stated previously, our goal is to return, as quickly as possible, to the pre-recession margins and returns our shareholders expect from us. While the 540 basis point improvement in our operating ratio is most encouraging, we remain vigilant to not allow unnecessary costs to creep back into the model. This will enable us to take full advantage of the model's ample operating leverage. Lastly and most importantly, we thank our employees and independent contractors whose hard work and dedication made these results possible."

Commenting further on the quarter, Rodney L. Bell, Senior Vice President and CFO said, "We had another outstanding quarter for cash flows allowing us to increase cash by $11.2 million to close the quarter with cash of $85.7 million. Consistent with year end we had $50.0 million outstanding on our line of credit with $38.3 million available on our credit facility."

Commenting on the Company's guidance for the second quarter, Mr. Bell said, "We anticipate that our second quarter 2011 revenues will increase in the range of 8% to 12% over the comparable 2010 period, and we expect income per diluted share to be between $0.34 and $0.38 per share. This compares to $0.27 per share in the second quarter of 2010."

Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2011 results on Thursday, April 21, 2011 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, pass code 41970161. 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,

                                       2011         2010

Operating revenue:

Forward Air

Airport-to-airport                     $ 82,147     $ 70,888

Logistics                                16,494       13,855

Other                                    6,403        5,875

Forward Air Solutions

Pool distribution                        15,157       16,359

Total operating revenue                  120,201      106,977

Operating expenses:

Purchased transportation

Forward Air

Airport-to-airport                       32,593       28,799

Logistics                                12,799       10,768

Other                                    1,473        1,492

Forward Air Solutions

Pool distribution                        3,457        3,442

Total purchased transportation           50,322       44,501

Salaries, wages and employee benefits    30,495       30,670

Operating leases                         6,706        6,629

Depreciation and amortization            5,082        4,949

Insurance and claims                     2,175        2,331

Fuel expense                             2,388        2,058

Other operating expenses                 9,747        9,784

Total operating expenses                 106,915      100,922

Income from operations                   13,286       6,055

Other income (expense):

Interest expense                         (195    )    (185    )

Other, net                               16           30

Total other expense                      (179    )    (155    )

Income before income taxes               13,107       5,900

Income taxes                             5,238        2,481

Net income                             $ 7,869      $ 3,419

Net income per share:

Basic                                  $ 0.27       $ 0.12

Diluted                                $ 0.27       $ 0.12

Weighted average shares outstanding:

Basic                                    29,135       28,951

Diluted                                  29,371       29,074

Dividends per share:                   $ 0.07       $ 0.07




Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

                                                       March 31,  December 31,

                                                       2011       2010 (a)

Assets

Current assets:

Cash                                                   $ 85,681   $ 74,504

Accounts receivable, net                                 68,387     62,763

Other current assets                                     9,541      8,696

Total current assets                                     163,609    145,963

Property and equipment                                   217,560    213,704

Less accumulated depreciation and amortization           88,033     87,272

Total property and equipment, net                        129,527    126,432

Goodwill and other acquired intangibles:

Goodwill                                                 43,332     43,332

Other acquired intangibles, net                          30,111     31,259

Total goodwill and other acquired intangibles            73,443     74,591

Other assets                                             1,523      1,810

Total assets                                           $ 368,102  $ 348,796

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable                                       $ 11,804   $ 10,687

Accrued expenses                                         21,900     16,280

Current portion of debt and capital lease obligations    603        638

Total current liabilities                                34,307     27,605

Debt and capital lease obligations, less current         50,747     50,883
portion

Other long-term liabilities                              8,371      8,106

Deferred income taxes                                    6,408      6,116

Shareholders' equity:

Common stock                                             292        290

Additional paid-in capital                               30,668     24,300

Retained earnings                                        237,309    231,496

Total shareholders' equity                               268,269    256,086

Total liabilities and shareholders' equity             $ 368,102  $ 348,796

(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,

                                                     2011         2010

Operating activities:

Net income                                           $ 7,869      $ 3,419

Adjustments to reconcile net income to net cash
provided by operating activities

Depreciation and amortization                          5,082        4,949

Share-based compensation                               1,443        1,763

Loss on disposal of property and equipment             21           1

Provision for (recovery) loss on receivables           (50     )    90

Provision for revenue adjustments                      484          423

Deferred income taxes                                  20           (873    )

Tax benefit for stock options exercised                (88     )    (4      )

Changes in operating assets and liabilities

Accounts receivable                                    (6,058  )    (3,218  )

Prepaid expenses and other current assets              (881    )    1,786

Accounts payable and accrued expenses                  7,377        1,856

Net cash provided by operating activities              15,219       10,192

Investing activities:

Proceeds from disposal of property and equipment       279          20

Purchases of property and equipment                    (7,329  )    (5,426  )

Other                                                  308          39

Net cash used in investing activities                  (6,742  )    (5,367  )

Financing activities:

Payments of debt and capital lease obligations         (171    )    (261    )

Proceeds from exercise of stock options                4,838        38

Payments of cash dividends                             (2,055  )    (2,029  )

Tax benefit for stock options exercised                88           4

Net cash provided by (used in) financing activities    2,700        (2,248  )

Net increase in cash                                   11,177       2,577

Cash at beginning of period                            74,504       42,035

Cash at end of period                                $ 85,681     $ 44,612




Forward Air Corporation

Segment Information

(In millions)

(Unaudited)

                Three months ended

                March      Percent    March      Percent              Percent
                31,        of         31,        of

                2011       Revenue    2010       Revenue    Change    Change

Operating
revenue

Forward Air     $ 105.2    87.5    %  $ 90.9     85.0    %  $ 14.3    15.7    %

FASI              15.2     12.6         16.4     15.3         (1.2 )  (7.3    )

Intercompany      (0.2  )  (0.1    )    (0.3  )  (0.3    )    0.1     (33.3   )
Eliminations

Total             120.2    100.0        107.0    100.0        13.2    12.3

Purchased
transportation

Forward Air       46.9     44.6         41.1     45.2         5.8     14.1

FASI              3.6      23.7         3.7      22.6         (0.1 )  (2.7    )

Intercompany      (0.2  )  100.0        (0.3  )  100.0        0.1     (33.3   )
Eliminations

Total             50.3     41.8         44.5     41.6         5.8     13.0

Salaries,
wages and
employee
benefits

Forward Air       23.9     22.7         23.4     25.7         0.5     2.1

FASI              6.6      43.4         7.3      44.5         (0.7 )  (9.6    )

Total             30.5     25.4         30.7     28.7         (0.2 )  (0.7    )

Operating
leases

Forward Air       4.9      4.7          4.5      5.0          0.4     8.9

FASI              1.8      11.8         2.1      12.8         (0.3 )  (14.3   )

Total             6.7      5.6          6.6      6.2          0.1     1.5

Depreciation
and
amortization

Forward Air       4.1      3.9          4.0      4.4          0.1     2.5

FASI              1.0      6.6          0.9      5.5          0.1     11.1

Total             5.1      4.2          4.9      4.6          0.2     4.1

Insurance and
claims

Forward Air       1.6      1.5          1.8      2.0          (0.2 )  (11.1   )

FASI              0.6      3.9          0.5      3.0          0.1     20.0

Total             2.2      1.8          2.3      2.1          (0.1 )  (4.3    )

Fuel expense

Forward Air       1.1      1.0          0.9      1.0          0.2     22.2

FASI              1.3      8.6          1.2      7.3          0.1     8.3

Total             2.4      2.0          2.1      2.0          0.3     14.3

Other
operating
expenses

Forward Air       8.4      8.0          8.0      8.8          0.4     5.0

FASI              1.3      8.6          1.8      11.0         (0.5 )  (27.8   )

Total             9.7      8.1          9.8      9.1          (0.1 )  (1.0    )

Income (loss)
from
operations

Forward Air       14.3     13.6         7.2      7.9          7.1     98.6

FASI              (1.0  )  (6.6    )    (1.1  )  (6.7    )    0.1     (9.1    )

Total           $ 13.3     11.1    %  $ 6.1      5.7     %  $ 7.2     118.0   %




Forward Air Corporation

Forward Air Inc. Operating Statistics

                                         Three months ended

                                         March 31,      March 31,    Percent

                                         2011           2010         Change

Operating ratio                          86.4      %    92.1      %  (6.2    ) %

Business days                            64.0           63.0         1.6

Business weeks                           12.8           12.6         1.6

Airport-to-airport:

Tonnage

Total pounds (1)                         400,558        378,625      5.8

Average weekly pounds (1)                31,294         30,050       4.1

Linehaul shipments

Total linehaul                           572,456        546,313      4.8

Average weekly                           44,723         43,358       3.1

Forward Air Complete shipments           83,006         69,106       20.1

As a percentage of linehaul shipments    14.5      %    12.6      %  15.1

Average linehaul shipment size           700            693          1.0

Revenue per pound (2)

Linehaul yield                         $ 16.69        $ 15.93        4.1

Fuel surcharge impact                    1.66           1.09         3.0

Forward Air Complete impact              2.18           1.74         2.3

Total airport-to-airport yield         $ 20.53        $ 18.76        9.4

Logistics:

Miles

Owner operator (1)                       6,980          5,937        17.6

Third party (1)                          3,259          2,738        19.0

Total Miles                              10,239         8,675        18.0

Revenue per mile                       $ 1.62         $ 1.61         0.6

Cost per mile                          $ 1.25         $ 1.24         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.


    Source: Forward Air Corporation