Forward Air Corporation Reports Fourth Quarter and Fiscal 2009 Results
Forward Air Corporation Reports Fourth Quarter and Fiscal 2009 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth quarter and year ended December 31, 2009.
Operating revenue for the quarter ended December 31, 2009 decreased 4.4% to $118.0 million from $123.4 million for the same quarter in 2008. Income from operations was $12.3 million, compared with $14.0 million for the fourth quarter of 2008, a decrease of 12.1%. As a percent of operating revenue, income from operations decreased to 10.4% from 11.3% for the same quarter last year. Net income during the period decreased by $1.9 million, or 22.9%, to $6.4 million from $8.3 million in the fourth quarter of 2008. Net income per diluted share for the fourth quarter of 2009 was $0.22 compared with $0.29 in the same quarter in 2008, a decrease of 24.1%.
Operating revenue for the year ended December 31, 2009 decreased 12.0% to $417.4 million from $474.4 million for the year ended December 31, 2008. Income from operations, which includes a first quarter non-cash, pre-tax charge of $7.2 million primarily for goodwill impairment related to the Company's Forward Air Solutions segment, was $18.8 million, compared with $70.3 million in 2008. Including the impact of the goodwill impairment, the Company's net income for the year ended December 31, 2009, was $9.9 million, compared with $42.5 million in 2008. Net income per diluted share for the year ended December 31, 2009 was $0.34 compared with $1.47 in 2008.
Bruce A. Campbell, Chairman, President, and CEO, said, "We are pleased with our fourth quarter results which provided an encouraging finish to a year of unprecedented challenges. This quarter's performance validated the positive leverage and earnings power of our model as illustrated by our airport-to-airport segment generating $5.6 million of additional operating income on $14.9 million in additional operating revenue when compared to the third quarter of 2009. We were also pleased to see our Solutions segment return to being a solid earnings contributor despite the continuing struggles of the specialty retail sector."
Commenting further, Mr. Campbell said, "Although we were encouraged by the trends that started at the end of the third quarter and which continued throughout the fourth quarter, we remain very cautious, yet optimistic, in our outlook for 2010. Our yield, while stabilized, continues to suffer from competitive pricing which we expect to continue until such time as capacity is taken out of the market or demand increases from an improved economy."
In closing Mr. Campbell said, "I would be remiss if I didn't acknowledge the significant contributions and sacrifices of our team of employees and independent contractors who managed to do more with less in 2009. We are all looking forward to taking lessons learned this past year and applying them in 2010 to produce the superior margins and returns our shareholders have come to expect from Forward Air."
In commenting further on the fourth quarter, Rodney L. Bell, Senior Vice President and CFO, said "We produced very solid cash flows during the quarter with $19.5 million from operations compared with $21.2 in the fourth quarter of 2008. For the year, cash flow from operations was $50.2 million compared to $59.1 million last year. We increased our cash position during 2009 by $20.0 million to $42.0 million at year end."
Commenting further, Mr. Bell said, "Assuming no changes in the current economic environment, we anticipate first quarter 2010 revenues to increase in the range of 6 to 10% over the prior year first quarter, and expect income per diluted share to be between $0.08 and $0.12 per share."
Review of Financial Results
Forward Air will hold a conference call to discuss fourth quarter 2009 results on Tuesday, February 9, 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
Consolidated Condensed Statements of Income
(In thousands, except per share data)
(Unaudited)
Three months ended Year ended
December 31, December 31, December 31, December 31,
2009 2008 2009 2008
Operating revenue:
Forward Air
Airport-to-airport $ 73,338 $ 77,713 $ 268,245 $ 334,860
Logistics 15,422 16,602 54,067 59,290
Other 6,100 6,669 23,076 25,133
Forward Air Solutions
Pool distribution 23,158 22,468 72,022 55,153
Total operating revenue 118,018 123,452 417,410 474,436
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 30,509 30,358 112,516 128,785
Logistics 12,061 13,336 42,188 44,560
Other 1,553 1,500 5,234 6,425
Forward Air Solutions
Pool distribution 4,715 3,551 14,490 9,315
Total purchased 48,838 48,745 174,428 189,085
transportation
Salaries, wages and 31,735 32,149 118,568 116,504
employee benefits
Operating leases 6,853 7,485 27,294 24,403
Depreciation and 5,035 4,785 19,722 16,615
amortization
Insurance and claims 2,735 2,409 9,719 8,099
Fuel expense 2,113 2,999 7,312 11,465
Other operating expenses 8,441 10,834 34,424 37,980
Impairment of goodwill
and other intangible -- -- 7,157 --
assets
Total operating expenses 105,750 109,406 398,624 404,151
Income from operations 12,268 14,046 18,786 70,285
Other income (expense):
Interest expense (202 ) (396 ) (670 ) (1,236 )
Other, net 20 37 69 362
Total other expense (182 ) (359 ) (601 ) (874 )
Income before income 12,086 13,687 18,185 69,411
taxes
Income taxes 5,658 5,350 8,239 26,869
Net income $ 6,428 $ 8,337 $ 9,946 $ 42,542
Net income per share:
Basic $ 0.22 $ 0.29 $ 0.34 $ 1.48
Diluted $ 0.22 $ 0.29 $ 0.34 $ 1.47
Weighted average shares
outstanding:
Basic 28,943 28,889 28,928 28,808
Diluted 29,041 28,987 28,993 29,025
Dividends per share: $ 0.07 $ 0.07 $ 0.28 $ 0.28
Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2009 2008(a)
Assets
Current assets:
Cash $ 42,035 $ 22,093
Accounts receivable, net 55,720 57,206
Other current assets 9,379 12,290
Total current assets 107,134 91,589
Property and equipment 204,716 186,377
Less accumulated depreciation and amortization 75,990 63,401
Total property and equipment, net 128,726 122,976
Goodwill and other acquired intangibles:
Goodwill 43,332 50,230
Other acquired intangibles, net 35,849 40,708
Total goodwill and other acquired intangibles 79,181 90,938
Other assets 1,597 2,024
Total assets $ 316,638 $ 307,527
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 10,333 $ 11,633
Accrued expenses 18,295 12,927
Current portion of debt and capital lease 919 1,602
obligations
Total current liabilities 29,547 26,162
Debt and capital lease obligations, less current 52,169 53,035
portion
Other long-term liabilities 4,485 3,055
Deferred income taxes 5,786 8,841
Shareholders' equity:
Common stock 290 289
Additional paid-in capital 16,631 10,249
Retained earnings 207,730 205,896
Total shareholders' equity 224,651 216,434
Total liabilities and shareholders' equity $ 316,638 $ 307,527
(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
December 31, December 31,
2009 2008
Operating activities:
Net income $ 6,428 $ 8,337
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 5,035 4,785
Share-based compensation 1,732 1,695
Gain on disposal of property and equipment 7 135
Provision for loss on receivables 14 658
Provision for revenue adjustments 474 986
Deferred income taxes (1,110 ) 516
Tax expense for stock options exercised 371 118
Changes in operating assets and liabilities, net of
acquisitions
Accounts receivable (3,214 ) 13,716
Prepaid expenses and other current assets 2,115 (170 )
Accounts payable and accrued expenses 7,620 (9,715 )
Net cash provided by operating activities 19,472 21,061
Investing activities:
Proceeds from disposal of property and equipment 39 41
Purchases of property and equipment (2,019 ) (14,019 )
Acquisition of businesses -- (267 )
Other (33 ) 157
Net cash used in investing activities (2,013 ) (14,088 )
Financing activities:
Payments of debt and capital lease obligations (386 ) (431 )
Payments of cash dividends (2,028 ) (2,027 )
Common stock issued under employee stock purchase 138 110
plan
Cash settlement of share-based awards for minimum (7 ) (5 )
tax withholdings
Tax expense for stock options exercised (371 ) (118 )
Net cash used in financing activities (2,654 ) (2,471 )
Net increase in cash 14,805 4,502
Cash at beginning of period 27,230 17,591
Cash at end of period $ 42,035 $ 22,093
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Year ended
December 31, December 31,
2009 2008
Operating activities:
Net income $ 9,946 $ 42,542
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 19,722 16,615
Impairment of goodwill and other intangible assets 7,157 --
Share-based compensation 6,754 6,267
(Gain) loss on disposal of property and equipment (6 ) 171
Provision for (recovery) loss on receivables (60 ) 903
Provision for revenue adjustments 2,390 4,259
Deferred income taxes (4,119 ) 1,151
Tax expense (benefit) for stock options exercised 370 (1,030 )
Changes in operating assets and liabilities, net of
acquisitions
Accounts receivable (844 ) (2,376 )
Prepaid expenses and other current assets 548 (2,102 )
Accounts payable and accrued expenses 8,321 (7,317 )
Net cash provided by operating activities 50,179 59,083
Investing activities:
Proceeds from disposal of property and equipment 270 87
Purchases of property and equipment (20,847 ) (26,699 )
Acquisition of businesses -- (29,566 )
Other 372 (10 )
Net cash used in investing activities (20,205 ) (56,188 )
Financing activities:
Payments of debt and capital lease obligations (1,549 ) (1,603 )
Borrowings on line of credit -- 45,000
Payments on line of credit -- (25,000 )
Proceeds from exercise of stock options 8 3,085
Payments of cash dividends (8,109 ) (8,089 )
Common stock issued under employee stock purchase 237 255
plan
Cash settlement of share-based awards for minimum (249 ) (389 )
tax withholdings
Tax (expense) benefit for stock options exercised (370 ) 1,030
Net cash (used in) provided by financing activities (10,032 ) 14,289
Net increase in cash 19,942 17,184
Cash at beginning of period 22,093 4,909
Cash at end of period $ 42,035 $ 22,093
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
December Percent December Percent of Percent
31, of 31,
2009 Revenue 2008 Revenue Change Change
Operating
revenue
Forward Air $ 95.1 80.6 % $ 101.4 82.2 % $ (6.3 ) (6.2 ) %
FASI 23.3 19.7 22.5 18.2 0.8 3.6
Intercompany (0.4 ) (0.3 ) (0.5 ) (0.4 ) 0.1 (20.0 )
Eliminations
Total 118.0 100.0 123.4 100.0 (5.4 ) (4.4 )
Purchased
transportation
Forward Air 44.2 46.5 45.3 44.7 (1.1 ) (2.4 )
FASI 5.0 21.4 3.9 17.3 1.1 28.2
Intercompany (0.4 ) 100.0 (0.5 ) 100.0 0.1 (20.0 )
Eliminations
Total 48.8 41.4 48.7 39.5 0.1 0.2
Salaries,
wages and
employee
benefits
Forward Air 22.4 23.6 22.2 21.9 0.2 0.9
FASI 9.3 39.9 9.9 44.0 (0.6 ) (6.1 )
Total 31.7 26.9 32.1 26.0 (0.4 ) (1.2 )
Operating
leases
Forward Air 4.6 4.8 4.9 4.8 (0.3 ) (6.1 )
FASI 2.3 9.9 2.6 11.6 (0.3 ) (11.5 )
Total 6.9 5.8 7.5 6.1 (0.6 ) (8.0 )
Depreciation
and
amortization
Forward Air 4.1 4.3 3.8 3.7 0.3 7.9
FASI 0.9 3.9 1.0 4.4 (0.1 ) (10.0 )
Total 5.0 4.2 4.8 3.9 0.2 4.2
Insurance and
claims
Forward Air 2.1 2.2 2.2 2.2 (0.1 ) (4.5 )
FASI 0.7 3.0 0.2 0.9 0.5 250.0
Total 2.8 2.4 2.4 2.0 0.4 16.7
Fuel expense
Forward Air 0.8 0.8 1.0 1.0 (0.2 ) (20.0 )
FASI 1.3 5.6 2.0 8.9 (0.7 ) (35.0 )
Total 2.1 1.8 3.0 2.4 (0.9 ) (30.0 )
Other
operating
expenses
Forward Air 6.6 7.0 8.5 8.4 (1.9 ) (22.4 )
FASI 1.8 7.7 2.4 10.7 (0.6 ) (25.0 )
Total 8.4 7.1 10.9 8.8 (2.5 ) (22.9 )
Income from
operations
Forward Air 10.3 10.8 13.5 13.3 (3.2 ) (23.7 )
FASI 2.0 8.6 0.5 2.2 1.5 300.0
Total $ 12.3 10.4 % $ 14.0 11.3 % $ (1.7 ) (12.1 ) %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited
Year ended
December Percent December Percent Percent
31, of 31, of
2009 Revenue 2008 Revenue Change Change
Operating
revenue
Forward Air $ 346.3 83.0 % $ 421.2 88.8 % $ (74.9 ) (17.8 ) %
FASI 72.5 17.4 55.3 11.6 17.2 31.1
Intercompany (1.4 ) (0.4 ) (2.1 ) (0.4 ) 0.7 (33.3 )
Eliminations
Total 417.4 100.0 474.4 100.0 (57.0 ) (12.0 )
Purchased
transportation
Forward Air 160.3 46.3 179.9 42.7 (19.6 ) (10.9 )
FASI 15.4 21.2 11.2 20.2 4.2 37.5
Intercompany (1.3 ) 92.9 (2.1 ) 100.0 0.8 (38.1 )
Eliminations
Total 174.4 41.8 189.0 39.9 (14.6 ) (7.7 )
Salaries,
wages and
employee
benefits
Forward Air 85.5 24.7 92.5 22.0 (7.0 ) (7.6 )
FASI 33.1 45.6 24.0 43.4 9.1 37.9
Total 118.6 28.4 116.5 24.6 2.1 1.8
Operating
leases
Forward Air 18.7 5.4 18.5 4.4 0.2 1.1
FASI 8.6 11.9 5.9 10.7 2.7 45.8
Total 27.3 6.5 24.4 5.1 2.9 11.9
Depreciation
and
amortization
Forward Air 16.1 4.6 14.4 3.4 1.7 11.8
FASI 3.6 5.0 2.2 4.0 1.4 63.6
Total 19.7 4.7 16.6 3.5 3.1 18.7
Insurance and
claims
Forward Air 7.6 2.2 7.3 1.7 0.3 4.1
FASI 2.1 2.9 0.8 1.4 1.3 162.5
Total 9.7 2.3 8.1 1.7 1.6 19.8
Fuel expense
Forward Air 3.1 0.9 5.8 1.4 (2.7 ) (46.6 )
FASI 4.2 5.8 5.7 10.3 (1.5 ) (26.3 )
Total 7.3 1.8 11.5 2.4 (4.2 ) (36.5 )
Other
operating
expenses
Forward Air 27.7 8.0 32.1 7.6 (4.4 ) (13.7 )
FASI 6.8 9.4 5.9 10.7 0.9 15.3
Intercompany (0.1 ) 7.1 -- -- (0.1 ) 100.0
Eliminations
Total 34.4 8.3 38.0 8.0 (3.6 ) (9.5 )
Impairment of
goodwill and
other
intangible
assets
Forward Air 0.2 0.1 -- -- 0.2 100.0
FASI 7.0 9.6 -- -- 7.0 100.0
Total 7.2 1.7 -- -- 7.2 100.0
Income (loss)
from
operations
Forward Air 27.1 7.8 70.7 16.8 (43.6 ) (61.7 )
FASI (8.3 ) (11.4 ) (0.4 ) (0.7 ) (7.9 ) 1,975.0
Total $ 18.8 4.5 % $ 70.3 14.8 % $ (51.5 ) (73.3 ) %
Forward Air Corporation
Forward Air Inc. Operating Statistics
Three months ended Year ended
December December Percent December December Percent
31, 31, 31, 31,
2009 2008 Change 2009 2008 Change
Operating ratio 89.2 % 86.7 % (2.9 ) % 92.2 % 83.2 % (10.8 ) %
Business days 64.0 63.0 1.6% 255.0 255.0 --
Business weeks 12.8 12.6 1.6% 51.0 51.0 --
Airport-to-airport:
Tonnage
Total pounds1 398,921 407,162 (2.0 ) 1,452,969 1,743,963 (16.7 )
Average weekly 31,166 32,314 (3.6 ) 28,490 34,195 (16.7 )
pounds1
Linehaul shipments
Total linehaul 565,922 557,260 1.6 2,095,223 2,295,299 (8.7 )
Average weekly 44,213 44,227 (0.1 ) 41,083 45,006 (8.7 )
Forward Air 71,442 56,930 25.5 266,136 202,382 31.5
Complete shipments
As a percentage of 12.6 % 10.2 % 23.5 12.7 % 8.8 % 44.3
linehaul shipments
Average linehaul 705 731 (3.5 ) 693 760 (8.8 )
shipment size
Revenue per pound2
Linehaul yield 15.84 16.52 (3.5 ) 16.06 16.55 (2.5 )
Fuel surcharge 0.96 1.43 (2.5 ) 0.84 1.72 (4.6 )
impact
Forward Air 1.62 1.21 2.1 1.60 1.01 3.1
Complete impact
Total
airport-to-airport 18.42 19.16 (3.9 ) 18.50 19.28 (4.0 )
yield
Logistics:
Miles
Owner operator1 6,421 5,408 18.7 24,338 18,840 29.2
Third party1 3,220 4,605 (30.1 ) 9,929 15,660 (36.6 )
Total Miles 9,641 10,013 (3.7 ) 34,267 34,500 (0.7 )
Revenue per mile $ 1.62 $ 1.69 (4.1 ) $ 1.59 $ 1.74 (8.6 )
Cost per mile $ 1.25 $ 1.33 (6.0 ) % $ 1.23 $ 1.29 (4.7 ) %
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
Released February 8, 2010