Forward Air Corporation Reports Second Quarter 2010 Results

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the second quarter and six months ended June 30, 2010.

Operating revenue for the quarter ended June 30, 2010 increased 22.5% to $122.1 million from $99.7 million for the same quarter in 2009. Income from operations was $13.5 million, compared with $4.9 million in the prior-year quarter. As a percent of operating revenue, income from operations increased to 11.1% from 4.9% for the same quarter last year. Net income during the period increased to $7.9 million from $2.8 million in the prior-year quarter. Income per diluted share from operations for the second quarter of 2010 was $0.27 compared with $0.10 in the prior-year quarter.

Operating revenue for the six months ended June 30, 2010 increased 16.7% to $229.1 million from $196.3 million for the same period in 2009. Income from operations was $19.6 million, compared with a $0.1 million loss in the prior-year period. As a percent of operating revenue, income from operations increased to 8.6% for the first six months of 2010 from a 0.1% loss from operations for the same period in 2009. Net income during the period was $11.3 million compared to a $0.3 million net loss in the prior-year period. Income per diluted share from operations for the first six months of 2010 was $0.39 compared with a $0.01 loss per diluted share in the prior-year period.

Bruce A. Campbell, Chairman, President, and CEO, said, "We are very pleased with our overall second quarter performance. The positive trends experienced in the first quarter have continued, and in some cases accelerated, during the second quarter."

"Through the leverage in our airport-to-airport business model we were able to take advantage of much better year-over-year volumes, better operating efficiencies, improved yields and our continued focus on cost control. Sequentially, from the first quarter 2010, we were able to convert approximately half of our incremental revenue growth to the bottom line."

"While our Solutions group suffered a small loss, which was largely attributable to unusually high health care expenses, we continued to make significant progress on our strategic initiatives. By the end of the quarter we had nearly completed the elimination of a large, unprofitable customer and have been able to replace most of the related revenue with new profitable business. Additionally, we have completed the process of identifying new industry verticals which, over time, will allow us to mitigate the harsh seasonal nature of our current specialty retail customer base."

Commenting on the Company's guidance for the third quarter, Rodney L. Bell, Senior Vice President and CFO, said, "We anticipate that our third quarter 2010 revenues will increase in the range of 20% to 25% over the comparable 2009 period, and we expect income per diluted share to be between $0.28 and $0.32 per share. This compares to $0.13 per share in the third quarter of 2009."

Review of Financial Results

Forward Air will hold a conference call to discuss second quarter 2010 results on Friday, July 23, 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

Condensed Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)

                                  Three months ended     Six months ended

                                  June 30,    June 30,   June 30,    June 30,

                                  2010        2009       2010        2009

Operating revenue:

Forward Air

Airport-to-airport                $ 81,741    $ 65,182   $ 152,628   $ 128,240

Logistics                           17,160      12,279     31,015      25,473

Other                               6,389       5,666      12,264      11,379

Forward Air Solutions

Pool distribution                   16,842      16,570     33,201      31,221

Total operating revenue             122,132     99,697     229,108     196,313

Operating expenses:

Purchased transportation

Forward Air

Airport-to-airport                  32,501      27,830     61,300      53,983

Logistics                           13,071      9,518      23,839      19,798

Other                               1,616       1,230      3,108       2,294

Forward Air Solutions

Pool distribution                   3,503       3,395      6,945       6,027

Total purchased transportation      50,691      41,973     95,192      82,102

Salaries, wages and employee        33,167      29,187     63,837      58,243
benefits

Operating leases                    6,252       6,820      12,880      13,809

Depreciation and amortization       5,107       4,823      10,055      9,682

Insurance and claims                2,106       2,223      4,437       4,939

Fuel expense                        2,044       1,637      4,102       3,319

Other operating expenses            9,263       8,161      19,048      17,216

Impairment of goodwill and other    --          --         --          7,157
intangible assets

Total operating expenses            108,630     94,824     209,551     196,467

Income (loss) from operations       13,502      4,873      19,557      (154    )

Other income (expense):

Interest expense                    (181    )   (150   )   (366    )   (291    )

Other, net                          (19     )   20         11          (2      )

Total other expense                 (200    )   (130   )   (355    )   (293    )

Income (loss) before income         13,302      4,743      19,202      (447    )
taxes

Income taxes                        5,390       1,899      7,871       (186    )

Net income (loss)                 $ 7,912     $ 2,844    $ 11,331    $ (261    )

Net income (loss) per share:

Basic                             $ 0.27      $ 0.10     $ 0.39      $ (0.01   )

Diluted                           $ 0.27      $ 0.10     $ 0.39      $ (0.01   )

Weighted average shares
outstanding:

Basic                               28,973      28,927     28,962      28,916

Diluted                             29,119      28,977     29,093      28,916

Dividends per share:              $ 0.07      $ 0.07     $ 0.14      $ 0.14




Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

                                                       June 30,   December 31,

                                                       2010       2009 (a)

Assets

Current assets:

Cash                                                   $ 47,916   $ 42,035

Accounts receivable, net                                 63,541     55,720

Other current assets                                     10,859     9,471

Total current assets                                     122,316    107,226

Property and equipment                                   211,696    204,716

Less accumulated depreciation and amortization           82,026     75,990

Total property and equipment, net                        129,670    128,726

Goodwill and other acquired intangibles:

Goodwill                                                 43,332     43,332

Other acquired intangibles, net                          33,554     35,849

Total goodwill and other acquired intangibles            76,886     79,181

Other assets                                             1,625      1,597

Total assets                                           $ 330,497  $ 316,730

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable                                       $ 9,697    $ 10,333

Accrued expenses                                         21,864     18,531

Current portion of debt and capital lease obligations    779        919

Total current liabilities                                32,340     29,783

Debt and capital lease obligations, less current         51,819     52,169
portion

Other long-term liabilities                              6,047      4,485

Deferred income taxes                                    4,885      5,786

Shareholders' equity:

Common stock                                             290        290

Additional paid-in capital                               20,259     16,631

Retained earnings                                        214,857    207,586

Total shareholders' equity                               235,406    224,507

Total liabilities and shareholders' equity             $ 330,497  $ 316,730

(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

                                                        June 30,    June 30,

                                                        2010        2009

Operating activities:

Net income                                              $ 7,912     $ 2,844

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

Depreciation and amortization                             5,107       4,823

Share-based compensation                                  1,618       1,635

Gain on disposal of property and equipment                (8     )    (21     )

Provision for loss (recovery) on receivables              134         (256    )

Provision for revenue adjustments                         414         574

Deferred income taxes                                     (791   )    (583    )

Tax benefit for stock options exercised                   (5     )    --

Changes in operating assets and liabilities,

Accounts receivable                                       (5,664 )    (1,915  )

Prepaid expenses and other current assets                 (2,400 )    (1,064  )

Accounts payable and accrued expenses                     2,402       (1,101  )

Net cash provided by operating activities                 8,719       4,936

Investing activities:

Proceeds from disposal of property and equipment          22          90

Purchases of property and equipment                       (3,313 )    (10,288 )

Other                                                     (69    )    468

Net cash used in investing activities                     (3,360 )    (9,730  )

Financing activities:

Payments of debt and capital lease obligations            (229   )    (437    )

Proceeds from exercise of stock options                   106         --

Payments of cash dividends                                (2,028 )    (2,028  )

Common stock issued under employee stock purchase plan    91          99

Cash settlement of share-based awards for minimum tax     --          (9      )
withholdings

Tax benefit for stock options exercised                   5           --

Net cash used in financing activities                     (2,055 )    (2,375  )

Net increase (decrease) in cash                           3,304       (7,169  )

Cash at beginning of period                               44,612      31,241

Cash at end of period                                   $ 47,916    $ 24,072




Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

                                                        Six Months Ended

                                                        June 30,    June 30,

                                                        2010        2009

Operating activities:

Net income (loss)                                       $ 11,331    $ (261    )

Adjustments to reconcile net income (loss) to net cash
provided by operating activities

Depreciation and amortization                             10,055      9,682

Impairment of goodwill and other intangible assets        --          7,157

Share-based compensation                                  3,381       3,415

Gain on disposal of property and equipment                (7     )    (12     )

Provision for loss (recovery) on receivables              224         (291    )

Provision for revenue adjustments                         837         1,368

Deferred income taxes                                     (1,664 )    (2,543  )

Tax benefit for stock options exercised                   (9     )    --

Changes in operating assets and liabilities,

Accounts receivable                                       (8,882 )    6,091

Prepaid expenses and other current assets                 (614   )    (359    )

Accounts payable and accrued expenses                     4,259       (2,852  )

Net cash provided by operating activities                 18,911      21,395

Investing activities:

Proceeds from disposal of property and equipment          42          217

Purchases of property and equipment                       (8,739 )    (15,025 )

Other                                                     (30    )    356

Net cash used in investing activities                     (8,727 )    (14,452 )

Financing activities:

Payments of debt and capital lease obligations            (490   )    (773    )

Proceeds from exercise of stock options                   144         --

Payments of cash dividends                                (4,057 )    (4,053  )

Common stock issued under employee stock purchase plan    91          99

Cash settlement of share-based awards for minimum tax     --          (237    )
withholdings

Tax benefit for stock options exercised                   9           --

Net cash used in financing activities                     (4,303 )    (4,964  )

Net increase in cash                                      5,881       1,979

Cash at beginning of period                               42,035      22,093

Cash at end of period                                   $ 47,916    $ 24,072





Forward Air Corporation

Segment Information

(In millions)

(Unaudited)

                Three months ended

                June       Percent    June      Percent                %
                30,        of         30,       of

                2010       Revenue    2009      Revenue      Change    Change

Operating
revenue

Forward Air     $ 105.6    86.5    %  $ 83.3    83.6      %  $ 22.3    26.8     %

FASI              16.9     13.8         16.7    16.7           0.2     1.2

Intercompany      (0.4  )  (0.3    )    (0.3 )  (0.3    )      (0.1 )  33.3
Eliminations

Total             122.1    100.0        99.7    100.0          22.4    22.5

Purchased
transportation

Forward Air       47.3     44.8         38.7    46.5           8.6     22.2

FASI              3.8      22.5         3.6     21.5           0.2     5.6

Intercompany      (0.4  )  100.0        (0.3 )  100.0          (0.1 )  33.3
Eliminations

Total             50.7     41.5         42.0    42.2           8.7     20.7

Salaries,
wages and
employee
benefits

Forward Air       25.4     24.0         21.1    25.3           4.3     20.4

FASI              7.7      45.5         8.1     48.5           (0.4 )  (4.9   )

Total             33.1     27.1         29.2    29.3           3.9     13.4

Operating
leases

Forward Air       4.4      4.2          4.7     5.6            (0.3 )  (6.4   )

FASI              1.9      11.2         2.1     12.6           (0.2 )  (9.5   )

Total             6.3      5.2          6.8     6.8            (0.5 )  (7.4   )

Depreciation
and
amortization

Forward Air       4.1      3.9          3.9     4.7            0.2     5.1

FASI              1.0      5.9          0.9     5.4            0.1     11.1

Total             5.1      4.2          4.8     4.8            0.3     6.3

Insurance and
claims

Forward Air       1.6      1.5          1.7     2.0            (0.1 )  (5.9   )

FASI              0.5      3.0          0.5     3.0            --      --

Total             2.1      1.7          2.2     2.2            (0.1 )  (4.5   )

Fuel expense

Forward Air       0.9      0.9          0.7     0.8            0.2     28.6

FASI              1.1      6.5          0.9     5.4            0.2     22.2

Total             2.0      1.6          1.6     1.6            0.4     25.0

Other
operating
expenses

Forward Air       7.7      7.3          6.7     8.1            1.0     14.9

FASI              1.6      9.5          1.5     9.0            0.1     6.7

Total             9.3      7.6          8.2     8.2            1.1     13.4

Income (loss)
from
operations

Forward Air       14.2     13.4         5.8     7.0            8.4     144.8

FASI              (0.7  )  (4.1    )    (0.9 )  (5.4    )      0.2     (22.2  )

Total           $ 13.5     11.1    %  $ 4.9     4.9       %  $ 8.6     175.5    %





Forward Air Corporation

Segment Information

(In millions)

(Unaudited)

                Six months ended

                June       Percent    June       Percent                %
                30,        of         30,        of

                2010       Revenue    2009       Revenue      Change    Change

Operating
revenue

Forward Air     $ 196.5    85.8    %  $ 165.5    84.3      %  $ 31.0    18.7     %

FASI              33.3     14.5         31.4     16.0           1.9     6.1

Intercompany      (0.7  )  (0.3    )    (0.6  )  (0.3    )      (0.1 )  16.7
Eliminations

Total             229.1    100.0        196.3    100.0          32.8    16.7

Purchased
transportation

Forward Air       88.3     44.9         76.2     46.1           12.1    15.9

FASI              7.5      22.5         6.4      20.4           1.1     17.2

Intercompany      (0.6  )  85.7         (0.5  )  83.3           (0.1 )  20.0
Eliminations

Total             95.2     41.6         82.1     41.8           13.1    16.0

Salaries,
wages and
employee
benefits

Forward Air       48.7     24.8         42.5     25.7           6.2     14.6

FASI              15.1     45.4         15.7     50.0           (0.6 )  (3.8   )

Total             63.8     27.8         58.2     29.7           5.6     9.6

Operating
leases

Forward Air       8.8      4.5          9.5      5.7            (0.7 )  (7.4   )

FASI              4.1      12.3         4.3      13.7           (0.2 )  (4.7   )

Total             12.9     5.6          13.8     7.0            (0.9 )  (6.5   )

Depreciation
and
amortization

Forward Air       8.2      4.2          7.9      4.8            0.3     3.8

FASI              1.9      5.7          1.8      5.7            0.1     5.6

Total             10.1     4.4          9.7      4.9            0.4     4.1

Insurance and
claims

Forward Air       3.5      1.8          4.0      2.4            (0.5 )  (12.5  )

FASI              0.9      2.7          0.9      2.9            --      --

Total             4.4      1.9          4.9      2.5            (0.5 )  (10.2  )

Fuel expense

Forward Air       1.8      0.9          1.5      0.9            0.3     20.0

FASI              2.3      6.9          1.8      5.7            0.5     27.8

Total             4.1      1.8          3.3      1.7            0.8     24.2

Other
operating
expenses

Forward Air       15.8     8.0          14.1     8.5            1.7     12.1

FASI              3.3      9.9          3.2      10.2           0.1     3.1

Intercompany      (0.1  )  14.3         (0.1  )  16.7           --      --
Eliminations

Total             19.0     8.3          17.2     8.8            1.8     10.5

Impairment of
goodwill

and other
intangible
assets

Forward Air       --       --           0.2      0.1            (0.2 )  NM

FASI              --       --           7.0      22.3           (7.0 )  NM

Total             --       --           7.2      3.7            (7.2 )  NM

Income (loss)
from
operations

Forward Air       21.4     10.9         9.6      5.8            11.8    122.9

FASI              (1.8  )  (5.4    )    (9.7  )  (30.9   )      7.9     (81.4  )

Total           $ 19.6     8.6     %  $ (0.1  )  (0.1    ) %  $ 19.7    NM       %

NM - Not Meaningful




Forward Air Corporation

Forward Air Inc. Operating Statistics

                                         Three months ended

                                         June 30,      June 30,    Percent

                                         2010          2009        Change

Operating ratio                          86.6     %    93.0     %  (6.9    ) %

Business days                            64.0          64.0        --

Business weeks                           12.8          12.8        --

Airport-to-airport:

Tonnage

Total pounds (1)                         423,965       357,678     18.5

Average weekly pounds (1)                33,122        27,944      18.5

Linehaul shipments

Total linehaul                           575,466       514,452     11.9

Average weekly                           44,958        40,192      11.9

Forward Air Complete shipments           78,496        67,109      17.0

As a percentage of linehaul shipments    13.6     %    13.0     %  4.6

Average linehaul shipment size           737           695         6.0

Revenue per pound (2)

Linehaul yield                         $ 16.26       $ 15.93       1.8

Fuel surcharge impact                    1.24          0.69        3.0

Forward Air Complete impact              1.80          1.64        0.9

Total airport-to-airport yield         $ 19.30       $ 18.26       5.7

Logistics:

Miles

Owner operator (1)                       7,006         6,211       12.8

Third party (1)                          3,377         1,800       87.6

Total Miles                              10,383        8,011       29.6

Revenue per mile                       $ 1.67        $ 1.54        8.4

Cost per mile                          $ 1.26        $ 1.19        5.9       %

(1) - In thousands

(2) - In cents per pound; percentage change is expressed as a percent of total
yield.




Forward Air Corporation

Forward Air Inc. Operating Statistics

                                  Six months ended

                                  June 30,       June 30,      Percent

                                  2010           2009          Change

Operating ratio                   89.1      %    94.2      %   (5.4    ) %

Business days                     127.0          127.0         --

Business weeks                    25.4           25.4          --

Airport-to-airport:

Tonnage

Total pounds (1)                  802,590        696,280       15.3

Average weekly pounds (1)         31,598         27,413        15.3

Linehaul shipments

Total linehaul                    1,121,809      1,017,272     10.3

Average weekly                    44,166         40,050        10.3

Forward Air Complete shipments    147,602        120,998       22.0

As a percentage of linehaul       13.2      %    11.9      %   10.9
shipments

Average linehaul shipment size    715            684           4.5

Revenue per pound (2)

Linehaul yield                  $ 16.10        $ 16.26         (0.9    )

Fuel surcharge impact             1.17           0.71          2.5

Forward Air Complete impact       1.77           1.48          1.6

Total airport-to-airport yield  $ 19.04        $ 18.45         3.2

Logistics:

Miles

Owner operator (1)                12,943         11,806        9.6

Third party (1)                   6,114          4,421         38.3

Total Miles                       19,057         16,227        17.4

Revenue per mile                $ 1.64         $ 1.58          3.8

Cost per mile                   $ 1.25         $ 1.22          2.5       %

(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