Forward Air Corporation Reports Second Quarter 2010 Results
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
Released July 22, 2010