Forward Air Corporation Reports Second Quarter 2011 Results
Forward Air Corporation Reports Second 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 second quarter and six months ended June 30, 2011.
Operating revenue for the quarter ended June 30, 2011 increased 8.3% to $132.2 million from $122.1 million for the same quarter in 2010. Income from operations was $19.9 million, compared with $13.5 million in the prior-year quarter. As a percent of operating revenue, income from operations increased to 15.1% from 11.1% for the same quarter last year. Net income during the period increased to $12.0 million from $7.9 million in the prior-year quarter. Income per diluted share for the second quarter of 2011 was $0.40 compared with $0.27 in the prior-year quarter.
Operating revenue for the six months ended June 30, 2011 increased 10.2% to $252.4 million from $229.1 million for the same period in 2010. Income from operations was $33.2 million, compared with $19.6 million in the prior-year period. As a percent of operating revenue, income from operations increased to 13.1% for the first six months of 2011 from 8.6% for the same period in 2010. Net income during the period was $19.8 million compared to $11.3 million in the prior-year period. Income per diluted share from operations for the first six months of 2011 was $0.67 compared with $0.39 in the prior-year period.
Bruce A. Campbell, Chairman, President, and CEO, commenting on the second quarter said, "We are pleased to announce that the hard work and dedication of our employees and independent contractors has once again produced outstanding quarterly results. In our core airport-to-airport business, our yield remained strong, which was driven in part by our June 6, 2011 general rate increase along with continued pricing discipline. Our tonnage volumes, while positive each month of the quarter, saw some periodic softness. This softness, which we view as a function of the macroeconomic environment, appears to be persisting somewhat into the third quarter."
Commenting further, Mr. Campbell said, "Our Forward Air Solutions team continues to make steady progress by nearly cutting in half the $0.02 earnings per share deficit from a year ago. With a solid cost model and the full benefit of new business wins we fully expect Solutions to be a positive contributor to earnings in the third quarter."
Also commenting on the quarter, Rodney L. Bell, Senior Vice President and CFO said, "On the strength of an impressive $17.3 million in cash provided by operating activities we were able to increase our cash balance by $10.4 million in the quarter. We ended the quarter with $96.1 million in cash, $50 million outstanding on our line of credit and $38.2 million of availability on our credit facility."
Commenting on the Company's guidance for the second quarter, Mr. Bell said, "We anticipate that our third quarter 2011 revenues will increase in the range of 6% to 10% over the comparable 2010 period, and we expect income per diluted share to be between $0.38 and $0.42 per share. This compares to $0.31 per share in the third quarter of 2010."
Review of Financial Results
Forward Air will hold a conference call to discuss second quarter 2011 results on Thursday, July 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 15649968. 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,
2011 2010 2011 2010
Operating revenue:
Forward Air
Airport-to-airport $ 91,493 $ 81,741 $ 173,640 $ 152,628
Logistics 18,005 17,160 34,500 31,015
Other 6,871 6,389 13,274 12,264
Forward Air Solutions
Pool distribution 15,823 16,842 30,980 33,201
Total operating revenue 132,192 122,132 252,394 229,108
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 35,675 32,501 68,269 61,300
Logistics 13,373 13,071 26,173 23,839
Other 1,659 1,616 3,132 3,108
Forward Air Solutions
Pool distribution 3,502 3,503 6,958 6,945
Total purchased 54,209 50,691 104,532 95,192
transportation
Salaries, wages and employee 31,439 33,167 61,934 63,837
benefits
Operating leases 6,705 6,252 13,411 12,880
Depreciation and 5,222 5,107 10,304 10,055
amortization
Insurance and claims 1,845 2,106 4,020 4,437
Fuel expense 2,564 2,044 4,952 4,102
Other operating expenses 10,332 9,263 20,079 19,048
Total operating expenses 112,316 108,630 219,232 209,551
Income from operations 19,876 13,502 33,162 19,557
Other income (expense):
Interest expense (141 ) (181 ) (336 ) (366 )
Other, net 31 (19 ) 47 11
Total other expense (110 ) (200 ) (289 ) (355 )
Income before income taxes 19,766 13,302 32,873 19,202
Income taxes 7,797 5,390 13,035 7,871
Net income $ 11,969 $ 7,912 $ 19,838 $ 11,331
Net income per share:
Basic $ 0.41 $ 0.27 $ 0.68 $ 0.39
Diluted $ 0.40 $ 0.27 $ 0.67 $ 0.39
Weighted average shares
outstanding:
Basic 29,337 28,973 29,236 28,962
Diluted 29,851 29,119 29,618 29,093
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,
2011 2010 (a)
Assets
Current assets:
Cash $ 96,119 $ 74,504
Accounts receivable, net 69,779 62,763
Other current assets 10,053 8,696
Total current assets 175,951 145,963
Property and equipment 221,715 213,704
Less accumulated depreciation and amortization 88,517 87,272
Total property and equipment, net 133,198 126,432
Goodwill and other acquired intangibles:
Goodwill 43,332 43,332
Other acquired intangibles, net 28,963 31,259
Total goodwill and other acquired intangibles 72,295 74,591
Other assets 1,535 1,810
Total assets $ 382,979 $ 348,796
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 15,354 $ 10,687
Accrued expenses 17,933 16,280
Current portion of debt and capital lease obligations 583 638
Total current liabilities 33,870 27,605
Debt and capital lease obligations, less current 50,611 50,883
portion
Other long-term liabilities 7,782 8,106
Deferred income taxes 7,980 6,116
Shareholders' equity:
Common stock 294 290
Additional paid-in capital 35,231 24,300
Retained earnings 247,211 231,496
Total shareholders' equity 282,736 256,086
Total liabilities and shareholders' equity $ 382,979 $ 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
June 30, June 30,
2011 2010
Operating activities:
Net income $ 11,969 $ 7,912
Adjustments to reconcile net income to net cash provided
by operating activities
Depreciation and amortization 5,222 5,107
Share-based compensation 1,512 1,618
Gain on disposal of property and equipment (21 ) (8 )
Provision for loss on receivables 22 134
Provision for revenue adjustments 449 414
Deferred income taxes 1,919 (791 )
Tax benefit for stock options exercised (131 ) (5 )
Changes in operating assets and liabilities
Accounts receivable (1,863 ) (5,664 )
Prepaid expenses and other current assets (864 ) (2,400 )
Accounts payable and accrued expenses (874 ) 2,402
Net cash provided by operating activities 17,340 8,719
Investing activities:
Proceeds from disposal of property and equipment 388 22
Purchases of property and equipment (8,112 ) (3,313 )
Other (7 ) (69 )
Net cash used in investing activities (7,731 ) (3,360 )
Financing activities:
Payments of debt and capital lease obligations (157 ) (229 )
Proceeds from exercise of stock options 2,793 106
Payments of cash dividends (2,066 ) (2,028 )
Common stock issued under employee stock purchase plan 128 91
Tax benefit for stock options exercised 131 5
Net cash provided by (used in) financing activities 829 (2,055 )
Net increase in cash 10,438 3,304
Cash at beginning of period 85,681 44,612
Cash at end of period $ 96,119 $ 47,916
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six Months Ended
June 30, June 30,
2011 2010
Operating activities:
Net income $ 19,838 $ 11,331
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 10,304 10,055
Share-based compensation 2,955 3,381
Gain on disposal of property and equipment -- (7 )
Provision for (recovery) loss on receivables (28 ) 224
Provision for revenue adjustments 933 837
Deferred income taxes 1,939 (1,664 )
Tax benefit for stock options exercised (219 ) (9 )
Changes in operating assets and liabilities
Accounts receivable (7,921 ) (8,882 )
Prepaid expenses and other current assets (1,745 ) (614 )
Accounts payable and accrued expenses 6,503 4,259
Net cash provided by operating activities 32,559 18,911
Investing activities:
Proceeds from disposal of property and equipment 667 42
Purchases of property and equipment (15,441 ) (8,739 )
Other 301 (30 )
Net cash used in investing activities (14,473 ) (8,727 )
Financing activities:
Payments of debt and capital lease obligations (328 ) (490 )
Proceeds from exercise of stock options 7,631 144
Payments of cash dividends (4,121 ) (4,057 )
Common stock issued under employee stock purchase plan 128 91
Tax benefit for stock options exercised 219 9
Net cash provided by (used in) financing activities 3,529 (4,303 )
Net increase in cash 21,615 5,881
Cash at beginning of period 74,504 42,035
Cash at end of period $ 96,119 $ 47,916
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
June Percent June 30, Percent Percent
30, of of
2011 Revenue 2010 Revenue Change Change
Operating
revenue
Forward Air $ 116.5 88.1 % $ 105.6 86.5 % $ 10.9 10.3 %
FASI 15.9 12.0 16.9 13.8 (1.0 ) (5.9 )
Intercompany (0.2 ) (0.1 ) (0.4 ) (0.3 ) 0.2 (50.0 )
Eliminations
Total 132.2 100.0 122.1 100.0 10.1 8.3
Purchased
transportation
Forward Air 50.8 43.6 47.3 44.8 3.5 7.4
FASI 3.6 22.7 3.8 22.5 (0.2 ) (5.3 )
Intercompany (0.2 ) 100.0 (0.4 ) 100.0 0.2 (50.0 )
Eliminations
Total 54.2 41.0 50.7 41.5 3.5 6.9
Salaries,
wages and
employee
benefits
Forward Air 24.7 21.2 25.4 24.0 (0.7 ) (2.8 )
FASI 6.7 42.1 7.7 45.5 (1.0 ) (13.0 )
Total 31.4 23.7 33.1 27.1 (1.7 ) (5.1 )
Operating
leases
Forward Air 5.0 4.3 4.4 4.2 0.6 13.6
FASI 1.7 10.7 1.9 11.2 (0.2 ) (10.5 )
Total 6.7 5.1 6.3 5.2 0.4 6.3
Depreciation
and
amortization
Forward Air 4.1 3.5 4.1 3.9 - -
FASI 1.1 6.9 1.0 5.9 0.1 10.0
Total 5.2 3.9 5.1 4.2 0.1 2.0
Insurance and
claims
Forward Air 1.5 1.3 1.6 1.5 (0.1 ) (6.3 )
FASI 0.4 2.5 0.5 3.0 (0.1 ) (20.0 )
Total 1.9 1.4 2.1 1.7 (0.2 ) (9.5 )
Fuel expense
Forward Air 1.2 1.0 0.9 0.9 0.3 33.3
FASI 1.4 8.8 1.1 6.5 0.3 27.3
Total 2.6 2.0 2.0 1.6 0.6 30.0
Other
operating
expenses
Forward Air 8.8 7.6 7.7 7.3 1.1 14.3
FASI 1.5 9.4 1.6 9.5 (0.1 ) (6.3 )
Total 10.3 7.8 9.3 7.6 1.0 10.8
Income (loss)
from
operations
Forward Air 20.4 17.5 14.2 13.4 6.2 43.7
FASI (0.5 ) (3.1 ) (0.7 ) (4.1 ) 0.2 (28.6 )
Total $ 19.9 15.1 % $ 13.5 11.1 % $ 6.4 47.4 %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Six months ended
June Percent June 30, Percent Percent
30, of of
2011 Revenue 2010 Revenue Change Change
Operating
revenue
Forward Air $ 221.7 87.8 % $ 196.5 85.8 % $ 25.2 12.8 %
FASI 31.1 12.3 33.3 14.5 (2.2 ) (6.6 )
Intercompany (0.4 ) (0.1 ) (0.7 ) (0.3 ) 0.3 (42.9 )
Eliminations
Total 252.4 100.0 229.1 100.0 23.3 10.2
Purchased
transportation
Forward Air 97.7 44.1 88.3 44.9 9.4 10.6
FASI 7.2 23.1 7.5 22.5 (0.3 ) (4.0 )
Intercompany (0.4 ) 100.0 (0.6 ) 85.7 0.2 (33.3 )
Eliminations
Total 104.5 41.4 95.2 41.6 9.3 9.8
Salaries,
wages and
employee
benefits
Forward Air 48.7 22.0 48.7 24.8 - -
FASI 13.3 42.8 15.1 45.4 (1.8 ) (11.9 )
Total 62.0 24.6 63.8 27.8 (1.8 ) (2.8 )
Operating
leases
Forward Air 9.8 4.4 8.8 4.5 1.0 11.4
FASI 3.6 11.6 4.1 12.3 (0.5 ) (12.2 )
Total 13.4 5.3 12.9 5.6 0.5 3.9
Depreciation
and
amortization
Forward Air 8.2 3.7 8.2 4.2 - -
FASI 2.1 6.7 1.9 5.7 0.2 10.5
Total 10.3 4.1 10.1 4.4 0.2 2.0
Insurance and
claims
Forward Air 3.1 1.4 3.5 1.8 (0.4 ) (11.4 )
FASI 0.9 2.9 0.9 2.7 - -
Total 4.0 1.6 4.4 1.9 (0.4 ) (9.1 )
Fuel expense
Forward Air 2.3 1.0 1.8 0.9 0.5 27.8
FASI 2.6 8.4 2.3 6.9 0.3 13.0
Total 4.9 1.9 4.1 1.8 0.8 19.5
Other
operating
expenses
Forward Air 17.2 7.8 15.8 8.0 1.4 8.9
FASI 2.9 9.3 3.3 9.9 (0.4 ) (12.1 )
Intercompany - - (0.1 ) 14.3 0.1 (100.0 )
Eliminations
Total 20.1 8.0 19.0 8.3 1.1 5.8
Income (loss)
from
operations
Forward Air 34.7 15.6 21.4 10.9 13.3 62.1
FASI (1.5 ) (4.8 ) (1.8 ) (5.4 ) 0.3 (16.7 )
Total $ 33.2 13.1 % $ 19.6 8.6 % $ 13.6 69.4 %
Forward Air Corporation
Forward Air Inc. Operating Statistics
Three months ended
June 30, June 30, Percent
2011 2010 Change
Operating ratio 82.5 % 86.6 % (4.7 )%
Business days 64.0 64.0 -
Business weeks 12.8 12.8 -
Airport-to-airport:
Tonnage
Total pounds (1) 438,208 423,965 3.4
Average weekly pounds (1) 34,235 33,122 3.4
Linehaul shipments
Total linehaul 596,592 575,466 3.7
Average weekly 46,609 44,958 3.7
Forward Air Complete shipments 89,710 78,496 14.3
As a percentage of linehaul shipments 15.0 % 13.6 % 10.3
Average linehaul shipment size 735 737 (0.3 )
Revenue per pound (2)
Linehaul yield $ 16.74 $ 16.26 2.5
Fuel surcharge impact 1.94 1.24 3.6
Forward Air Complete impact 2.22 1.80 2.2
Total airport-to-airport yield $ 20.90 $ 19.30 8.3
Logistics:
Miles
Owner operator (1) 7,567 7,006 8.0
Third party (1) 3,113 3,377 (7.8 )
Total Miles 10,680 10,383 2.9
Revenue per mile $ 1.69 $ 1.67 1.2
Cost per mile $ 1.25 $ 1.26 (0.8 )%
(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
2011 2010 Change
Operating ratio 84.4 % 89.1 % (5.3 )%
Business days 128.0 127.0 0.8
Business weeks 25.6 25.4 0.8
Airport-to-airport:
Tonnage
Total pounds (1) 838,766 802,590 4.5
Average weekly pounds (1) 32,764 31,598 3.7
Linehaul shipments
Total linehaul 1,169,048 1,121,809 4.2
Average weekly 45,666 44,166 3.4
Forward Air Complete shipments 172,716 147,602 17.0
As a percentage of linehaul shipments 14.8 % 13.2 % 12.1
Average linehaul shipment size 717 715 0.3
Revenue per pound (2)
Linehaul yield $ 16.72 $ 16.10 3.2
Fuel surcharge impact 1.81 1.17 3.4
Forward Air Complete impact 2.20 1.77 2.3
Total airport-to-airport yield $ 20.73 $ 19.04 8.9
Logistics:
Miles
Owner operator (1) 14,547 12,943 12.4
Third party (1) 6,372 6,114 4.2
Total Miles 20,919 19,057 9.8
Revenue per mile $ 1.65 $ 1.64 0.6
Cost per mile $ 1.25 $ 1.25 - %
(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 20, 2011