Forward Air Corporation Reports Third Quarter 2009 Results
Forward Air Corporation Reports Third Quarter 2009 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the third quarter and nine months ended September 30, 2009.
Operating revenue for the quarter ended September 30, 2009 decreased 15.1% to $103.1 million from $121.5 million for the same quarter in 2008. Income from operations was $6.7 million, compared with $19.3 million in the prior-year quarter. As a percent of operating revenue, income from operations decreased to 6.5% from 15.9% for the same quarter last year. Net income during the period was $3.8 million compared to $12.1 million in the prior-year quarter. Income per diluted share from operations for the third quarter of 2009 was $0.13 compared with $0.42 in the prior-year quarter.
Operating revenue for the nine months ended September 30, 2009 decreased 14.7% to $299.4 million from $351.0 million for the same period in 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 $6.5 million, compared with $56.2 million in the prior-year period. Including the impact of the goodwill impairment, the Company's net income for the nine months ended September 30, 2009, was $3.5 million, compared with $34.2 million in the prior-year period. Net income per diluted share for the first nine months of 2009 was $0.12 compared with $1.18 in the prior-year period.
"It came as no surprise that our results continued to be negatively impacted in the third quarter as a result of the global economic recession," said Bruce A. Campbell, Chairman, President and CEO. "The pricing environment, which began to deteriorate late in the first quarter, has remained extremely challenging but has shown signs of stabilization. In key areas of our Forward Air, Inc. business segment we did have cause for some guarded optimism. The final weeks of the quarter saw a sequential firming up of our airport-to-airport network tonnage that has continued thus far into October. Within airport-to-airport our Forward Air Complete pick-up and delivery offering continued to gain traction. During the quarter an average of 14.4% of our linehaul shipments had a pick-up and or delivery attached compared to 9.4% in the third quarter of 2008. Lastly, our TLX truckload brokerage group which saw revenue declines in the second quarter appears to have curtailed that slide with September revenues coming in flat compared to last year."
Commenting further, Mr. Campbell said, "The third quarter proved to be more challenging than originally anticipated for our Solutions business segment. After a tremendous amount of work getting the right cost structure as well as achieving new business wins, the peak retail season did not occur in September as forecasted by our customers. However, in the first weeks of October volumes would indicate the beginning of a somewhat normalized fourth quarter. Again we will monitor this trend with cautious optimism."
Continuing, Mr. Campbell said, "Every day it seems some expert declares the recovery has begun. We see signs that are encouraging and we do feel the worst is over, but now is not the time to let down our guard. Our people will continue to vigilantly control costs ensuring our rapid return to the margins and returns that our shareholders have historically come to expect of Forward Air."
In closing, Mr. Campbell said, "We are pleased to report that for a second consecutive year and for 10 of the past 11 years Forward Air has been named by Forbes magazine as one of the "200 Best Small Companies" in America. Congratulations and thank you to all of the Forward Air employees and independent contractors who made this honor possible."
Commenting further on the quarter, Rodney L. Bell, Senior Vice President and CFO, said, "Cash flow from operations was $9.3 million for the quarter and $30.7 million year-to-date compared to $20.9 and $38.0 respectively for last year. We ended the period with just over $27 million in cash and $39.5 million available on our line of credit. With the completion of our Dallas facility in July we have no meaningful capital expenditure needs for the balance of 2009 and anticipate 2010 capital expenditures to be approximately $10 million providing ample free cash flow and flexibility."
Commenting further, Mr. Bell said, "Assuming current trends remain stable, for the fourth quarter of 2009, we anticipate a year-over-year decline in revenue in the range of 10 to 15% and expect income per diluted share to be between $0.15 and $0.21 per share."
Review of Financial Results
Forward Air will hold a conference call to discuss third quarter 2009 results on Thursday, October 22, 2009 at 10:00 a.m. EDT. 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 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 84 terminals located on or near major airports 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 19 terminals 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 Nine months ended
September September September 30, September 30,
30, 30,
2009 2008 2009 2008
Operating revenue:
Forward Air
Airport-to-airport $ 66,667 $ 85,901 $ 194,908 $ 257,147
Logistics 13,172 15,597 38,645 42,688
Other 5,596 6,487 16,975 18,464
Forward Air
Solutions
Pool distribution 17,644 13,499 48,864 32,685
Total operating 103,079 121,484 299,392 350,984
revenue
Operating expenses:
Purchased
transportation
Forward Air
Airport-to-airport 28,025 33,388 82,008 98,432
Logistics 10,329 11,227 30,127 31,224
Other 1,387 1,764 3,681 4,941
Forward Air
Solutions
Pool distribution 3,747 2,505 9,774 5,743
Total purchased 43,488 48,884 125,590 140,340
transportation
Salaries, wages and 28,591 28,504 86,834 84,355
employee benefits
Operating leases 6,631 6,183 20,440 16,918
Depreciation and 5,006 4,134 14,687 11,830
amortization
Insurance and 2,045 1,816 6,984 5,690
claims
Fuel expense 1,880 3,052 5,199 8,466
Other operating 8,767 9,583 25,983 27,146
expenses
Impairment of
goodwill and other -- -- 7,157 --
intangible assets
Total operating 96,408 102,156 292,874 294,745
expenses
Income from 6,671 19,328 6,518 56,239
operations
Other (expense)
income:
Interest expense (177 ) (210 ) (469 ) (839 )
Other, net 51 115 50 325
Total other expense (126 ) (95 ) (419 ) (514 )
Income before 6,545 19,233 6,099 55,725
income taxes
Income taxes 2,766 7,136 2,581 21,519
Net income $ 3,779 $ 12,097 $ 3,518 $ 34,206
Net income per
share:
Basic $ 0.13 $ 0.42 $ 0.12 $ 1.19
Diluted $ 0.13 $ 0.42 $ 0.12 $ 1.18
Weighted average
shares outstanding:
Basic 28,942 28,871 28,924 28,782
Diluted 29,026 29,139 28,978 29,067
Dividends per $ 0.07 $ 0.07 $ 0.21 $ 0.21
share:
Forward Air Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
September 30, December 31,
2009 2008 (a)
Assets
Current assets:
Cash $ 27,230 $ 22,093
Accounts receivable, net 52,993 57,206
Other current assets 14,145 12,290
Total current assets 94,368 91,589
Property and equipment 203,383 186,377
Less accumulated depreciation and amortization 72,976 63,401
Total property and equipment, net 130,407 122,976
Goodwill and other acquired intangibles:
Goodwill 43,332 50,230
Other acquired intangibles, net 36,997 40,708
Total goodwill and other acquired intangibles 80,329 90,938
Other assets 1,582 2,024
Total assets $ 306,686 $ 307,527
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 8,509 $ 11,633
Accrued expenses 16,057 12,927
Current portion of debt and capital lease 1,072 1,602
obligations
Total current liabilities 25,638 26,162
Long-term debt and capital lease obligations, less 52,404 53,035
current portion
Other long-term liabilities 3,749 3,055
Deferred income taxes 6,136 8,841
Shareholders' equity:
Common stock 289 289
Additional paid-in capital 15,139 10,249
Retained earnings 203,331 205,896
Total shareholders' equity 218,759 216,434
Total liabilities and shareholders' equity $ 306,686 $ 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
September 30, September 30,
2009 2008
Operating activities:
Net income $ 3,779 $ 12,097
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 5,006 4,134
Share-based compensation 1,607 1,451
(Gain) loss on sale or disposal of property and (1 ) 15
equipment
Provision for loss on receivables 217 131
Provision for revenue adjustments 548 1,369
Deferred income taxes (466 ) (793 )
Tax benefit for stock options exercised (1 ) (69 )
Changes in operating assets and liabilities:
Accounts receivable (3,721 ) 2,209
Prepaid expenses and other current assets 382 439
Accounts payable and accrued expenses 1,962 (116 )
Net cash provided by operating activities 9,312 20,867
Investing activities:
Proceeds from disposal of property and equipment 14 13
Purchases of property and equipment (3,803 ) (7,325 )
Acquisition of businesses -- (10,653 )
Other 49 (74 )
Net cash used in investing activities (3,740 ) (18,039 )
Financing activities:
Payments of debt and capital lease obligations (390 ) (302 )
Borrowings on line of credit -- 15,000
Payments on line of credit -- --
Proceeds from exercise of stock options 8 947
Payments of cash dividends (2,028 ) (2,026 )
Common stock issued under employee stock -- --
purchase plan
Cash settlement of share-based awards for (5 ) (7 )
minimum tax withholdings
Tax benefit for stock options exercised 1 69
Net cash (used in) provided by financing (2,414 ) 13,681
activities
Net increase in cash 3,158 16,509
Cash at beginning of period 24,072 1,082
Cash at end of period $ 27,230 $ 17,591
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine months ended
September 30, September 30,
2009 2008
Operating activities:
Net income $ 3,518 $ 34,206
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 14,687 11,830
Impairment of goodwill and other intangible 7,157 --
assets
Share-based compensation 5,022 4,571
(Gain) loss on sale or disposal of property and (13 ) 36
equipment
Provision for (recovery) loss on receivables (74 ) 245
Provision for revenue adjustments 1,916 3,273
Deferred income taxes (3,009 ) 635
Tax benefit for stock options exercised (1 ) (1,148 )
Changes in operating assets and liabilities:
Accounts receivable 2,370 (16,092 )
Prepaid expenses and other current assets (1,567 ) (1,932 )
Accounts payable and accrued expenses 701 2,398
Net cash provided by operating activities 30,707 38,022
Investing activities:
Proceeds from disposal of property and equipment 231 46
Purchases of property and equipment (18,828 ) (12,680 )
Acquisition of businesses -- (29,299 )
Other 405 (167 )
Net cash used in investing activities (18,192 ) (42,100 )
Financing activities:
Payments of debt and capital lease obligations (1,163 ) (1,172 )
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 (6,081 ) (6,062 )
Common stock issued under employee stock 99 145
purchase plan
Repurchase of common stock (242 ) --
Cash settlement of share-based awards for -- (384 )
minimum tax withholdings
Tax benefit for stock options exercised 1 1,148
Net cash (used in) provided by financing (7,378 ) 16,760
activities
Net increase in cash 5,137 12,682
Cash at beginning of period 22,093 4,909
Cash at end of period $ 27,230 $ 17,591
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
September Percent September Percent of Percent
30, of 30,
2009 Revenue 2008 Revenue Change Change
Operating
revenue
Forward Air $ 85.7 83.1 % $ 108.6 89.4 % $ (22.9 ) (21.1 ) %
FASI 17.8 17.3 13.6 11.2 4.2 30.9
Intercompany (0.4 ) (0.4 ) (0.7 ) (0.6 ) 0.3 (42.9 )
Eliminations
Total 103.1 100.0 121.5 100.0 (18.4 ) (15.1 )
Purchased
transportation
Forward Air 39.8 46.4 46.5 42.8 (6.7 ) (14.4 )
FASI 4.0 22.5 3.1 22.8 0.9 29.0
Intercompany (0.3 ) 75.0 (0.7 ) 100.0 0.4 (57.1 )
Eliminations
Total 43.5 42.2 48.9 40.2 (5.4 ) (11.0 )
Salaries,
wages and
employee
benefits
Forward Air 20.6 24.0 23.0 21.2 (2.4 ) (10.4 )
FASI 8.0 44.9 5.5 40.5 2.5 45.5
Total 28.6 27.7 28.5 23.5 0.1 0.4
Operating
leases
Forward Air 4.6 5.4 4.7 4.3 (0.1 ) (2.1 )
FASI 2.0 11.2 1.5 11.0 0.5 33.3
Total 6.6 6.4 6.2 5.1 0.4 6.5
Depreciation
and
amortization
Forward Air 4.1 4.8 3.6 3.3 0.5 13.9
FASI 0.9 5.1 0.5 3.7 0.4 80.0
Total 5.0 4.9 4.1 3.4 0.9 22.0
Insurance and
claims
Forward Air 1.6 1.9 1.7 1.6 (0.1 ) (5.9 )
FASI 0.4 2.2 0.1 0.7 0.3 300.0
Total 2.0 1.9 1.8 1.5 0.2 11.1
Fuel expense
Forward Air 0.8 0.9 1.6 1.5 (0.8 ) (50.0 )
FASI 1.1 6.2 1.5 11.0 (0.4 ) (26.7 )
Total 1.9 1.8 3.1 2.5 (1.2 ) (38.7 )
Other
operating
expenses
Forward Air 7.0 8.2 8.2 7.5 (1.2 ) (14.6 )
FASI 1.9 10.7 1.4 10.3 0.5 35.7
Intercompany (0.1 ) 25.0 -- -- (0.1 ) (100.0 )
Eliminations
Total 8.8 8.6 9.6 7.9 (0.8 ) (8.3 )
Income (loss)
from
operations
Forward Air 7.2 8.4 19.3 17.8 (12.1 ) (62.7 )
FASI (0.5 ) (2.8 ) -- -- (0.5 ) (100.0 )
Total $ 6.7 6.5 % $ 19.3 15.9 % $ (12.6 ) (65.3 ) %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Nine months ended
September Percent September Percent Percent
30, of 30, of
2009 Revenue 2008 Revenue Change Change
Operating
revenue
Forward Air $ 251.2 83.9 % $ 319.8 91.1 % $ (68.6 ) (21.5 ) %
FASI 49.2 16.4 32.8 9.4 16.4 50.0
Intercompany (1.0 ) (0.3 ) (1.6 ) (0.5 ) 0.6 (37.5 )
Eliminations
Total 299.4 100.0 351.0 100.0 (51.6 ) (14.7 )
Purchased
transportation
Forward Air 116.1 46.2 134.6 42.1 (18.5 ) (13.7 )
FASI 10.4 21.1 7.3 22.3 3.1 42.5
Intercompany (0.9 ) 90.0 (1.6 ) 100.0 0.7 (43.8 )
Eliminations
Total 125.6 42.0 140.3 40.0 (14.7 ) (10.5 )
Salaries,
wages and
employee
benefits
Forward Air 63.1 25.1 70.3 22.0 (7.2 ) (10.2 )
FASI 23.7 48.2 14.1 43.0 9.6 68.1
Total 86.8 29.0 84.4 24.1 2.4 2.8
Operating
leases
Forward Air 14.1 5.6 13.6 4.2 0.5 3.7
FASI 6.3 12.8 3.3 10.0 3.0 90.9
Total 20.4 6.8 16.9 4.8 3.5 20.7
Depreciation
and
amortization
Forward Air 12.0 4.8 10.6 3.3 1.4 13.2
FASI 2.7 5.5 1.2 3.6 1.5 125.0
Total 14.7 4.9 11.8 3.4 2.9 24.6
Insurance and
claims
Forward Air 5.6 2.2 5.1 1.6 0.5 9.8
FASI 1.4 2.8 0.6 1.8 0.8 133.3
Total 7.0 2.3 5.7 1.6 1.3 22.8
Fuel expense
Forward Air 2.3 0.9 4.8 1.5 (2.5 ) (52.1 )
FASI 2.9 5.9 3.7 11.3 (0.8 ) (21.6 )
Total 5.2 1.7 8.5 2.4 (3.3 ) (38.8 )
Other
operating
expenses
Forward Air 21.0 8.4 23.7 7.4 (2.7 ) (11.4 )
FASI 5.1 10.4 3.5 10.7 1.6 45.7
Intercompany (0.1 ) 10.0 -- -- (0.1 ) (100.0 )
Eliminations
Total 26.0 8.7 27.2 7.7 (1.2 ) (4.4 )
Impairment of
goodwill and
other
intangible
assets
Forward Air 0.2 0.1 -- -- 0.2 100.0
FASI 7.0 14.2 -- -- 7.0 100.0
Total 7.2 2.4 -- -- 7.2 100.0
Income (loss)
from
operations
Forward Air 16.8 6.7 57.1 17.9 (40.3 ) (70.6 )
FASI (10.3 ) (20.9 ) (0.9 ) (2.7 ) (9.4 ) 1,044.4
Total $ 6.5 2.2 % $ 56.2 16.0 % $ (49.7 ) (88.4 ) %
Forward Air Corporation
Forward Air Inc. Operating Statistics
Three months ended Nine months ended
September September Percent September 30, September 30, Percent
30, 30,
2009 2008 Change 2009 2008 Change
Operating ratio 91.6 % 82.2 % (11.4 ) % 93.3 % 82.1 % (13.6 ) %
Business days 64.0 64.0 -- 191.0 192.0 (0.5 )
Business weeks 12.8 12.8 -- 38.2 38.4 (0.5 )
Airport-to-airport:
Tonnage
Total pounds(1) 357,768 441,269 (18.9 ) 1,054,048 1,336,801 (21.2 )
Average weekly 27,951 34,474 (18.9 ) 27,593 34,813 (20.7 )
pounds(1)
Linehaul shipments
Total linehaul 511,959 568,031 (9.9 ) 1,529,233 1,746,828 (12.5 )
Average weekly 39,997 44,377 (9.9 ) 40,032 45,490 (12.0 )
Forward Air 73,696 53,161 38.6 194,694 145,452 33.9
Complete shipments
As a percentage of 14.4 % 9.4 % 53.8 12.7 % 8.3 % 53.0
linehaul shipments
Average linehaul 699 777 (10.0 ) 689 765 (9.9 )
shipment size
Revenue per pound
(2)
Linehaul yield 15.91 16.39 (2.4 ) 16.14 16.56 (2.2 )
Fuel surcharge 0.93 2.15 (6.2 ) 0.79 1.81 (5.3 )
impact
Forward Air 1.83 1.17 3.3 1.60 0.95 3.4
Complete impact
Total
airport-to-airport 18.67 19.71 (5.3 ) 18.53 19.32 (4.1 )
yield
Logistics:
Miles
Owner operator(1) 6,111 4,812 27.0 17,916 13,432 33.4
Third party(1) 2,288 3,618 (36.8 ) 6,709 11,055 (39.3 )
Total Miles 8,399 8,430 (0.4 ) 24,625 24,487 0.6
Revenue per mile $ 1.58 $ 1.80 (12.2 ) $ 1.58 $ 1.74 (9.2 )
Cost per mile $ 1.23 $ 1.33 (7.5 ) % $ 1.22 $ 1.25 (2.4 ) %
(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 October 21, 2009