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