Forward Air Corporation Reports First Quarter 2008 Results

GREENEVILLE, Tenn.--(BUSINESS WIRE)--

Forward Air Corporation (NASDAQ:FWRD) today reported results for the first quarter ended March 31, 2008.

Operating revenue for the quarter ended March 31, 2008 increased 23.6% to $107.9 million from $87.3 million for the same quarter in 2007. Income from operations was $16.7 million, compared with $15.8 million in the prior-year quarter, an increase of 5.1%. As a percent of operating revenue, income from operations declined to 15.5% from 18.1% for the same quarter last year. Net income for the quarter ended March 31, 2008 was $10.0 million, compared with $10.3 million in the prior-year quarter. Net income per diluted share for the first quarter of 2008 was $0.35 compared with $0.34 in the prior-year quarter, an increase of 2.9%.

Bruce Campbell, Chairman, President and CEO, commented, "We were pleased with our performance in the first quarter. Despite the strong economic headwinds and challenging operating environment that persisted throughout the first quarter, we were able to achieve improved year-over-year operating revenue, income from operations and net income per diluted share. These results were made possible by the hard work and dedication of our employees and independent contractors and they have my sincerest gratitude for their efforts."

Commenting further, Mr. Campbell stated: "Also, in mid March, we were able to successfully complete the acquisition of certain assets of Pinch Holdings, Inc. and its related company AFTCO Enterprises, Inc. We were able to quickly tuck-in the Pinch/AFTCO airport-to-airport business component and our Forward Air Solutions team is working diligently to fully integrate their pool distribution business during the second quarter. As we move forward, we will continue to maintain discipline in our core business while also focusing our efforts on our 'Completing the Model' initiative. We believe that this approach will enable us to weather this challenging environment in the near term and properly position us for growth when the environment improves."

In commenting on the second quarter, Rodney L. Bell, Senior Vice President and CFO, said, "We anticipate second quarter year-over-year revenue growth in the 22 to 27% range. Additionally, we expect income per diluted share for the second quarter to be $0.38 to $0.42."

Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2008 results on Tuesday, April 22, 2008 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. A replay of the conference call will be available at www.forwardair.com beginning shortly after completion of the live call.

About Forward Air

Forward Air is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of terminals located in 83 cities on or near major airports in the United States and Canada. The Company 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 Corporation
             Condensed Consolidated Statements of Income
                (In thousands, except per share data)
                             (Unaudited)

                                             Three months ended
                                       ------------------------------
                                       March 31, 2008  March 31, 2007
                                       --------------  --------------
                                         (In thousands, except per
                                                 share data)
Operating revenue:
Forward Air
   Airport-to-airport                    $     82,059    $     74,221
   Logistics                                   12,253           8,184
   Other                                        5,789           4,948
Forward Air Solutions
   Pool distribution                            7,837              --
                                       --------------  --------------
Total operation revenue                       107,938          87,353

Operating expenses:
Purchased transportation
Forward Air
   Airport-to-airport                          31,540          30,532
   Logistics                                    9,180           6,146
   Other                                        1,633           1,296
Forward Air Solutions
   Pool distribution                            1,172              --
                                       --------------  --------------
     Total purchased transportation            43,525          37,974
     Salaries, wages and employee
      benefits                                 26,447          19,013
     Operating leases                           4,851           3,735
     Depreciation and amortization              3,698           2,380
     Insurance and claims                       2,260           1,702
     Other operating expenses                  10,507           6,710
                                       --------------  --------------
Total operating expenses                       91,288          71,514
                                       --------------  --------------
Income from operations                         16,650          15,839

Other income (expense):
   Interest expense                              (301)            (40)
   Other, net                                     154             753
                                       --------------  --------------
Total other (expense) income                     (147)            713
                                       --------------  --------------
Income before income taxes                     16,503          16,552
Income taxes                                    6,495           6,259
                                       --------------  --------------
Net income                               $     10,008    $     10,293
                                       ==============  ==============

Net income per share:
Basic                                    $       0.35    $       0.34
                                       ==============  ==============
Diluted                                  $       0.35    $       0.34
                                       ==============  ==============
Dividends                                $       0.07    $       0.07
                                       ==============  ==============
Weighted average shares outstanding:
Basic                                          28,694          30,338
Diluted                                        28,982          30,665
                       Forward Air Corporation
                 Condensed Consolidated Balance Sheet
                            (In thousands)
                             (Unaudited)

                                             March 31,   December 31,
                                                2008        2007(a)
                                            ------------ -------------

Assets
Current assets:
  Cash                                       $     3,235   $     4,909
  Short-term investments                             522           522
  Accounts receivable, net                        64,080        59,734
  Other current assets                             8,422         6,285
                                            ------------ -------------
Total current assets                              76,259        71,450

Property and equipment                           161,982       158,354
Less accumulated depreciation and
 amortization                                     58,121        55,322
                                            ------------ -------------
Total property and equipment, net                103,861       103,032
Goodwill and other acquired intangibles:
  Goodwill                                        53,939        36,053
  Other acquired intangibles, net                 29,097        29,991
                                            ------------ -------------
Total goodwill and other acquired
 intangibles                                      83,036        66,044
Other assets                                       1,389         1,358
                                            ------------ -------------
Total assets                                 $   264,545   $   241,884
                                            ============ =============

Liabilities and Shareholders' Equity
Current liabilities:
  Accounts payable                           $    14,354   $    11,714
  Accrued expenses                                12,939        14,274
  Current portion of debt and capital lease
   obligations                                       701           830
                                            ------------ -------------
Total current liabilities                         27,994        26,818

Debt and capital lease obligations, less
 current portion                                  41,359        31,486
Other long-term liabilities                        4,605         4,476
Deferred income taxes                              8,005         7,371

Shareholders' equity:
  Common stock                                       287           286
  Additional paid-in capital                       2,855            --
  Retained earnings                              179,440       171,447
                                            ------------ -------------
Total shareholders' equity                       182,582       171,733
                                            ------------ -------------
Total liabilities and shareholders' equity   $   264,545   $   241,884
                                            ============ =============

(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
                                                   -------------------
                                                   March 31, March 31,
                                                     2008      2007
                                                   --------- ---------
Operating activities:
Net income                                         $ 10,008  $ 10,293
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                       3,698     2,380
  Share-based compensation                            1,535       593
  Loss (gain) on sale of property and equipment          16       (62)
  Provision for loss (recovery) on receivables           95       (93)
  Provision for revenue adjustments                     996       655
  Deferred income taxes                                 514     1,797
  Tax (benefit) provision for stock options
   exercised                                           (725)        7
  Changes in operating assets and liabilities
    Accounts receivable                              (5,437)     (952)
    Prepaid expenses and other current assets           459      (440)
    Accounts payable and accrued expenses              (317)   (3,758)
                                                    -------   -------
Net cash provided by operating activities            10,842    10,420

Investing activities:
Proceeds from disposal of property and equipment          4       188
Purchases of property and equipment                  (2,645)  (22,570)
Proceeds from sales or maturities of available-
 for-sale securities                                     --    64,095
Purchases of available-for-sale securities               --   (44,520)
Acquisition of business                             (18,526)       --
Other                                                   (49)     (704)
                                                   --------  --------
Net cash used in investing activities               (21,216)   (3,511)

Financing activities:
Payments of debt and capital lease obligations         (606)       (9)
Borrowings on line of credit                         20,000        --
Payments on line of credit                          (10,000)       --
Proceeds from exercise of stock options                 956       196
Payments of cash dividends                           (2,013)   (2,127)
Repurchase of common stock                               --    (7,538)
Cash settlement of share-based awards for minimum
 tax withholdings                                      (362)     (220)
Tax benefit (provision) for stock options
 exercised                                              725        (7)
                                                   --------  --------
Net cash provided by (used in) financing
 activities                                           8,700    (9,705)
                                                   --------  --------
Net decrease in cash                                 (1,674)   (2,796)
Cash at beginning of period                           4,909     8,231
                                                   --------  --------
Cash at end of period                              $  3,235  $  5,435
                                                   ========  ========
                       Forward Air Corporation
                         Segment Information
                            (In millions)
                             (Unaudited)

                                       Three months ended
                          --------------------------------------------
                           March 31, Percent of  March 31, Percent of
                             2008     Revenue      2007     Revenue
                          ---------- ---------- ---------- -----------
Operating Revenue
  Forward Air             $   100.1       92.8% $     87.3      100.0%
  FASI                          7.8        7.2           -          -
                          ---------- ---------- ---------- ----------
        Total                 107.9      100.0        87.3      100.0
                          ---------- ---------- ---------- ----------

Purchased Transportation
  Forward Air                  42.3       42.3        38.0       43.5
  FASI                          1.2       15.4           -          -
                          ---------- ---------- ---------- ----------
        Total                  43.5       40.3        38.0       43.5
                          ---------- ---------- ---------- ----------

Salaries, wages and
 employee benefits
  Forward Air                  22.6       22.6        19.0       21.8
  FASI                          3.8       48.7           -          -
                          ---------- ---------- ---------- ----------
        Total                  26.4       24.5        19.0       21.8
                          ---------- ---------- ---------- ----------

Operating Leases
  Forward Air                   4.3        4.3         3.7        4.2
  FASI                          0.5        6.4           -          -
                          ---------- ---------- ---------- ----------
        Total                   4.8        4.5         3.7        4.2
                          ---------- ---------- ---------- ----------

Depreciation and
 Amortization
  Forward Air                   3.4        3.4         2.4        2.8
  FASI                          0.3        3.8           -          -
                          ---------- ---------- ---------- ----------
        Total                   3.7        3.4         2.4        2.8
                          ---------- ---------- ---------- ----------

Insurance and claims
  Forward Air                   1.8        1.8         1.7        1.9
  FASI                          0.5        6.4           -          -
                          ---------- ---------- ---------- ----------
        Total                   2.3        2.1         1.7        1.9
                          ---------- ---------- ---------- ----------

Other operating expenses
  Forward Air                   8.7        8.7         6.7        7.7
  FASI                          1.8       23.1           -          -
                          ---------- ---------- ---------- ----------
        Total                  10.5        9.7         6.7        7.7
                          ---------- ---------- ---------- ----------

Income (loss) from
 operations
  Forward Air                  17.0       16.9        15.8       18.1
  FASI                         (0.3)      (3.8)          -          -
                          ---------- ---------- ---------- ----------
        Total             $    16.7       15.5% $     15.8       18.1%
                          ========== ========== ========== ==========

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