Forward Air Corporation Reports First Quarter 2018 Results and Quarterly Cash Dividend

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GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported operating revenue, income from operations, net income and diluted earnings per share for the three months ended March 31, 2018.

Operating revenue for the quarter ended March 31, 2018 increased 15.5% to $302.6 million from $262.0 million for the same quarter in 2017. Income from operations was $24.2 million, compared to $23.7 million in the prior year quarter. Net income during the period was $17.7 million compared to $14.6 million in the first quarter of 2017. Net income per diluted share for the first quarter of 2018 was $0.60 compared to $0.48 in the prior year quarter.

Bruce A. Campbell, President, and CEO, commenting on first quarter results said, “Our first quarter results were ahead of our guidance despite some adverse weather. Expedited LTL drove strong volume growth amid a tight Truckload market to deliver solid performance despite a higher use of brokered transportation. Truckload Premium Services also faced a higher use of brokered transportation as it continued adjusting its customer contracts to market rates. Our Intermodal group delivered broad-based growth that extended beyond its recently completed acquisitions. Pool Distribution had a solid quarter driven by volume growth and new business wins.”

Commenting on the Company’s second quarter 2018 guidance, Michael J. Morris, Senior Vice President and CFO, said, “We expect second quarter year-on-year revenue growth to be 16% to 20%. This revenue outlook contemplates our 2018 implementation of ASC 606, Revenue from Contracts with Customers, which now requires that we report fuel surcharge revenue on a gross basis. As such, our growth outlook reflects a comparison to our second quarter 2017 revenue which reported fuel surcharge on a net basis. After adjusting this prior year period to reflect fuel surcharge revenue on a gross basis, we expect our year-on-year revenue growth to be 9% to 13%. We expect net income per diluted share to be between $0.73 and $0.77 in the second quarter of 2018, compared to $0.65 in the prior year quarter. The prior year earnings per share for the second quarter of 2017 increased $0.01 per diluted share from the originally reported $0.64 per diluted share following the implementation of ASC 606.”

On April 20, 2018, our Board of Directors declared a quarterly cash dividend of $0.15 per share of common stock. The dividend is payable to shareholders of record at the close of business on May 25, 2018, and is expected to be paid on June 8, 2018.

This quarterly dividend is pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.60 per share of common stock, payable in quarterly increments of $0.15 per share of common stock. The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by the Board of Directors each quarter after its review of the Company's financial performance.

Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2018 results on Thursday, April 26, 2018 at 9:00 a.m. EDT. The Company’s conference call will be available online at www.forwardaircorp.com or by dialing (800) 398-9379. A replay of the conference call will be available at www.forwardaircorp.com beginning shortly after the completion of the live call.

About Forward Air Corporation

Forward Air keeps your business moving forward by providing services within four business segments: Expedited LTL (provides expedited regional, inter-regional and national LTL services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals); Truckload Premium Services (provides expedited truckload brokerage, dedicated fleet services, as well as high-security and temperature-controlled logistics services); Intermodal (provides first-and last-mile high-value drayage services both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services); and Pool Distribution (provides high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region). For more information, visit our website at www.forwardaircorp.com.

Financial Statement Presentation

Our results reflect the impact of the new revenue recognition standards, adopted under ASC 606, on a full retrospective basis, which required us to adjust each prior reporting period presented.

 
Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
       
Three months ended

March 31,
2018

March 31,
2017

  (As Adjusted)
Operating revenue:
Expedited LTL $ 169,944 $ 148,765
Truckload Premium Services 46,094 47,088
Pool Distribution 42,671 38,801
Intermodal 48,568 28,907
Eliminations and other operations (4,669 ) (1,515 )
Operating revenue 302,608 262,046
 
Operating expenses:
Purchased transportation 139,666 117,695
Salaries, wages and employee benefits 69,581 61,928
Operating leases 17,964 15,601
Depreciation and amortization 10,690 10,033
Insurance and claims 7,153 5,806
Fuel expense 5,554 3,680
Other operating expenses 27,765   23,560  
Total operating expenses 278,373   238,303  
Operating (loss) income:
Expedited LTL 20,773 18,928
Truckload Premium Services (43 ) 1,755
Pool Distribution 1,371 1,367
Intermodal 3,469 2,555
Other operations (1,335 ) (862 )
Income from operations 24,235   23,743  
 
Other income (expense):
Interest expense (371 ) (282 )
Other, net —   (26 )
Total other income (expense) (371 ) (308 )
Income before income taxes 23,864 23,435
Income tax expense 6,123   8,854  
Net income and comprehensive income $ 17,741   $ 14,581  
 
Net income per share:
Basic $ 0.60   $ 0.48  
Diluted $ 0.60   $ 0.48  
 
Dividends per share: $ 0.15   $ 0.15  
 
 
Expedited LTL Segment Information
(In millions)
(Unaudited)
                       
Three months ended
March 31, Percent of March 31, Percent of Percent
2018 Revenue 2017 Revenue Change Change
    (As Adjusted)      
Operating revenue $ 169.9 100.0 % $ 148.8 100.0 % $ 21.1 14.2 %
 
Operating expenses:
Purchased transportation 78.4 46.2 63.1 42.4 15.3 24.2
Salaries, wages and employee benefits 37.7 22.2 34.9 23.5 2.8 8.0
Operating leases 9.9 5.8 9.2 6.2 0.7 7.6
Depreciation and amortization 5.5 3.2 5.6 3.8 (0.1 ) (1.8 )
Insurance and claims 3.2 1.9 2.9 1.9 0.3 10.3
Fuel expense 1.3 0.8 0.9 0.6 0.4 44.4
Other operating expenses 13.1   7.7   13.3   8.9   (0.2 ) (1.5 )
Total operating expenses 149.1   87.8   129.9   87.3   19.2   14.8  
Income from operations $ 20.8   12.2 % $ 18.9   12.7 % $ 1.9   10.1 %
 
 
Expedited LTL Operating Statistics
           
Three months ended
March 31, March 31, Percent
2018 2017 Change
  (As Adjusted)  
 
Business days 64 64 — %
 
Tonnage
Total pounds ¹ 608,822 565,682 7.6
Pounds per day ¹ 9,513 8,839 7.6
 
Shipments
Total shipments 970,820 901,636 7.7
Shipments per day 15,169 14,088 7.7
Total shipments with pickup and/or delivery 231,410 210,002 10.2
 
Revenue per hundredweight $ 25.18 $ 24.01 4.9
Revenue per hundredweight, ex fuel 21.66 21.46 0.9
 
Revenue per shipment 158 151 4.6
Revenue per shipment, ex fuel 136 135 0.7
 
Weight per shipment 627 627 — %
 
¹ - In thousands
 
 
Truckload Premium Services Segment Information
(In millions)
(Unaudited)
                       
Three months ended
March 31, Percent of March 31, Percent of Percent
2018 Revenue 2017 Revenue Change Change
    (As Adjusted)      
Operating revenue $ 46.1 100.0 % $ 47.1 100.0 % $ (1.0 ) (2.1 )%
 
Operating expenses:
Purchased transportation 34.8 75.5 34.6 73.4 0.2 0.6
Salaries, wages and employee benefits 5.1 11.1 5.2 11.0 (0.1 ) (1.9 )
Operating leases 0.2 0.4 0.1 0.2 0.1 100.0
Depreciation and amortization 1.8 3.9 1.5 3.2 0.3 20.0
Insurance and claims 1.0 2.2 1.1 2.3 (0.1 ) (9.1 )
Fuel expense 1.1 2.4 0.8 1.7 0.3 37.5
Other operating expenses 2.1   4.5   2.1   4.5     —   —  
Total operating expenses 46.1   100.0   45.4   96.4     0.7   1.5  
Income from operations $ —   — % $ 1.7   3.6 % $ (1.7 ) (100.0 )%
 
 
Truckload Premium Services Operating Statistics
     
Three months ended
March 31,     March 31,     Percent
2018 2017 Change
  (As Adjusted)  
 
Total Miles ¹ 20,072 22,846 (12.1 )%
Empty Miles Percentage 9.5 % 10.2 % (6.9 )
Tractors (avg) 329 408 (19.4 )
Miles per tractor per week

4,766

4,375

8.9

 
Revenue per mile $ 2.19 $ 2.01 9.0
Cost per mile $ 1.81 $ 1.60 13.1 %
 
¹ - In thousands
 
 
Pool Distribution Segment Information
(In millions)
(Unaudited)
                       
Three months ended
March 31, Percent of March 31, Percent of Percent
2018 Revenue 2017 Revenue Change Change
    (As Adjusted)      
Operating revenue $ 42.7 100.0 % $ 38.8 100.0 % $ 3.9 10.1 %
 
Operating expenses:
Purchased transportation 12.1 28.3 10.9 28.1 1.2 11.0
Salaries, wages and employee benefits 15.9 37.2 14.4 37.1 1.5 10.4
Operating leases 3.7 8.7 3.2 8.2 0.5 15.6
Depreciation and amortization 1.8 4.2 1.8 4.6 — —
Insurance and claims 0.9 2.1 1.0 2.6 (0.1 ) (10.0 )
Fuel expense 1.6 3.8 1.2 3.1 0.4 33.3
Other operating expenses 5.3     12.4   4.9     12.6   0.4   8.2  
Total operating expenses 41.3     96.7   37.4     96.4   3.9   10.4  
Income from operations $ 1.4   3.3 % $ 1.4   3.6 % $ —   — %
 
 
Pool Operating Statistics
     
Three months ended
March 31,     March 31,     Percent
2018 2017 Change
  (As Adjusted)  
 

Cartons ¹

20,223 18,691 8.2 %
Revenue per Carton $ 2.11 $ 2.08 1.4 %
Terminals 28 28 — %
 

¹ - In thousands

 
 
Intermodal Segment Information
(In millions)
(Unaudited)
                       
Three months ended
March 31, Percent of March 31, Percent of Percent
2018 Revenue 2017 Revenue Change Change
    (As Adjusted)      
Operating revenue $ 48.6 100.0 % $ 28.9 100.0 % $ 19.7 68.2 %
 
Operating expenses:
Purchased transportation 18.7 38.5 10.3 35.6 8.4 81.6
Salaries, wages and employee benefits 10.3 21.2 6.7 23.2 3.6 53.7
Operating leases 4.0 8.2 3.1 10.7 0.9 29.0
Depreciation and amortization 1.6 3.3 1.1 3.8 0.5 45.5
Insurance and claims 1.4 2.9 0.8 2.8 0.6 75.0
Fuel expense 1.6 3.3 0.7 2.4 0.9 128.6
Other operating expenses 7.5   15.4   3.6   12.5   3.9   108.3  
Total operating expenses 45.1   92.8   26.3   91.0   18.8   71.5  
Income from operations $ 3.5   7.2 % $ 2.6   9.0 % $ 0.9   34.6 %
 
 
Intermodal Operating Statistics
     
Three months ended
March 31,     March 31,     Percent
2018 2017 Change
  (As Adjusted)  
 
Drayage shipments 73,671 34,754 112.0 %
Drayage revenue per Shipment $ 571 $ 663 (13.9 )%
Number of Locations 19 13 46.2 %
 
 
Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
   

March 31,
2018

   

December 31,
2017

  (As Adjusted)
Assets
Current assets:
Cash and cash equivalents $ 12,735 $ 3,893
Accounts receivable, net 146,191 147,948
Other current assets 11,147   15,807
Total current assets 170,073 167,648
 
Property and equipment 402,688 399,235
Less accumulated depreciation and amortization 199,088   193,123
Net property and equipment 203,600 206,112
Goodwill and other acquired intangibles:
Goodwill 191,671 191,671
Other acquired intangibles, net of accumulated amortization 108,938   111,247
Total goodwill and other acquired intangibles, net 300,609 302,918
Other assets 15,925   15,944
Total assets $ 690,207   $ 692,622
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 30,004 $ 30,723
Accrued expenses 35,976 35,069
Current portion of debt and capital lease obligations 351   359
Total current liabilities 66,331 66,151
 
Debt and capital lease obligations, less current portion 40,522 40,588
Other long-term liabilities 24,118 24,104
Deferred income taxes 32,793 29,080
 
Shareholders’ equity:
Common stock 290 295
Additional paid-in capital 197,607 195,346
Retained earnings 328,546   337,058
Total shareholders’ equity 526,443   532,699
Total liabilities and shareholders’ equity $ 690,207   $ 692,622
 
 
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
   
Three months ended

March 31,
2018

   

March 31,
2017

  (As Adjusted)
Operating activities:
Net income $ 17,741 $ 14,581
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 10,690 10,033
Share-based compensation 2,261 1,962
Loss on disposal of property and equipment 82 488
Provision for loss on receivables 134 22
Provision for revenue adjustments 817 718
Deferred income tax expense 3,713 131
Changes in operating assets and liabilities
Accounts receivable 805 (1,470 )
Prepaid expenses and other current assets 2,715 2,153
Income taxes 1,768 8,434
Accounts payable and accrued expenses 87   9  
Net cash provided by operating activities 40,813 37,061
 
Investing activities:
Proceeds from disposal of property and equipment 644 790
Purchases of property and equipment (6,221 ) (2,652 )
Other (91 ) 128  
Net cash used in investing activities (5,668 ) (1,734 )
 
Financing activities:
Payments of debt and capital lease obligations (74 ) (27,857 )
Proceeds from senior credit facility — 13,000
Proceeds from exercise of stock options — 1,524
Payments of cash dividends (4,413 ) (4,539 )
Repurchase of common stock (repurchase program) (19,993 ) (9,996 )
Cash settlement of share-based awards for tax withholdings (1,823 ) (1,635 )
Net cash used in financing activities (26,303 ) (29,503 )

Net increase in cash

8,842 5,824
Cash at beginning of period 3,893   8,511  
Cash at end of period $ 12,735   $ 14,335  
 

The following table summarizes supplemental guidance information that management believes to be useful.

  Forward Air Corporation
Additional Guidance Data
(In thousands, except per share data)
(Unaudited)
       
Three months ended
  Actual         March 31, 2018  
Net income $ 17,741
Income allocated to participating securities (145 )
Numerator for diluted income per share - net income $ 17,596  
 
Fully diluted share count 29,480
Diluted earnings per share $ 0.60
 
 
  Projected         Full year 2018  
Projected tax rate 25.3 %
 
Projected year end fully diluted share count 28,800
 
Projected capital expenditures, net $ 46,500
 

Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as:“anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,”“likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements included in this press release relate to expected second quarter 2018 revenue growth and net income per diluted shares as well as full year 2018 projected tax rate, fully diluted share count (before consideration of future share repurchase) and projected capital expenditures.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these 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, the creditworthiness of our customers and their ability to pay for services rendered, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2017.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

Forward Air Corporation
Michael J. Morris, 404-362-8933
mmorris@forwardair.com

Source: Forward Air Corporation

Released April 25, 2018