Forward Air Corporation Reports Fourth Quarter and Fiscal 2010 Results and Announces Quarterly Cash Dividend
Forward Air Corporation Reports Fourth Quarter and Fiscal 2010 Results and Announces Quarterly Cash Dividend
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth quarter and year ended December 31, 2010.
Operating revenue for the quarter ended December 31, 2010 increased 13.0% to $133.3 million from $118.0 million for the same quarter in 2009. Income from operations was $18.7 million, compared with $12.1 million for the fourth quarter of 2009, an increase of 54.5%. As a percent of operating revenue, income from operations increased to 14.0% from 10.3% for the same quarter last year. Net income during the period increased by $5.5 million, or 88.0%, to $11.8 million from $6.3 million in the fourth quarter of 2009. Net income per diluted share for the fourth quarter of 2010 was $0.41 compared with $0.22 in the same quarter in 2009, an increase of 86.4%.
Operating revenue for the year ended December 31, 2010 increased 15.9% to $483.9 million from $417.4 million for the year ended December 31, 2009. Income from operations was $53.7 million, compared with $18.6 million in 2009. The Company's net income for the year ended December 31, 2010, was $32.0 million, compared with $9.8 million in 2009. Net income per diluted share for the year ended December 31, 2010 was $1.10 compared with $0.34 in 2009. The income from operations, net income and net income per diluted share for the year end December 31, 2009 included the impact of a $7.2 million pre-tax charge for the impairment of goodwill and other intangible assets.
Bruce A. Campbell, Chairman, President and CEO, said, "Solid demand for our airport-to-airport service along with strong pricing delivered outstanding results for the fourth quarter. We were most encouraged by the continued positive leverage of our business model which produced a 370 basis point improvement as compared to the fourth quarter of 2009. The resulting 86.0% operating ratio is our best operating performance since the third quarter of 2008. We are pleased with our continued progress toward attaining the returns and margins our shareholders have come to expect from Forward Air."
Commenting further, Mr. Campbell said, "We were also encouraged by the fourth quarter performance of our Forward Air Solutions segment. With a continued firming of the economy, further success penetrating complementary industry verticals and on-going cost control initiatives, we expect this segment to be a profitable contributor in 2011."
In closing, Mr. Campbell said, "We expect that improving macroeconomic trends as well as positive trends specific to Forward Air will continue throughout 2011. Utilizing our dedicated team of employees and independent contractors we intend to take full advantage of this improved operating environment in order to drive maximum value to our shareholders."
In commenting further on the quarter, Rodney L. Bell, Senior Vice President and CFO said, "Strong free cash flow of $40.1 million allowed us to increase cash by $32.5 million to end 2010 with $74.5 million on our balance sheet. Consistent with the end of 2009, we closed 2010 with $50 million outstanding on our line of credit and had $38.3 million available on our credit facility."
Commenting on the Company's guidance for the first quarter, Mr. Bell said, "We anticipate our first quarter 2011 revenues will increase in the range of 9% to 13% over the comparable 2010 period, and we expect income per diluted share to be between $0.20 and $0.24 per share. This compares to $0.12 per share in the first quarter of 2010."
On February 11, 2011, our Board of Directors declared a quarterly cash dividend of $0.07 per share of common stock. The dividend is payable to shareholders of record at the close of business on March 13, 2011, and is expected to be paid on March 28, 2011.
This quarterly dividend is pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.28 per share of common stock, payable in quarterly increments of $0.07 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 fourth quarter and year end 2010 results on Tuesday, February 15, 2011 at 9:00 a.m. EST. The Company's conference call will be available online at www.forwardair.com or by dialing 800-841-9385, passcode 156 499 68. 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
Consolidated Condensed Statements of Income
(In thousands, except per share data)
(Unaudited)
Three months ended Year ended
December December 31, December 31, December 31,
31,
2010 2009 2010 2009
Operating revenue:
Forward Air
Airport-to-airport $ 87,245 $ 73,338 $ 321,702 $ 268,245
Logistics 17,147 15,422 64,935 54,067
Other 6,386 6,100 25,130 23,076
Forward Air
Solutions
Pool distribution 22,532 23,158 72,172 72,022
Total operating 133,310 118,018 483,939 417,410
revenue
Operating
expenses:
Purchased
transportation
Forward Air
Airport-to-airport 34,959 30,509 129,111 112,516
Logistics 13,445 12,061 50,225 42,188
Other 1,476 1,553 6,288 5,234
Forward Air
Solutions
Pool distribution 5,123 4,715 15,747 14,490
Total purchased 55,003 48,838 201,371 174,428
transportation
Salaries, wages
and employee 33,426 31,971 129,108 118,804
benefits
Operating leases 6,864 6,853 26,252 27,294
Depreciation and 5,167 5,035 20,450 19,722
amortization
Insurance and 2,442 2,735 8,425 9,719
claims
Fuel expense 2,409 2,113 8,461 7,312
Other operating 9,321 8,441 36,133 34,424
expenses
Impairment of
goodwill and other -- -- -- 7,157
intangible assets
Total operating 114,632 105,986 430,200 398,860
expenses
Income from 18,678 12,032 53,739 18,550
operations
Other income
(expense):
Interest expense (173 ) (202 ) (730 ) (670 )
Other, net 53 20 90 69
Total other (120 ) (182 ) (640 ) (601 )
expense
Income before 18,558 11,850 53,099 17,949
income taxes
Income taxes 6,741 5,566 21,063 8,147
Net income $ 11,817 $ 6,284 $ 32,036 $ 9,802
Net income per
share:
Basic $ 0.41 $ 0.22 $ 1.11 $ 0.34
Diluted $ 0.41 $ 0.22 $ 1.10 $ 0.34
Weighted average
shares
outstanding:
Basic 29,010 28,943 28,984 28,928
Diluted 29,174 29,041 29,111 28,993
Dividends per $ 0.07 $ 0.07 $ 0.28 $ 0.28
share:
Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2010 2009 (a)
Assets
Current assets:
Cash $ 74,504 $ 42,035
Accounts receivable, net 62,763 55,720
Other current assets 8,696 9,471
Total current assets 145,963 107,226
Property and equipment 213,704 204,716
Less accumulated depreciation and amortization 87,272 75,990
Total property and equipment, net 126,432 128,726
Goodwill and other acquired intangibles:
Goodwill 43,332 43,332
Other acquired intangibles, net 31,259 35,849
Total goodwill and other acquired intangibles 74,591 79,181
Other assets 1,810 1,597
Total assets $ 348,796 $ 316,730
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 10,687 $ 10,333
Accrued expenses 16,280 18,531
Current portion of debt and capital lease obligations 638 919
Total current liabilities 27,605 29,783
Debt and capital lease obligations, less current 50,883 52,169
portion
Other long-term liabilities 8,106 4,485
Deferred income taxes 6,116 5,786
Shareholders' equity:
Common stock 290 290
Additional paid-in capital 24,300 16,631
Retained earnings 231,496 207,586
Total shareholders' equity 256,086 224,507
Total liabilities and shareholders' equity $ 348,796 $ 316,730
(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
December 31, December 31,
2010 2009
Operating activities:
Net income $ 11,817 $ 6,284
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 5,167 5,035
Share-based compensation 1,397 1,732
Gain on disposal of property and equipment 78 7
Provision for (recovery) loss on receivables (254 ) 14
Provision for revenue adjustments 127 474
Deferred income taxes 3,060 (1,572 )
Tax (benefit) expense for stock options (166 ) 371
exercised
Changes in operating assets and liabilities
Accounts receivable (198 ) (3,214 )
Prepaid expenses and other current assets 989 2,115
Accounts payable and accrued expenses (5,883 ) 8,226
Net cash provided by operating activities 16,134 19,472
Investing activities:
Proceeds from disposal of property and equipment 69 39
Purchases of property and equipment (3,259 ) (2,019 )
Other (224 ) (33 )
Net cash used in investing activities (3,414 ) (2,013 )
Financing activities:
Payments of debt and capital lease obligations (173 ) (386 )
Proceeds from exercise of stock options 501 --
Payments of cash dividends (2,033 ) (2,028 )
Common stock issued under employee stock 104 138
purchase plan
Cash settlement of share-based awards for -- (7 )
minimum tax withholdings
Tax benefit (expense) for stock options 166 (371 )
exercised
Net cash used in financing activities (1,435 ) (2,654 )
Net increase in cash 11,285 14,805
Cash at beginning of period 63,219 27,230
Cash at end of period $ 74,504 $ 42,035
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Year ended
December 31, December 31,
2010 2009
Operating activities:
Net income $ 32,036 $ 9,802
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 20,450 19,722
Impairment of goodwill and other intangible -- 7,157
assets
Share-based compensation 6,284 6,754
Gain on disposal of property and equipment (570 ) (6 )
Provision for recovery on receivables (52 ) (60 )
Provision for revenue adjustments 1,589 2,390
Deferred income taxes 1,436 (4,581 )
Tax (benefit) expense for stock options (194 ) 370
exercised
Changes in operating assets and liabilities
Accounts receivable (8,580 ) (844 )
Prepaid expenses and other current assets (40 ) 548
Accounts payable and accrued expenses 1,636 8,927
Net cash provided by operating activities 53,995 50,179
Investing activities:
Proceeds from disposal of property and equipment 1,482 270
Purchases of property and equipment (15,148 ) (20,847 )
Other (224 ) 372
Net cash used in investing activities (13,890 ) (20,205 )
Financing activities:
Payments of debt and capital lease obligations (895 ) (1,549 )
Proceeds from exercise of stock options 991 8
Payments of cash dividends (8,121 ) (8,109 )
Common stock issued under employee stock 195 237
purchase plan
Cash settlement of share-based awards for -- (249 )
minimum tax withholdings
Tax benefit (expense) for stock options 194 (370 )
exercised
Net cash used in financing activities (7,636 ) (10,032 )
Net increase in cash 32,469 19,942
Cash at beginning of period 42,035 22,093
Cash at end of period $ 74,504 $ 42,035
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
December Percent December Percent %
31, of 31, of
2010 Revenue 2009 Revenue Change Change
Operating
revenue
Forward Air $ 111.1 83.3 % $ 95.1 80.6 % $ 16.0 16.8 %
FASI 22.6 17.0 23.3 19.7 (0.7 ) (3.0 )
Intercompany (0.4 ) (0.3 ) (0.4 ) (0.3 ) -- --
Eliminations
Total 133.3 100.0 118.0 100.0 15.3 13.0
Purchased
transportation
Forward Air 49.9 44.9 44.2 46.5 5.7 12.9
FASI 5.5 24.3 5.0 21.4 0.5 10.0
Intercompany (0.4 ) 100.0 (0.4 ) 100.0 -- --
Eliminations
Total 55.0 41.3 48.8 41.4 6.2 12.7
Salaries,
wages and
employee
benefits
Forward Air 24.9 22.4 22.6 23.8 2.3 10.2
FASI 8.5 37.6 9.3 39.9 (0.8 ) (8.6 )
Total 33.4 25.0 31.9 27.0 1.5 4.7
Operating
leases
Forward Air 5.0 4.5 4.6 4.8 0.4 8.7
FASI 1.9 8.4 2.3 9.9 (0.4 ) (17.4 )
Total 6.9 5.2 6.9 5.8 -- --
Depreciation
and
amortization
Forward Air 4.2 3.8 4.1 4.3 0.1 2.4
FASI 1.0 4.4 0.9 3.9 0.1 11.1
Total 5.2 3.9 5.0 4.2 0.2 4.0
Insurance and
claims
Forward Air 1.6 1.4 2.1 2.2 (0.5 ) (23.8 )
FASI 0.8 3.6 0.7 3.0 0.1 14.3
Total 2.4 1.8 2.8 2.4 (0.4 ) (14.3 )
Fuel expense
Forward Air 1.0 0.9 0.8 0.8 0.2 25.0
FASI 1.4 6.2 1.3 5.6 0.1 7.7
Total 2.4 1.8 2.1 1.8 0.3 14.3
Other
operating
expenses
Forward Air 7.6 6.9 6.6 7.0 1.0 15.2
FASI 1.7 7.5 1.8 7.7 (0.1 ) (5.6 )
Total 9.3 7.0 8.4 7.1 0.9 10.7
Income from
operations
Forward Air 16.9 15.2 10.1 10.6 6.8 67.3
FASI 1.8 8.0 2.0 8.6 (0.2 ) (10.0 )
Total $ 18.7 14.0 % $ 12.1 10.3 % $ 6.6 54.5 %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Year ended
December Percent December Percent %
31, of 31, of
2010 Revenue 2009 Revenue Change Change
Operating
revenue
Forward Air $ 412.9 85.3 % $ 346.3 83.0 % $ 66.6 19.2 %
FASI 72.5 15.0 72.5 17.4 -- --
Intercompany (1.5 ) (0.3 ) (1.4 ) (0.4 ) (0.1 ) 7.1
Eliminations
Total 483.9 100.0 417.4 100.0 66.5 15.9
Purchased
transportation
Forward Air 185.8 45.0 160.3 46.3 25.5 15.9
FASI 16.9 23.3 15.4 21.2 1.5 9.7
Intercompany (1.3 ) (86.7 ) (1.3 ) 92.9 -- --
Eliminations
Total 201.4 41.6 174.4 41.8 27.0 15.5
Salaries,
wages and
employee
benefits
Forward Air 98.3 23.8 85.7 24.7 12.6 14.7
FASI 30.8 42.5 33.1 45.6 (2.3 ) (6.9 )
Total 129.1 26.7 118.8 28.5 10.3 8.7
Operating
leases
Forward Air 18.6 4.5 18.7 5.4 (0.1 ) (0.5 )
FASI 7.7 10.6 8.6 11.9 (0.9 ) (10.5 )
Total 26.3 5.4 27.3 6.5 (1.0 ) (3.7 )
Depreciation
and
amortization
Forward Air 16.5 4.0 16.1 4.6 0.4 2.5
FASI 3.9 5.4 3.6 5.0 0.3 8.3
Total 20.4 4.2 19.7 4.7 0.7 3.6
Insurance and
claims
Forward Air 6.2 1.5 7.6 2.2 (1.4 ) (18.4 )
FASI 2.2 3.0 2.1 2.9 0.1 4.8
Total 8.4 1.7 9.7 2.3 (1.3 ) (13.4 )
Fuel expense
Forward Air 3.8 0.9 3.1 0.9 0.7 22.6
FASI 4.7 6.5 4.2 5.8 0.5 11.9
Total 8.5 1.8 7.3 1.8 1.2 16.4
Other
operating
expenses
Forward Air 29.8 7.2 27.7 8.0 2.1 7.6
FASI 6.5 9.0 6.8 9.4 (0.3 ) (4.4 )
Intercompany (0.2 ) (13.3 ) (0.1 ) 7.1 (0.1 ) 100.0
Eliminations
Total 36.1 7.5 34.4 8.3 1.7 4.9
Impairment of
goodwill
and other
intangible
assets
Forward Air -- -- 0.2 0.1 (0.2 ) (100.0 )
FASI -- -- 7.0 9.6 (7.0 ) (100.0 )
Total -- -- 7.2 1.7 (7.2 ) (100.0 )
Income (loss)
from
operations
Forward Air 53.9 13.1 26.9 7.8 27.0 100.4
FASI (0.2 ) (0.3 ) (8.3 ) (11.4 ) 8.1 (97.6 )
Total $ 53.7 11.1 % $ 18.6 4.4 % $ 35.1 188.7 %
Forward Air Corporation
Forward Air Inc. Operating Statistics
Three months ended
December 31, December 31, Percent
2010 2009 Change
Operating ratio 84.8 % 89.4 % (5.1 ) %
Business days 63.0 64.0 (1.6 )
Business weeks 12.6 12.8 (1.6 )
Airport-to-airport:
Tonnage
Total pounds (1) 437,977 398,921 9.8
Average weekly pounds (1) 34,760 31,166 11.5
Linehaul shipments
Total linehaul 623,211 565,922 10.1
Average weekly 49,461 44,213 11.9
Forward Air Complete shipments 85,917 71,442 20.3
As a percentage of linehaul 13.8 % 12.6 % 9.5
shipments
Average linehaul shipment size 703 705 (0.3 )
Revenue per pound (2)
Linehaul yield $ 16.70 $ 15.84 4.7
Fuel surcharge impact 1.28 0.96 1.7
Forward Air Complete impact 1.97 1.62 1.9
Total airport-to-airport yield $ 19.95 $ 18.42 8.3
Logistics:
Miles
Owner operator (1) 7,179 6,421 11.8
Third party (1) 3,617 3,220 12.3
Total Miles 10,796 9,641 12.0
Revenue per mile $ 1.61 $ 1.62 (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.
Forward Air Corporation
Forward Air Inc. Operating Statistics
Year ended
December 31, December 31, Percent
2010 2009 Change
Operating ratio 86.9 % 92.2 % (5.7 ) %
Business days 254.0 255.0 (0.4 )
Business weeks 50.8 51.0 (0.4 )
Airport-to-airport:
Tonnage
Total pounds (1) 1,655,075 1,452,969 13.9
Average weekly pounds (1) 32,580 28,490 14.4
Linehaul shipments
Total linehaul 2,308,468 2,095,223 10.2
Average weekly 45,442 41,083 10.6
Forward Air Complete shipments 314,203 266,136 18.1
As a percentage of linehaul 13.6 % 12.7 % 7.1
shipments
Average linehaul shipment size 717 693 3.5
Revenue per pound (2)
Linehaul yield $ 16.40 $ 16.06 1.8
Fuel surcharge impact 1.21 0.84 2.0
Forward Air Complete impact 1.86 1.60 1.4
Total airport-to-airport yield $ 19.47 $ 18.50 5.2
Logistics:
Miles
Owner operator (1) 27,086 24,338 11.3
Third party (1) 12,943 9,929 30.4
Total Miles 40,029 34,267 16.8
Revenue per mile $ 1.64 $ 1.59 3.1
Cost per mile $ 1.25 $ 1.23 1.6 %
(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 February 14, 2011