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