Forward Air Corporation Reports Third Quarter 2019 Results

Reports record third quarter financial results, including revenue, operating income, earnings per share and EBITDA

Reports record year-to-date financial results, including revenue, earnings per share, cash from operating activities and free cash flow

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported financial results for the three and nine months ended September 30, 2019.

Revenue for the three months ended September 30, 2019 increased 9.1% to $361.7 million from $331.4 million for the same period of 2018. Income from operations was $30.7 million compared to $29.9 million in the prior year period. Net income during the three months ended September 30, 2019 was $22.2 million compared to $22.3 million in the same period of 2018. Net income per diluted share for the three months ended September 30, 2019 was $0.78 compared to $0.76 in the prior year period.

Revenue for the nine months ended September 30, 2019 increased 6.7% to $1,028.9 million from $964.3 million for the same period of 2018. Income from operations was $86.0 million compared to $87.0 million in the prior year period. Net income during the nine months ended September 30, 2019 was $62.9 million compared to $64.4 million for the same period of 2018. Net income per diluted share for the nine months ended September 30, 2019 was $2.19 compared to $2.18 for the same period of 2018.

For the three months ended September 30, 2019, the Company generated $46.0 million of cash flow from operations compared to $46.9 million for the same period in 2018. For the nine months ended September 30, 2019, the Company generated $117.7 million of cash flow from operations compared to $113.8 million for the same period of 2018.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $41.2 million for the three months ended September 30, 2019 compared to $40.2 million for the same period of 2018. Free cash flow was $36.3 million for the three months ended September 30, 2019 compared to $31.3 million in the prior year period.

EBITDA was $118.0 million for the nine months ended September 30, 2019 compared to $118.3 million for the same period of 2018. Free cash flow was $92.7 million for the nine months ended September 30, 2019 compared to $85.5 million in the prior year period.

EBITDA and free cash flow are non-GAAP financial measures and reconciliations of these non-GAAP financial measures are provided in the attached financial tables.

Tom Schmitt, Chairman, President and CEO, commenting on third quarter results said, “Our growth strategies drove our record third quarter results. Consolidated revenues grew 9.1% while consolidated operating income grew 10.1% before considering the net impact of a $2.5 million increased vehicle reserve recorded during the quarter.”

Commenting on the Company’s third quarter results, Michael J. Morris, CFO, said, “Our third quarter earnings per share of $0.78 was at the high end of our guidance range, and reflected a $0.06 per share net impact of an increased vehicular reserve for unfavorable development of claims previously disclosed on June 21, 2019.” Regarding the Company’s fourth quarter 2019 guidance, Mr. Morris said, “We expect fourth quarter year-on-year revenue growth to be 6% to 10% and net income per diluted share to be between $0.90 and $0.94 in the fourth quarter of 2019. This compares to $0.95 in the fourth quarter of 2018, which benefited from a low book tax rate of 20.0%.”

On October 22, 2019, our Board of Directors declared a quarterly cash dividend of $0.18 per share of common stock. The dividend is payable to shareholders of record at the close of business on November 21, 2019 and is expected to be paid on December 6, 2019.

This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.72 for the full year 2019, payable in quarterly increments of $0.18 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 and position.

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2019 results on Friday, October 25, 2019 at 9:00 a.m. EDT. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, where investors can easily find or navigate to pertinent information about us, or by dialing (800) 230-1059. A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com beginning shortly after 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, final mile solutions and customs brokerage by utilizing a comprehensive national network of terminals); 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); Truckload Premium Services (provides expedited truckload brokerage, dedicated fleet services, as well as high-security and temperature-controlled logistics 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.

 

Forward Air Corporation

Consolidated Statements of Comprehensive Income

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Operating revenue:

 

 

 

 

 

 

 

Expedited LTL

$

210,060

 

 

$

188,507

 

 

$

594,336

 

 

$

551,342

 

Intermodal

58,347

 

 

50,545

 

 

163,000

 

 

148,275

 

Truckload Premium Services

45,458

 

 

47,942

 

 

137,239

 

 

142,982

 

Pool Distribution

50,962

 

 

47,280

 

 

141,952

 

 

133,256

 

Eliminations and other operations

(3,164

)

 

(2,899

)

 

(7,636

)

 

(11,530

)

Operating revenue

361,663

 

 

331,375

 

 

1,028,891

 

 

964,325

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Purchased transportation

163,606

 

 

155,451

 

 

462,744

 

 

450,833

 

Salaries, wages and employee benefits

87,259

 

 

76,028

 

 

243,899

 

 

217,682

 

Operating leases

20,521

 

 

18,671

 

 

60,021

 

 

54,640

 

Depreciation and amortization

10,528

 

 

10,295

 

 

32,036

 

 

31,346

 

Insurance and claims

10,930

 

 

9,203

 

 

33,531

 

 

26,442

 

Fuel expense

6,105

 

 

5,634

 

 

17,642

 

 

16,786

 

Other operating expenses

32,025

 

 

26,214

 

 

93,045

 

 

79,612

 

Total operating expenses

330,974

 

 

301,496

 

 

942,918

 

 

877,341

 

Income (loss) from operations:

 

 

 

 

 

 

 

Expedited LTL

25,896

 

 

23,724

 

 

72,332

 

 

71,023

 

Intermodal

6,900

 

 

7,321

 

 

18,326

 

 

16,333

 

Truckload Premium Services

606

 

 

1,673

 

 

2,137

 

 

3,348

 

Pool Distribution

1,867

 

 

735

 

 

4,685

 

 

3,695

 

Other operations

(4,580

)

 

(3,574

)

 

(11,507

)

 

(7,415

)

Income from operations

30,689

 

 

29,879

 

 

85,973

 

 

86,984

 

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

Interest expense

(761

)

 

(472

)

 

(1,916

)

 

(1,327

)

Other, net

1

 

 

(1

)

 

(1

)

 

(2

)

Total other expense

(760

)

 

(473

)

 

(1,917

)

 

(1,329

)

Income before income taxes

29,929

 

 

29,406

 

 

84,056

 

 

85,655

 

Income tax expense

7,734

 

 

7,077

 

 

21,124

 

 

21,289

 

Net income and comprehensive income

$

22,195

 

 

$

22,329

 

 

$

62,932

 

 

$

64,366

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.78

 

 

$

0.76

 

 

$

2.20

 

 

$

2.18

 

Diluted

$

0.78

 

 

$

0.76

 

 

$

2.19

 

 

$

2.18

 

 

 

 

 

 

 

 

 

Dividends per share:

$

0.18

 

 

$

0.15

 

 

$

0.54

 

 

$

0.45

 

 

Expedited LTL Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

Percent of

 

September 30,

 

Percent of

 

 

 

Percent

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

Operating revenue

$

210.1

 

 

100.0

%

 

$

188.5

 

 

100.0

%

 

$

21.6

 

 

11.5

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

95.5

 

 

45.5

 

 

88.6

 

 

47.0

 

 

6.9

 

 

7.8

 

Salaries, wages and employee benefits

47.9

 

 

22.8

 

 

41.6

 

 

22.1

 

 

6.3

 

 

15.1

 

Operating leases

11.1

 

 

5.3

 

 

10.3

 

 

5.5

 

 

0.8

 

 

7.8

 

Depreciation and amortization

5.2

 

 

2.5

 

 

5.6

 

 

3.0

 

 

(0.4

)

 

(7.1

)

Insurance and claims

4.0

 

 

1.9

 

 

3.9

 

 

2.1

 

 

0.1

 

 

2.6

 

Fuel expense

1.8

 

 

0.9

 

 

1.6

 

 

0.8

 

 

0.2

 

 

12.5

 

Other operating expenses

18.7

 

 

8.9

 

 

13.2

 

 

7.0

 

 

5.5

 

 

41.7

 

Total operating expenses

184.2

 

 

87.7

 

 

164.8

 

 

87.4

 

 

19.4

 

 

11.8

 

Income from operations

$

25.9

 

 

12.3

%

 

$

23.7

 

 

12.6

%

 

$

2.2

 

 

9.3

%

 

Expedited LTL Operating Statistics

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

September 30,

 

Percent

 

2019

 

2018

 

Change

 

 

 

 

 

 

Business days

64

 

 

63

 

 

1.6

%

 

 

 

 

 

 

Tonnage

 

 

 

 

 

Total pounds ¹

613,812

 

 

636,831

 

 

(3.6

)

Pounds per day ¹

9,591

 

 

10,108

 

 

(5.1

)

 

 

 

 

 

 

Shipments

 

 

 

 

 

Total shipments ¹

977

 

 

1,003

 

 

(2.6

)

Shipments per day ¹

15.3

 

 

15.9

 

 

(4.1

)

 

 

 

 

 

 

Weight per shipment

628

 

 

635

 

 

(1.1

)

 

 

 

 

 

 

Revenue per hundredweight

$

27.65

 

 

$

26.56

 

 

4.1

 

Revenue per hundredweight, ex fuel

23.23

 

 

22.31

 

 

4.1

 

 

 

 

 

 

 

Revenue per shipment

$

176

 

 

$

171

 

 

2.9

 

Revenue per shipment, ex fuel

148

 

 

144

 

 

2.8

 

 

 

 

 

 

 

Network revenue from door-to-door shipments as a percentage of network revenue 2,3

40.7

%

 

35.3

%

 

15.3

%

 

 

 

 

 

 

1 In thousands

2 Door-to-door shipments include all shipments with a pickup and/or delivery

3 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial and final mile revenue

Intermodal Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

Percent of

 

September 30,

 

Percent of

 

 

 

Percent

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

Operating revenue

$

58.3

 

 

100.0

%

 

$

50.5

 

 

100.0

%

 

$

7.8

 

 

15.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

21.0

 

 

36.0

 

 

19.3

 

 

38.2

 

 

1.7

 

 

8.8

 

Salaries, wages and employee benefits

14.2

 

 

24.4

 

 

10.9

 

 

21.6

 

 

3.3

 

 

30.3

 

Operating leases

4.3

 

 

7.4

 

 

4.0

 

 

7.9

 

 

0.3

 

 

7.5

 

Depreciation and amortization

2.6

 

 

4.5

 

 

1.5

 

 

3.0

 

 

1.1

 

 

73.3

 

Insurance and claims

1.8

 

 

3.1

 

 

1.4

 

 

2.8

 

 

0.4

 

 

28.6

 

Fuel expense

2.2

 

 

3.8

 

 

1.6

 

 

3.2

 

 

0.6

 

 

37.5

 

Other operating expenses

5.3

 

 

9.1

 

 

4.5

 

 

8.9

 

 

0.8

 

 

17.8

 

Total operating expenses

51.4

 

 

88.2

 

 

43.2

 

 

85.5

 

 

8.2

 

 

19.0

 

Income from operations

$

6.9

 

 

11.8

%

 

$

7.3

 

 

14.5

%

 

$

(0.4

)

 

(5.5

)%

 

Intermodal Operating Statistics

 

 

 

Three months ended

 

September 30,

 

September 30,

 

Percent

 

2019

 

2018

 

Change

 

 

 

 

 

 

Drayage shipments

84,230

 

 

75,981

 

 

10.9

%

Drayage revenue per shipment

$

597

 

 

$

574

 

 

4.0

 

Number of locations

21

 

 

19

 

 

10.5

%

 

Truckload Premium Services Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

Percent of

 

September 30,

 

Percent of

 

 

 

Percent

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

Operating revenue

$

45.5

 

 

100.0

%

 

$

47.9

 

 

100.0

%

 

$

(2.4

)

 

(5.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

34.5

 

 

75.8

 

 

35.8

 

 

74.7

 

 

(1.3

)

 

(3.6

)

Salaries, wages and employee benefits

4.3

 

 

9.5

 

 

4.7

 

 

9.8

 

 

(0.4

)

 

(8.5

)

Operating leases

0.4

 

 

0.9

 

 

0.1

 

 

0.2

 

 

0.3

 

 

300.0

 

Depreciation and amortization

1.2

 

 

2.6

 

 

1.5

 

 

3.1

 

 

(0.3

)

 

(20.0

)

Insurance and claims

1.3

 

 

2.9

 

 

1.2

 

 

2.5

 

 

0.1

 

 

8.3

 

Fuel expense

0.7

 

 

1.5

 

 

0.7

 

 

1.5

 

 

 

 

 

Other operating expenses

2.5

 

 

5.5

 

 

2.2

 

 

4.6

 

 

0.3

 

 

13.6

 

Total operating expenses

44.9

 

 

98.7

 

 

46.2

 

 

96.5

 

 

(1.3

)

 

(2.8

)

Income from operations

$

0.6

 

 

1.3

%

 

$

1.7

 

 

3.5

%

 

$

(1.1

)

 

(64.7

)%

 

Truckload Premium Services Operating Statistics

 

 

 

Three months ended

 

September 30,

 

September 30,

 

Percent

 

2019

 

2018

 

Change

 

 

 

 

 

 

Total Miles ¹

19,813

 

 

19,197

 

 

3.2

%

Empty Miles Percentage

7.7

%

 

8.5

%

 

(9.4

)

Tractors (avg)

391

 

 

291

 

 

34.4

 

Miles per tractor per week 2

2,006

 

 

2,317

 

 

(13.4

)

 

 

 

 

 

 

Revenue per mile

$

2.21

 

 

$

2.37

 

 

(6.8

)

Cost per mile

$

1.79

 

 

$

1.88

 

 

(4.8

)%

 

1 In thousands

2 Calculated using Company-employed driver and owner-operator miles

Pool Distribution Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

Percent of

 

September 30,

 

Percent of

 

 

 

Percent

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

Operating revenue

$

51.0

 

 

100.0

%

 

$

47.3

 

 

100.0

%

 

$

3.7

 

 

7.8

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

15.5

 

 

30.4

 

 

14.3

 

 

30.2

 

 

1.2

 

 

8.4

 

Salaries, wages and employee benefits

19.0

 

 

37.3

 

 

17.5

 

 

37.0

 

 

1.5

 

 

8.6

 

Operating leases

4.7

 

 

9.2

 

 

4.2

 

 

8.9

 

 

0.5

 

 

11.9

 

Depreciation and amortization

1.5

 

 

2.9

 

 

1.7

 

 

3.6

 

 

(0.2

)

 

(11.8

)

Insurance and claims

1.3

 

 

2.5

 

 

1.3

 

 

2.7

 

 

 

 

 

Fuel expense

1.5

 

 

2.9

 

 

1.6

 

 

3.4

 

 

(0.1

)

 

(6.3

)

Other operating expenses

5.6

 

 

11.0

 

 

6.0

 

 

12.7

 

 

(0.4

)

 

(6.7

)

Total operating expenses

49.1

 

 

96.3

 

 

46.6

 

 

98.5

 

 

2.5

 

 

5.4

 

Income from operations

$

1.9

 

 

3.7

%

 

$

0.7

 

 

1.5

%

 

$

1.2

 

 

171.4

%

 

Pool Operating Statistics

 

 

 

Three months ended

 

September 30,

 

September 30,

 

Percent

 

2019

 

2018

 

Change

 

 

 

 

 

 

Cartons ¹

25,692

 

 

22,218

 

 

15.6

%

Revenue per carton

$

1.98

 

 

$

2.13

 

 

(7.0

)

Terminals

30

 

 

28

 

 

7.1

%

 

 

 

 

 

 

1 In thousands

 

 

 

 

 

 

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

September 30,
2019

 

December 31,
2018

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

34,824

 

 

$

25,657

 

Accounts receivable, net

157,494

 

 

156,359

 

Other current assets

23,393

 

 

19,066

 

Total current assets

215,711

 

 

201,082

 

 

 

 

 

Property and equipment

438,656

 

 

413,900

 

Less accumulated depreciation and amortization

217,813

 

 

204,005

 

Total property and equipment, net

220,843

 

 

209,895

 

Operating lease right-of-use assets

158,977

 

 

 

Goodwill and other acquired intangibles:

 

 

 

Goodwill

220,423

 

 

199,092

 

Other acquired intangibles, net of accumulated amortization

130,038

 

 

113,661

 

Total goodwill and other acquired intangibles, net

350,461

 

 

312,753

 

Other assets

34,641

 

 

36,485

 

Total assets

$

980,633

 

 

$

760,215

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

32,599

 

 

$

34,630

 

Accrued expenses

51,412

 

 

39,784

 

Other current liabilities

7,049

 

 

 

Current portion of debt and finance lease obligations

1,578

 

 

309

 

Current portion of operating lease obligations

47,137

 

 

 

Total current liabilities

139,775

 

 

74,723

 

 

 

 

 

Debt and finance lease obligations, less current portion

72,738

 

 

47,335

 

Operating lease obligations, less current portion

112,553

 

 

 

Other long-term liabilities

51,316

 

 

47,739

 

Deferred income taxes

43,106

 

 

37,174

 

 

 

 

 

Shareholders’ equity:

 

 

 

Common stock

279

 

 

285

 

Additional paid-in capital

221,629

 

 

210,296

 

Retained earnings

339,237

 

 

342,663

 

Total shareholders’ equity

561,145

 

 

553,244

 

Total liabilities and shareholders’ equity

$

980,633

 

 

$

760,215

 

 

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Three months ended

 

September 30,
2019

 

September 30,
2018

Operating activities:

 

 

 

Net income

$

22,195

 

 

$

22,329

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

Depreciation and amortization

10,528

 

 

10,295

 

Change in fair value of earn-out liability

890

 

 

(455

)

Share-based compensation

2,762

 

 

2,847

 

Loss on disposal of property and equipment, net

1,098

 

 

120

 

Provision for loss (recovery) on receivables

197

 

 

(509

)

Provision for revenue adjustments

963

 

 

1,092

 

Deferred income tax expense

2,653

 

 

2,182

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

(3,939

)

 

3,345

 

Prepaid expenses and other current assets

511

 

 

(1,241

)

Income taxes

(374

)

 

(1,765

)

Accounts payable and accrued expenses

8,483

 

 

8,615

 

Net cash provided by operating activities

45,967

 

 

46,855

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from disposal of property and equipment

829

 

 

1,150

 

Purchases of property and equipment

(10,504

)

 

(16,738

)

Acquisition of business, net of cash acquired

(12,000

)

 

(3,737

)

Other

 

 

(9

)

Net cash used in investing activities

(21,675

)

 

(19,334

)

 

 

 

 

Financing activities:

 

 

 

Payments of finance lease obligations

(391

)

 

(77

)

Proceeds from senior credit facility

10,000

 

 

 

Proceeds from exercise of stock options

785

 

 

2,570

 

Payments of cash dividends

(5,088

)

 

(4,385

)

Repurchase of common stock (repurchase program)

(9,289

)

 

(16,820

)

Cash settlement of share-based awards for tax withholdings

(262

)

 

 

Net cash used in financing activities

(4,245

)

 

(18,712

)

Net increase in cash

20,047

 

 

8,809

 

Cash at beginning of period

14,777

 

 

20,102

 

Cash at end of period

$

34,824

 

 

$

28,911

 

 

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

Nine months ended

 

September 30,
2019

 

September 30,
2018

Operating activities:

 

 

 

Net income

$

62,932

 

 

$

64,366

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

Depreciation and amortization

32,036

 

 

31,346

 

Change in fair value of earn-out liability

890

 

 

(455

)

Share-based compensation

9,006

 

 

7,525

 

Loss (gain) on disposal of property and equipment, net

1,010

 

 

(14

)

Provision for loss (recovery) on receivables

828

 

 

(52

)

Provision for revenue adjustments

2,243

 

 

2,921

 

Deferred income tax expense

5,931

 

 

6,676

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

(4,206

)

 

(3,386

)

Prepaid expenses and other current assets

(4,473

)

 

(4,880

)

Income taxes

(2,556

)

 

(3,193

)

Accounts payable and accrued expenses

14,090

 

 

12,991

 

Net cash provided by operating activities

117,731

 

 

113,845

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from disposal of property and equipment

2,101

 

 

5,989

 

Purchases of property and equipment

(27,102

)

 

(34,344

)

Acquisition of business, net of cash acquired

(39,000

)

 

(3,737

)

Other

 

 

(356

)

Net cash used in investing activities

(64,001

)

 

(32,448

)

 

 

 

 

Financing activities:

 

 

 

Payments of finance lease obligations

(528

)

 

(228

)

Proceeds from senior credit facility

20,000

 

 

 

Proceeds from exercise of stock options

2,063

 

 

3,682

 

Payments of cash dividends

(15,421

)

 

(13,213

)

Repurchase of common stock (repurchase program)

(47,906

)

 

(44,985

)

Proceeds from common stock issued under employee stock purchase plan

261

 

 

237

 

Cash settlement of share-based awards for tax withholdings

(3,032

)

 

(1,872

)

Net cash used in financing activities

(44,563

)

 

(56,379

)

Net increase in cash

9,167

 

 

25,018

 

Cash at beginning of period

25,657

 

 

3,893

 

Cash at end of period

$

34,824

 

 

$

28,911

 

 

Forward Air Corporation Reconciliation of U.S. GAAP and Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP (also referred to herein as “reported”). However, the Company also uses “non-GAAP financial measures” that are derived on the basis of methodologies other than in accordance with GAAP. Specifically, the Company believes that meaningful analysis of its financial performance in 2019 and 2018 requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the Company’s performance.

This press release contains the following non-GAAP financial measures on a consolidated basis: earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the three and nine months ended September 30, 2019 and 2018; operating income growth before considering the net impact of increased vehicle reserve for the three months ended September 30, 2019; and free cash flow for the three and nine months ended September 30, 2019 and 2018. The Company believes that including these items will assist investors in understanding its core operating performance and allow for more accurate comparisons of results, as they eliminate the impact of investing activities.

The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached tables. The Company believes that excluding the increased vehicle reserve is useful to investors because it provides a view of the Company's operating income excluding the effects of a significant non-operation cost. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance stockholder value.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the tables below present, for the periods indicated, a reconciliation of the Company's presented non-GAAP financial measures to the most directly comparable GAAP financial measures.

 

Forward Air Corporation

Reconciliation to U.S. GAAP

(In thousands)

(Unaudited)

 

 

 

 

 

Three months ended

 

Nine months ended

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Net income

$

22,195

 

 

$

22,329

 

 

$

62,932

 

 

$

64,366

 

Interest expense and other, net

760

 

 

473

 

 

1,917

 

 

1,329

 

Income tax expense

7,734

 

 

7,077

 

 

21,124

 

 

21,289

 

Depreciation and amortization

10,528

 

 

10,295

 

 

32,036

 

 

31,346

 

EBITDA

$

41,217

 

 

$

40,174

 

 

$

118,009

 

 

$

118,330

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

September 30,
2019

 

September 30,
2018

 

September 30,
2019

 

September 30,
2018

Net cash provided by operating activities

$

45,967

 

 

$

46,855

 

 

$

117,731

 

 

$

113,845

 

Proceeds from disposal of property and equipment

829

 

 

1,150

 

 

2,101

 

 

5,989

 

Purchases of property and equipment

(10,504

)

 

(16,738

)

 

(27,102

)

 

(34,344

)

Free cash flow

$

36,292

 

 

$

31,267

 

 

$

92,730

 

 

$

85,490

 

 

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

September 30, 2019

Net income

$

22,195

 

Income allocated to participating securities

(236

)

Numerator for diluted income per share - net income

$

21,959

 

 

 

Fully diluted share count

28,082

 

Diluted earnings per share

$

0.78

 

 

 

 

 

Projected

Full year 2019

Projected tax rate

25.5

%

 

 

Projected capital expenditures, net

$

30,500

 

 

 

Projected

December 31, 2019

Projected year end fully diluted share count

28,100

 

 

 

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 fourth quarter 2019 financial growth, including revenue growth and net income per diluted shares, full year 2019 projected tax rate, share count, capital expenditures and the declaration of dividends.

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, 2018.

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