Forward Air Corporation Reports First Quarter 2010 Results
Forward Air Corporation Reports First Quarter 2010 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported results for the quarter ended March 31, 2010.
Operating revenue for the quarter ended March 31, 2010 increased 10.8% to $107.0 million from $96.6 million for the first quarter of 2009. Income from operations was $6.1 million, compared with a $5.0 million loss from operations for the same quarter of 2009. As a percent of operating revenue, income from operations increased to 5.7%. Net income during the period increased by $6.5 million to $3.4 million from a $3.1 million net loss for the first quarter of 2009. Net income per diluted share for the first quarter of 2010 was $0.12 compared with a $0.11 net loss per share in the same quarter of 2009.
The first quarter of 2009 included a $7.2 million non-cash, pre-tax impairment charge. Excluding the $7.2 million non-cash, pre-tax impairment charge from the results of operations for the first quarter of 2009, income from operations for the first quarter of 2010 increased $4.0 million from $2.1 million for the first quarter of 2009, and net income for the first quarter of 2010 increased $2.2 million from $1.2 million for the first quarter of 2009. Similarly, earnings per diluted share for the first quarter of 2010 increased $0.08 compared to the adjusted earnings per diluted share of $0.04 for the first quarter of 2009.
Bruce A. Campbell, Chairman, President, and CEO, said, "We are pleased to report that the trends of improved freight volumes and resulting profitability we experienced in the fourth quarter of 2009 continued throughout the first quarter of 2010. These continuing trends provide further encouragement that we have entered a period of sustained recovery."
"Our airport-to-airport network, Forward Air Complete pick-up and delivery as well as TLX expedited truckload brokerage were all solid contributors within our Forward Air, Inc. business segment. Our Forward Air Solutions pool distribution segment, while posting a loss for the first quarter, on the strength of better volumes did generate a profit in March. Since the first quarter is traditionally the weakest period, we are hopeful this may be a sign that the consumer is finally returning to retail sales."
In closing Mr. Campbell said, "Again this quarter please allow me to thank our team of employees and independent owner operators for their contributions to our solid quarterly results. It was their efforts that allowed us to weather the economic storm and emerge on the other side a much stronger company."
Commenting on the Company's guidance for the second quarter, Rodney L. Bell, Senior Vice President and CFO, said, "Starting May 1, 2010 we will begin experiencing the benefit of a general rate increase on the linehaul portion of our airport-to-airport network. Inclusive of this partial quarter benefit, we anticipate that our second quarter 2010 revenues will increase in the range of 13 to 18% over the comparable 2009 period, and we expect income per diluted share to be between $0.20 and $0.24 per share."
Review of Financial Results
Forward Air will hold a conference call to discuss first quarter 2010 results on Thursday, April 22, 2010 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. 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
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three months ended
March 31, March 31,
2010 2009
Operating revenue:
Forward Air
Airport-to-airport $ 70,888 $ 63,055
Logistics 13,855 13,044
Other 5,875 5,867
Forward Air Solutions
Pool distribution 16,359 14,650
Total operating revenue 106,977 96,616
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 28,799 26,153
Logistics 10,768 10,279
Other 1,492 1,064
Forward Air Solutions
Pool distribution 3,442 2,632
Total purchased transportation 44,501 40,128
Salaries, wages and employee benefits 30,670 29,056
Operating leases 6,629 6,989
Depreciation and amortization 4,949 4,858
Insurance and claims 2,331 2,716
Fuel expense 2,058 1,682
Other operating expenses 9,784 9,056
Impairment of goodwill and other intangible assets -- 7,157
Total operating expenses 100,922 101,642
Income (loss) from operations 6,055 (5,026 )
Other income (expense):
Interest expense (185 ) (141 )
Other, net 30 (22 )
Total other expense (155 ) (163 )
Income (loss) before income taxes 5,900 (5,189 )
Income taxes 2,481 (2,085 )
Net income (loss) $ 3,419 $ (3,104 )
Net income (loss) per share:
Basic $ 0.12 $ (0.11 )
Diluted $ 0.12 $ (0.11 )
Weighted average shares outstanding:
Basic 28,951 28,906
Diluted 29,074 28,906
Dividends per share: $ 0.07 $ 0.07
Forward Air Corporation
Reconciliation of U.S. GAAP Financial Results to Adjusted Financial Results
(In thousands, except per share data)
(Unaudited)
Three months ended
Adjusted
March 31, Impairment March 31,
2009 (1) Charge 2009
(Loss) income from operations $ (5,026 ) $ 7,157 $ 2,131
Income taxes (2,085 ) (2,875 ) 790
Net (loss) income (3,104 ) 4,282 1,178
Diluted/weighted average shares outstanding 28,906 28,963
Net (loss) income per share: $ (0.11 ) $ 0.04
(1) - As reported in accordance with United States generally accepted accounting
principles.
Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
March 31, December 31,
2010 2009 (a)
Assets
Current assets:
Cash $ 44,612 $ 42,035
Accounts receivable, net 58,425 55,720
Other current assets 7,688 9,471
Total current assets 110,725 107,226
Property and equipment 208,654 204,716
Less accumulated depreciation and amortization 78,323 75,990
Total property and equipment, net 130,331 128,726
Goodwill and other acquired intangibles:
Goodwill 43,332 43,332
Other acquired intangibles, net 34,701 35,849
Total goodwill and other acquired intangibles 78,033 79,181
Other assets 1,534 1,597
Total assets $ 320,623 $ 316,730
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 9,837 $ 10,333
Accrued expenses 20,745 18,531
Current portion of debt and capital lease obligations 835 919
Total current liabilities 31,417 29,783
Debt and capital lease obligations, less current 51,992 52,169
portion
Other long-term liabilities 4,623 4,485
Deferred income taxes 4,889 5,786
Shareholders' equity:
Common stock 290 290
Additional paid-in capital 18,436 16,631
Retained earnings 208,976 207,586
Total shareholders' equity 227,702 224,507
Total liabilities and shareholders' equity $ 320,623 $ 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
March 31, March 31,
2010 2009
Operating activities:
Net income (loss) $ 3,419 $ (3,104 )
Adjustments to reconcile net income (loss) to net cash
provided by operating activities
Depreciation and amortization 4,949 4,858
Impairment of goodwill and other intangible assets -- 7,157
Share-based compensation 1,763 1,780
Loss on disposal of property and equipment 1 9
Provision for loss (recovery) on receivables 90 (35 )
Provision for revenue adjustments 423 794
Deferred income taxes (873 ) (1,960 )
Tax benefit for stock options exercised (4 ) --
Changes in operating assets and liabilities,
Accounts receivable (3,218 ) 8,006
Prepaid expenses and other current assets 1,786 705
Accounts payable and accrued expenses 1,856 (1,751 )
Net cash provided by operating activities 10,192 16,459
Investing activities:
Proceeds from disposal of property and equipment 20 127
Purchases of property and equipment (5,426 ) (4,737 )
Other 39 (112 )
Net cash used in investing activities (5,367 ) (4,722 )
Financing activities:
Payments of debt and capital lease obligations (261 ) (336 )
Proceeds from exercise of stock options 38 --
Payments of cash dividends (2,029 ) (2,025 )
Cash settlement of share-based awards for minimum tax -- (228 )
withholdings
Tax benefit for stock options exercised 4 --
Net cash used in financing activities (2,248 ) (2,589 )
Net increase in cash 2,577 9,148
Cash at beginning of period 42,035 22,093
Cash at end of period $ 44,612 $ 31,241
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
March Percent March Percent Percent
31, of 31, of
2010 Revenue 2009 Revenue Change Change
Operating
revenue
Forward Air $ 90.9 85.0 % $ 82.1 85.0 % $ 8.8 10.7 %
FASI 16.4 15.3 14.8 15.3 1.6 10.8
Intercompany (0.3 ) (0.3 ) (0.3 ) (0.3 ) -- --
Eliminations
Total 107.0 100.0 96.6 100.0 10.4 10.8
Purchased
transportation
Forward Air 41.1 45.2 37.6 45.8 3.5 9.3
FASI 3.7 22.6 2.8 19.0 0.9 32.1
Intercompany (0.3 ) 100.0 (0.3 ) 100.0 -- --
Eliminations
Total 44.5 41.6 40.1 41.5 4.4 11.0
Salaries,
wages and
employee
benefits
Forward Air 23.4 25.7 21.5 26.2 1.9 8.8
FASI 7.3 44.5 7.6 51.3 (0.3 ) (3.9 )
Total 30.7 28.7 29.1 30.1 1.6 5.5
Operating
leases
Forward Air 4.5 5.0 4.8 5.8 (0.3 ) (6.3 )
FASI 2.1 12.8 2.2 14.8 (0.1 ) (4.5 )
Total 6.6 6.2 7.0 7.2 (0.4 ) (5.7 )
Depreciation
and
amortization
Forward Air 4.0 4.4 3.9 4.8 0.1 2.6
FASI 0.9 5.5 0.9 6.1 -- --
Total 4.9 4.6 4.8 5.0 0.1 2.1
Insurance and
claims
Forward Air 1.8 2.0 2.2 2.7 (0.4 ) (18.2 )
FASI 0.5 3.0 0.5 3.4 -- --
Total 2.3 2.1 2.7 2.8 (0.4 ) (14.8 )
Fuel expense
Forward Air 0.9 1.0 0.7 0.9 0.2 28.6
FASI 1.2 7.3 1.0 6.8 0.2 20.0
Total 2.1 2.0 1.7 1.8 0.4 23.5
Other
operating
expenses
Forward Air 8.0 8.8 7.4 9.0 0.6 8.1
FASI 1.8 11.0 1.6 10.8 0.2 12.5
Total 9.8 9.1 9.0 9.3 0.8 8.9
Impairment of
goodwill
and other
intangible
assets
Forward Air -- -- 0.2 0.2 (0.2 ) (100.0 )
FASI -- -- 7.0 47.3 (7.0 ) (100.0 )
Total -- -- 7.2 7.5 (7.2 ) (100.0 )
Income (loss)
from
operations
Forward Air 7.2 7.9 3.8 4.6 3.4 89.5
FASI (1.1 ) (6.7 ) (8.8 ) (59.5 ) 7.7 (87.5 )
Total $ 6.1 5.7 % $ (5.0 ) (5.2 ) % $ 11.1 (222.0 ) %
Forward Air Corporation
Forward Air Inc. Operating Statistics
Three months ended
March 31, March 31, Percent
2010 2009 Change
Operating ratio 92.1 % 95.4 % (3.5 ) %
Business days 63.0 63.0 --
Business weeks 12.6 12.6 --
Airport-to-airport:
Tonnage
Total pounds (1) 378,625 338,602 11.8
Average weekly pounds (1) 30,050 26,873 11.8
Linehaul shipments
Total linehaul 546,313 502,890 8.6
Average weekly 43,358 39,912 8.6
Forward Air Complete shipments 69,106 53,889 28.2
As a percentage of linehaul shipments 12.6 % 10.7 % 17.8
Average linehaul shipment size 693 673 3.0
Revenue per pound (2)
Linehaul yield $ 15.93 $ 16.61 (3.6 )
Fuel surcharge impact 1.09 0.73 1.9
Forward Air Complete impact 1.74 1.32 2.2
Total airport-to-airport yield $ 18.76 $ 18.66 0.5
Logistics:
Miles
Owner operator (1) 5,937 5,594 6.1
Third party (1) 2,738 2,621 4.5
Total Miles 8,675 8,215 5.6
Revenue per mile $ 1.61 $ 1.61 --
Cost per mile $ 1.24 $ 1.25 (0.8 ) %
(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 April 21, 2010