Forward Air Corporation Reports Record Second Quarter Results "Completing the Model" Initiatives Continue to Gain Traction
Forward Air Corporation Reports Record Second Quarter Results "Completing the Model" Initiatives Continue to Gain Traction
GREENEVILLE, Tenn.--(BUSINESS WIRE)--
Forward Air Corporation (NASDAQ:FWRD) today reported record revenue, operating income, net income and diluted earnings per share for the second quarter and six months ended June 30, 2008.
Operating revenue for the quarter ended June 30, 2008 increased 30.5% to $121.6 million from $93.1 million for the same quarter in 2007. Income from operations was $20.3 million, compared with $18.3 million in the prior-year quarter, an increase of 10.6%. As a percent of operating revenue, income from operations decreased to 16.7% from 19.7% for the same quarter last year. Net income during the period increased by $0.6 million, or 5.5%, to $12.1 million from $11.5 million in the prior-year quarter. Income per diluted share from operations for the second quarter of 2008 was $0.42 compared with $0.38 in the prior-year quarter, an increase of 10.5%.
Operating revenue for the six months ended June 30, 2008 increased 27.1% to $229.5 million from $180.5 million for the same period in 2007. Income from operations was $36.9 million, compared with $34.2 million in the prior-year period, an increase of 8.1%. As a percent of operating revenue, income from operations decreased to 16.1% for the first six months of 2008 from 18.9% in 2007. Net income during the period increased 1.6% to $22.1 million from $21.8 million in the prior-year period. Income per diluted share from operations for the first six months of 2008 was $0.76 compared with $0.72 in the prior-year period, an increase of 5.6%.
Bruce Campbell, Chairman, President and CEO, commented, "Within our Forward Air, Inc operating segment, which includes our core airport-to-airport network, we experienced continued success with our Completing the Model strategic initiatives. Most notably, our TLX truckload brokerage and our Forward Air Complete door-to-door pick-up and delivery offering were key contributors. The success of these initiatives along with improved freight volumes and disciplined cost control by our team enabled us to post record results in the most challenging of economic times."
Commenting further, Mr. Campbell said, "Our Forward Air Solutions segment, which is our pool distribution offering, continued executing their 2008 growth plan by expanding their geographic footprint into Texas. Two of the new locations, Dallas and Houston, resulted from our previously announced (March 17, 2008) asset purchase of Pinch Transport (and related companies) while the third new location, San Antonio, was a de novo expansion, driven by strong customer demand. We will continue to emphasize our geographic expansion strategy in this important product line for the balance of 2008."
In commenting on the third quarter, Rodney L. Bell, Senior Vice President and CFO, said, "We anticipate third quarter year-over-year revenue growth in the 22 to 27% range. Additionally, we expect income per diluted share for the third quarter to be $0.40 to $0.44.
Review of Financial Results
Forward Air will hold a conference call to discuss second quarter 2008 results on Tuesday, July 22, 2008 at 9:00 a.m. EDT. The Company's conference call will be available online at www.forwardair.com or by dialing 866.356.4441. 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
Forward Air is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of 83 terminals located on or near major airports in the United States and Canada. The Company 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 Corporation
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three months ended Six months ended
------------------ -------------------
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
--------- -------- --------- ---------
Operating revenue:
Forward Air
Airport-to-airport $ 89,187 $77,237 $171,246 $151,458
Logistics 14,838 10,680 27,091 18,865
Other 6,188 5,230 11,977 10,178
Forward Air Solutions
Pool distribution 11,350 -- 19,187 --
-------- ------- -------- --------
Total operating revenue 121,563 93,147 229,501 180,501
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 33,472 29,739 65,011 60,271
Logistics 10,818 8,150 19,998 14,296
Other 1,572 1,477 3,205 2,773
Forward Air Solutions
Pool distribution 2,069 -- 3,242 --
-------- ------- -------- --------
Total purchased
transportation 47,931 39,366 91,456 77,340
Salaries, wages and
employee benefits 29,404 19,964 55,851 38,977
Operating leases 5,884 3,882 10,735 7,617
Depreciation and
amortization 3,998 2,494 7,696 4,874
Insurance and claims 1,614 1,900 3,874 3,602
Fuel expense 3,289 271 5,413 509
Other operating expenses 9,181 6,957 17,564 13,429
-------- ------- -------- --------
Total operating expenses 101,301 74,834 192,589 146,348
-------- ------- -------- --------
Income from operations 20,262 18,313 36,912 34,153
Other income (expense):
Interest expense (328) (41) (629) (81)
Other, net 56 469 210 1,221
-------- ------- -------- --------
Total other income (expense) (272) 428 (419) 1,140
-------- ------- -------- --------
Income before income taxes 19,990 18,741 36,493 35,293
Income taxes 7,888 7,266 14,383 13,525
-------- ------- -------- --------
Net income $ 12,102 $11,475 $ 22,110 $ 21,768
======== ======= ======== ========
Net income per share:
Basic $ 0.42 $ 0.38 $ 0.77 $ 0.72
======== ======= ======== ========
Diluted $ 0.42 $ 0.38 $ 0.76 $ 0.72
======== ======= ======== ========
Dividends $ 0.07 $ 0.07 $ 0.14 $ 0.14
======== ======= ======== ========
Weighted average shares
outstanding:
Basic 28,805 29,805 28,737 30,070
Diluted 29,126 30,162 29,041 30,412
Forward Air Corporation
Condensed Consolidated Balance Sheet
(In thousands, except per share data)
(Unaudited)
-------- ------------
June 30, December 31,
2008 2007 (a)
-------- ------------
Assets
Current assets:
Cash $ 1,082 $ 4,909
Accounts receivable, net 75,973 59,734
Other current assets 9,153 6,807
-------- ------------
Total current assets 86,208 71,450
Property and equipment 160,988 158,354
Less accumulated depreciation and amortization 57,240 55,322
-------- ------------
Total property and equipment, net 103,748 103,032
Goodwill and other acquired intangibles:
Goodwill 45,045 36,053
Other acquired intangibles, net 37,067 29,991
-------- ------------
Total goodwill and other acquired intangibles 82,112 66,044
Other assets 1,955 1,358
-------- ------------
Total assets $274,023 $ 241,884
======== ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 13,512 $ 11,714
Accrued expenses 16,688 14,274
Current portion of debt and capital lease
obligations 592 830
-------- ------------
Total current liabilities 30,792 26,818
Debt and capital lease obligations, less current
portion 36,441 31,486
Other long-term liabilities 2,740 4,476
Deferred income taxes 8,138 7,371
Shareholders' equity:
Common stock 288 286
Additional paid-in capital 6,106 --
Retained earnings 189,518 171,447
-------- ------------
Total shareholders' equity 195,912 171,733
-------- ------------
Total liabilities and shareholders' equity $274,023 $ 241,884
======== ============
(a) Taken from audited financial statements, which are not presented
in their entirety
Forward Air Corporation
Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)
Six months ended
-------------------
June 30, June 30,
2008 2007
--------- ---------
Operating activities:
Net Income $ 22,110 $ 21,768
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 7,696 4,874
Share-based compensation 3,120 1,483
Loss (gain) on sale of property and equipment 21 (235)
Provision for loss (recovery) on receivables 113 (114)
Provision for revenue adjustments 1,904 1,165
Deferred income taxes 1,428 1,514
Tax benefit for stock options exercised (1,079) (8)
Changes in operating assets and liabilities
Accounts receivable (18,301) (4,312)
Prepaid expenses and other current assets (2,371) 1,347
Accounts payable and accrued expenses 2,514 (2,240)
-------- --------
Net cash provided by operating activities 17,155 25,242
Investing activities:
Proceeds from disposal of property and equipment 33 273
Purchases of property and equipment (5,355) (38,535)
Proceeds from sales or maturities of available-
for-sale securities -- 126,635
Purchases of available-for-sale securities -- (75,560)
Acquisition of business (18,646) --
Other (93) (676)
-------- --------
Net cash (used in) provided by investing
activities (24,061) 12,137
Financing activities
Payments on debt and capital lease obligations (870) (19)
Borrowings on line of credit 30,000 --
Payments on line of credit (25,000) --
Proceeds from exercise of stock options 2,138 275
Payments of cash dividends (4,036) (4,222)
Common stock issued under employee stock purchase
plan 145 138
Repurchase of common stock -- (31,220)
Cash settlement of share-based awards for minimum
tax withholdings (377) (234)
Tax benefit for stock options exercised 1,079 8
-------- --------
Net cash provided by (used in) financing
activities 3,079 (35,274)
-------- --------
Net (decrease) increase in cash (3,827) 2,105
Cash at beginning of period 4,909 8,231
-------- --------
Cash at end of period $ 1,082 $ 10,336
======== ========
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
---------------------------------------
June 30, Percent of June 30, Percent of
2008 Revenue 2007 Revenue
-------- ---------- -------- ----------
Operating revenue
Forward Air $110.9 91.2% $93.1 100.0%
FASI 11.4 9.4 -- --
Intercompany
Eliminations (0.7) (0.6) -- --
------- --------- -------- ---------
Total 121.6 100.0 93.1 100.0
------- --------- -------- ---------
Purchased transportation
Forward Air 45.9 41.4 39.4 42.3
FASI 2.7 23.7 -- --
Intercompany
Eliminations (0.7) 100.0 -- --
------- --------- -------- ---------
Total 47.9 39.4 39.4 42.3
------- --------- -------- ---------
Salaries, wages and employee
benefits
Forward Air 24.7 22.3 19.9 21.4
FASI 4.7 41.2 -- --
------- --------- -------- ---------
Total 29.4 24.2 19.9 21.4
------- --------- -------- ---------
Operating leases
Forward Air 4.6 4.2 3.9 4.2
FASI 1.3 11.4 -- --
------- --------- -------- ---------
Total 5.9 4.8 3.9 4.2
------- --------- -------- ---------
Depreciation and amortization
Forward Air 3.6 3.2 2.5 2.7
FASI 0.4 3.5 -- --
------- --------- -------- ---------
Total 4.0 3.3 2.5 2.7
------- --------- -------- ---------
Insurance and claims
Forward Air 1.6 1.4 1.9 2.0
FASI -- -- -- --
------- --------- -------- ---------
Total 1.6 1.3 1.9 2.0
------- --------- -------- ---------
Fuel expense
Forward Air 1.8 1.6 0.3 0.3
FASI 1.5 13.2 -- --
------- --------- -------- ---------
Total 3.3 2.7 0.3 0.3
------- --------- -------- ---------
Other operating expenses
Forward Air 8.0 7.2 6.9 7.4
FASI 1.2 10.5 -- --
------- --------- -------- ---------
Total 9.2 7.6 6.9 7.4
------- --------- -------- ---------
Income (loss) from operations
Forward Air 20.7 18.7 18.3 19.7
FASI (0.4) (3.5) -- --
------- --------- -------- ---------
Total $ 20.3 16.7% $18.3 19.7%
======= ========= ======== =========
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Six months ended
---------------------------------------
June 30, Percent of June 30, Percent of
2008 Revenue 2007 Revenue
-------- ---------- -------- ----------
Operating revenue
Forward Air $211.2 92.0% $180.5 100.0%
FASI 19.2 8.4 -- --
Intercompany
Eliminations (0.9) (0.4) -- --
------- --------- -------- ---------
Total 229.5 100.0 180.5 100.0
------- --------- -------- ---------
Purchased transportation
Forward Air 88.2 41.8 77.4 42.9
FASI 4.1 21.4 -- --
Intercompany
Eliminations (0.9) 100.0 -- --
------- --------- -------- ---------
Total 91.4 39.8 77.4 42.9
------- --------- -------- ---------
Salaries, wages and employee
benefits
Forward Air 47.3 22.4 38.9 21.6
FASI 8.6 44.8 -- --
------- --------- -------- ---------
Total 55.9 24.3 38.9 21.6
------- --------- -------- ---------
Operating leases
Forward Air 8.9 4.2 7.6 4.2
FASI 1.8 9.4 -- --
------- --------- -------- ---------
Total 10.7 4.7 7.6 4.2
------- --------- -------- ---------
Depreciation and amortization
Forward Air 7.0 3.3 4.9 2.7
FASI 0.7 3.6 -- --
------- --------- -------- ---------
Total 7.7 3.4 4.9 2.7
------- --------- -------- ---------
Insurance and claims
Forward Air 3.4 1.6 3.6 2.0
FASI 0.5 2.6 -- --
------- --------- -------- ---------
Total 3.9 1.7 3.6 2.0
------- --------- -------- ---------
Fuel expense
Forward Air 3.1 1.4 0.5 0.3
FASI 2.3 12.0 -- --
------- --------- -------- ---------
Total 5.4 2.4 0.5 0.3
------- --------- -------- ---------
Other operating expenses
Forward Air 15.4 7.3 13.4 7.4
FASI 2.1 10.9 -- --
------- --------- -------- ---------
Total 17.5 7.6 13.4 7.4
------- --------- -------- ---------
Income (loss) from operations
Forward Air 37.9 18.0 34.2 18.9
FASI (0.9) (4.7) -- --
------- --------- -------- ---------
Total $ 37.0 16.1% $ 34.2 18.9%
======= ========= ======== =========
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 July 21, 2008