Forward Air Corporation Reports Fourth Quarter and Fiscal 2008 Results
Forward Air Corporation Reports Fourth Quarter and Fiscal 2008 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth quarter and year ended December 31, 2008.
Operating revenue for the quarter ended December 31, 2008 increased 7.8% to $123.4 million from $114.5 million for the same quarter in 2007. Income from operations was $14.0 million, compared with $20.0 million for the fourth quarter of 2007, a decrease of 30.0%. As a percent of operating revenue, income from operations decreased to 11.3% from 17.5% for the same quarter last year. Net income during the period decreased by $4.1 million, or 32.8%, to $8.3 million from $12.4 million in the fourth quarter of 2007. Net income per diluted share for the fourth quarter of 2008 was $0.29 compared with $0.43 in the same quarter in 2007, a decrease of 32.6%.
Operating revenue for the year ended December 31, 2008 increased 20.8% to $474.4 million from $392.7 million for the same period in 2007. Income from operations was $70.3 million, compared with $71.0 million in the prior-year period, a decrease of 1.0%. As a percent of operating revenue, income from operations decreased to 14.8% for the year ended 2008 from 18.1% in 2007. Net income during the period decreased 5.3% to $42.5 million from $44.9 million in the prior-year period. Net income per diluted share from operations for the year ended 2008 was $1.47 compared with $1.50 for the year ended December 31, 2007, a decrease of 2.0%.
Bruce A. Campbell, Chairman, President, and CEO, said, "As noted in last month's update we experienced an unprecedented decline in demand for our core airport-to-airport freight services during the fourth quarter 2008. This negative trend accelerated throughout the quarter with December volumes declining in excess of 20% from December of 2007. Thus far this year, volumes appear to have stabilized around negative 20% in our core business."
Commenting further, Mr. Campbell said, "In response to this dramatic decline in volume we have made further reductions in our work force, initiated an across the board salary and wage freeze, curtailed 2009 planned capital spending and continued to attack every expense line item in order to drive meaningful cost reductions. It is important to note that we have taken all of these measures without sacrificing the superior level of service that has differentiated Forward Air from our competitors. This is truly a testament to the dedication of our employees and independent owner operators and they have our sincerest appreciation."
In commenting on the fourth quarter, Rodney L. Bell, Senior Vice President and CFO, said "In the fourth quarter cash flow from operations was $21.1 million as compared to $18.6 million in the same quarter of 2007 further illustrating the strength of our non-asset model even in the most challenging of economic environments. As mentioned in our update, we ended the year with just over $22 million in cash and $42.2 million available on our $100 million line of credit."
Commenting further, Mr. Bell said, "We anticipate first quarter year-over-year revenue in our Forward Air, Inc segment to decline between 10 and 15% while we expect revenue in our Forward Air Solutions segment to approximately double primarily on the strength of our two 2008 acquisitions. We anticipate income per diluted share to be between $0.10 and $0.15 per share."
Review of Financial Results
Forward Air will hold a conference call to discuss fourth quarter 2008 results on Tuesday, February 10, 2009 at 9:00 a.m. EDT. 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 82 terminals located on or near major airports 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 20 terminals 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,
2008 2007 2008 2007
Operating revenue:
Forward Air
Airport-to-airport $ 77,713 $ 86,034 $ 334,860 $ 313,162
Logistics 16,602 11,976 59,290 42,626
Other 6,669 5,524 25,133 20,923
Forward Air
Solutions
Pool distribution 22,468 10,956 55,153 16,026
Total operating 123,452 114,490 474,436 392,737
revenue
Operating
expenses:
Purchased
transportation
Forward Air
Airport-to-airport 30,358 33,608 128,785 123,658
Logistics 13,336 9,176 44,560 32,727
Other 1,500 1,737 6,425 6,049
Forward Air
Solutions
Pool distribution 3,551 1,292 9,315 2,003
Total purchased 48,745 45,813 189,085 164,437
transportation
Salaries, wages
and employee 32,149 27,800 116,504 88,803
benefits
Operating leases 7,485 4,670 24,403 16,761
Depreciation and 4,785 3,095 16,615 10,824
amortization
Insurance and 2,409 2,434 8,099 7,685
claims
Fuel expense 2,999 1,334 11,465 2,421
Other operating 10,834 9,353 37,980 30,758
expenses
Total operating 109,406 94,499 404,151 321,689
expenses
Income from 14,046 19,991 70,285 71,048
operations
Other income
(expense):
Interest expense (396 ) (355 ) (1,236 ) (491 )
Other, net 37 231 362 1,756
Total other income (359 ) (124 ) (874 ) 1,265
(expense)
Income before 13,687 19,867 69,411 72,313
income taxes
Income taxes 5,350 7,463 26,869 27,388
Net income $ 8,337 $ 12,404 $ 42,542 $ 44,925
Net income per
share:
Basic $ 0.29 $ 0.43 $ 1.48 $ 1.52
Diluted $ 0.29 $ 0.43 $ 1.47 $ 1.50
Weighted average
shares
outstanding:
Basic 28,889 28,832 28,808 29,609
Diluted 28,987 29,154 29,025 29,962
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,
2008 2007(a)
Assets
Current assets:
Cash $ 22,093 $ 4,909
Accounts receivable, net 57,206 59,734
Other current assets 12,290 6,807
Total current assets 91,589 71,450
Property and equipment 186,377 158,354
Less accumulated depreciation and amortization 63,401 55,322
Total property and equipment, net 122,976 103,032
Goodwill and other acquired intangibles:
Goodwill 50,230 36,053
Other acquired intangibles, net 40,708 29,991
Total goodwill and other acquired intangibles 90,938 66,044
Other assets 2,024 1,358
Total assets $ 307,527 $ 241,884
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 11,633 $ 11,714
Accrued expenses 12,927 14,274
Current portion of debt and capital lease 1,602 830
obligations
Total current liabilities 26,162 26,818
Debt and capital lease obligations, less current 53,035 31,486
portion
Other long-term liabilities 3,055 4,476
Deferred income taxes 8,841 7,371
Shareholders' equity:
Common stock 289 286
Additional paid-in capital 10,249 --
Retained earnings 205,896 171,447
Total shareholders' equity 216,434 171,733
Total liabilities and shareholders' equity $ 307,527 $ 241,884
(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)
Year ended
December 31, December 31,
2008 2007
Operating activities:
Net income $ 42,542 $ 44,925
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 16,615 10,824
Share-based compensation 6,267 3,710
Loss (gain) on disposal of property and 171 (172 )
equipment
Provision for loss (recovery) on receivables 903 (33 )
Provision for revenue adjustments 4,259 2,312
Deferred income taxes 1,151 596
Tax benefit for stock options exercised (1,030 ) (1,261 )
Changes in operating assets and liabilities, net
of acquisitions
Accounts receivable (2,376 ) (11,474 )
Prepaid expenses and other current assets (2,102 ) 291
Accounts payable and accrued expenses (2,665 ) 6,606
Income taxes (4,652 ) 6,069
Net cash provided by operating activities 59,083 62,393
Investing activities:
Proceeds from disposal of property and equipment 87 574
Purchases of property and equipment (26,699 ) (47,026 )
Proceeds from sales or maturities of -- 143,410
available-for-sale securities
Purchases of available-for-sale securities -- (82,282 )
Acquisition of businesses (29,329 ) (48,627 )
Other (247 ) (119 )
Net cash used in investing activities (56,188 ) (34,070 )
Financing activities:
Payments of debt and capital lease obligations (1,603 ) (493 )
Borrowings on line of credit 45,000 40,000
Payments on line of credit (25,000 ) (10,000 )
Proceeds from exercise of stock options 3,085 1,017
Payments of cash dividends (8,089 ) (8,305 )
Proceeds from common stock issued under employee 255 259
stock purchase plan
Cash settlement of share-based awards for (389 ) (250 )
minimum tax withholdings
Repurchase of common stock -- (55,134 )
Tax benefit for stock options exercised 1,030 1,261
Net cash provided by (used in) financing 14,289 (31,645 )
activities
Net increase (decrease) in cash 17,184 (3,322 )
Cash at beginning of period 4,909 8,231
Cash at end of period $ 22,093 $ 4,909
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
December Percent December Percent %
31, of 31, of
2008 Revenue 2007 Revenue Change Change
Operating
revenue
Forward Air $ 101.4 82.2 % $ 103.6 90.5 % $ (2.2 ) (2.1 ) %
FASI 22.5 18.2 11.0 9.6 11.5 104.5
Intercompany (0.5 ) (0.4 ) (0.1 ) (0.1 ) (0.4 ) 400.0
Eliminations
Total 123.4 100.0 114.5 100.0 8.9 7.8
Purchased
transportation
Forward Air 45.3 44.7 44.5 43.0 0.8 1.8
FASI 3.9 17.3 1.4 12.7 2.5 178.6
Intercompany (0.5 ) 100.0 (0.1 ) 100.0 (0.4 ) 400.0
Eliminations
Total 48.7 39.5 45.8 40.0 2.9 6.3
Salaries,
wages and
employee
benefits
Forward Air 22.2 21.9 23.2 22.4 (1.0 ) (4.3 )
FASI 9.9 44.0 4.6 41.8 5.3 115.2
Total 32.1 26.0 27.8 24.3 4.3 15.5
Operating
leases
Forward Air 4.9 4.8 4.1 3.9 0.8 19.5
FASI 2.6 11.6 0.6 5.5 2.0 333.3
Total 7.5 6.1 4.7 4.1 2.8 59.6
Depreciation
and
amortization
Forward Air 3.8 3.7 2.9 2.8 0.9 31.0
FASI 1.0 4.4 0.2 1.8 0.8 400.0
Total 4.8 3.9 3.1 2.7 1.7 54.8
Insurance and
claims
Forward Air 2.2 2.2 2.0 1.9 0.2 10.0
FASI 0.2 0.9 0.4 3.6 (0.2 ) (50.0 )
Total 2.4 2.0 2.4 2.1 -- --
Fuel expense
Forward Air 1.0 1.0 0.5 0.5 0.5 100.0
FASI 2.0 8.9 0.8 7.3 1.2 150.0
Total 3.0 2.4 1.3 1.1 1.7 130.8
Other
operating
expenses
Forward Air 8.5 8.4 8.2 7.9 0.3 3.7
FASI 2.4 10.7 1.2 10.9 1.2 100.0
Total 10.9 8.8 9.4 8.2 1.5 16.0
Income from
operations
Forward Air 13.5 13.3 18.2 17.6 (4.7 ) (25.8 )
FASI 0.5 2.2 1.8 16.4 (1.3 ) (72.2 )
Total $ 14.0 11.3 % $ 20.0 17.5 % $ (6.0 ) (30.0 ) %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Year ended
December Percent December Percent %
31, of 31, of
2008 Revenue 2007 Revenue Change Change
Operating
revenue
Forward Air $ 421.2 88.8 % $ 376.8 95.9 % $ 44.4 11.8 %
FASI 55.3 11.6 16.0 4.1 39.3 245.6
Intercompany (2.1 ) (0.4 ) (0.1 ) -- (2.0 ) (2,000.0 )
Eliminations
Total 474.4 100.0 392.7 100.0 81.7 20.8
Purchased
transportation
Forward Air 179.9 42.7 162.4 43.1 17.5 10.8
FASI 11.2 20.2 2.1 13.1 9.1 433.3
Intercompany (2.1 ) 100.0 (0.1 ) 100.0 (2.0 ) (2,000.0 )
Eliminations
Total 189.0 39.9 164.4 41.9 24.6 15.0
Salaries,
wages and
employee
benefits
Forward Air 92.5 22.0 82.0 21.8 10.5 12.8
FASI 24.0 43.4 6.8 42.5 17.2 252.9
Total 116.5 24.6 88.8 22.6 27.7 31.2
Operating
leases
Forward Air 18.5 4.4 15.8 4.2 2.7 17.1
FASI 5.9 10.7 1.0 6.3 4.9 490.0
Total 24.4 5.1 16.8 4.3 7.6 45.2
Depreciation
and
amortization
Forward Air 14.4 3.4 10.4 2.8 4.0 38.5
FASI 2.2 4.0 0.5 3.1 1.7 340.0
Total 16.6 3.5 10.9 2.8 5.7 52.3
Insurance and
claims
Forward Air 7.3 1.7 7.2 1.9 0.1 1.4
FASI 0.8 1.4 0.5 3.1 0.3 60.0
Total 8.1 1.7 7.7 1.9 0.4 5.2
Fuel expense
Forward Air 5.8 1.4 1.3 0.3 4.5 346.2
FASI 5.7 10.3 1.1 6.9 4.6 418.2
Total 11.5 2.4 2.4 0.6 9.1 379.2
Other
operating
expenses
Forward Air 32.1 7.6 29.0 7.7 3.1 10.7
FASI 5.9 10.7 1.7 10.6 4.2 247.1
Total 38.0 8.0 30.7 7.8 7.3 23.8
Income (loss)
from
operations
Forward Air 70.7 16.8 68.7 18.2 2.0 2.9
FASI (0.4 ) (0.7 ) 2.3 14.4 (2.7 ) (117.4 )
Total $ 70.3 14.8 % $ 71.0 18.1 % $ (0.7 ) (1.0 ) %
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 9, 2009