Forward Air Corporation Reports Second Quarter 2009 Results
Forward Air Corporation Reports Second Quarter 2009 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the second quarter and six months ended June 30, 2009.
Operating revenue for the quarter ended June 30, 2009 decreased 18.0% to $99.7 million from $121.6 million for the same quarter in 2008. Income from operations was $4.9 million, compared with $20.3 million in the prior-year quarter. As a percent of operating revenue, income from operations decreased to 4.9% from 16.7% for the same quarter last year. Net income during the period decreased to $2.8 million from $12.1 million in the prior-year quarter. Income per diluted share from operations for the second quarter of 2009 was $0.10 compared with $0.42 in the prior-year quarter.
Operating revenue for the six months ended June 30, 2009 decreased 14.5% to $196.3 million from $229.5 million for the same period in 2008. Results from operations, which includes a first quarter non-cash, pre-tax charge of $7.2 million primarily for goodwill impairment related to the Company's Forward Air Solutions segment, was a loss of $0.2 million, compared with income from operations of $36.9 million in the prior-year period. Including the impact of the goodwill impairment, the Company's net loss for the six months ended June 30, 2009, was $0.3 million, compared with net income of $22.1 million in the prior-year period. Net loss per share for the first six months of 2009 was $0.01 compared with net income per diluted share of $0.76 in the prior-year period.
Bruce A. Campbell, Chairman, President, and CEO, said "As expected, the challenging freight environment resulting from the global economic recession persisted throughout the second quarter. However, during the quarter, volumes in our core airport-to-airport business showed signs of stabilization. Our second quarter tonnage declined on a year-over-year basis but slightly less than the decline we experienced in the first quarter. During the quarter, our yield was severely impacted by the intense pricing pressure which began for us near the end of the first quarter as well as a difficult prior year fuel surcharge comparison."
Commenting further, Mr. Campbell said, "During this severe economic downturn, our goal, in our airport to airport operations, has been and continues to be aggressive and effective management of our expenses to the current business levels without jeopardizing the superior earnings power of the model. Thus far, we have been successful in that regard while generating respectable profits and cash flows given the conditions."
In closing Mr. Campbell said, "During the quarter, we were most encouraged by the performance of our Forward Air Solutions team. On the strength of nearly $13 million of annualized new business brought on during the quarter as well as significant overhead reductions, Solutions returned to profitability in the month of June. With our current cost structure and assuming consistent business levels, Solutions should be a bottom line contributor for the balance of the year."
Commenting further on the quarter, Rodney L. Bell, Senior Vice President and CFO said, "During the quarter, we generated $4.9 million of cash flow from operations compared to $6.3 million in the second quarter of 2008 and ended the period with over $24 million in cash. We used approximately $10 million of cash to fund the construction of our Dallas regional hub which opened in late June. This state of the art facility will house both our airport-to-airport and pool distribution operations, as well as our back-up data center. This allows for the consolidation of multiple Dallas facilities which will reduce leasehold expense and drive operational efficiency. With the exception of approximately $4 million of final payments on our Dallas facility, we expect our capital expenditures for the balance of the year to be minimal allowing for debt reduction or the further accumulation of cash. Consistent with the end of the first quarter, we owed $50 million on our line of credit with $39.5 million of availability."
Commenting further Mr. Bell said, "Assuming no further material deterioration in the environment, for the third quarter of 2009, we anticipate a year-over-year decline in revenue in the range of 15 to 20% and expect income per diluted share to be between $0.08 and $0.14 per share."
Review of Financial Results
Forward Air will hold a conference call to discuss first quarter 2009 results on Tuesday, July 21, 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 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 84 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 19 terminals 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 Six months ended
June 30, June 30, June 30, June 30,
2009 2008 2009 2008
Operating revenue:
Forward Air
Airport-to-airport $ 65,182 $ 89,187 $ 128,240 $ 171,246
Logistics 12,279 14,838 25,473 27,091
Other 5,666 6,188 11,379 11,977
Forward Air Solutions
Pool distribution 16,570 11,350 31,221 19,187
Total operating revenue 99,697 121,563 196,313 229,501
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 27,830 33,472 53,983 65,011
Logistics 9,518 10,818 19,798 19,998
Other 1,230 1,572 2,294 3,205
Forward Air Solutions
Pool distribution 3,395 2,069 6,027 3,242
Total purchased 41,973 47,931 82,102 91,456
transportation
Salaries, wages and employee 29,187 29,404 58,243 55,851
benefits
Operating leases 6,820 5,884 13,809 10,735
Depreciation and amortization 4,823 3,998 9,682 7,696
Insurance and claims 2,223 1,614 4,939 3,874
Fuel expense 1,637 3,289 3,319 5,413
Other operating expenses 8,161 9,181 17,216 17,564
Impairment of goodwill and -- -- 7,157 --
other intangible assets
Total operating expenses 94,824 101,301 196,467 192,589
Income (loss) from operations 4,873 20,262 (154 ) 36,912
Other (expense) income:
Interest expense (150 ) (328 ) (291 ) (629 )
Other, net 20 56 (2 ) 210
Total other expense (130 ) (272 ) (293 ) (419 )
Income (loss) before income 4,743 19,990 (447 ) 36,493
taxes
Income taxes 1,899 7,888 (186 ) 14,383
Net income (loss) $ 2,844 $ 12,102 $ (261 ) $ 22,110
Net income (loss) per share:
Basic $ 0.10 $ 0.42 $ (0.01 ) $ 0.77
Diluted $ 0.10 $ 0.42 $ (0.01 ) $ 0.76
Weighted average shares
outstanding:
Basic 28,927 28,805 28,916 28,737
Diluted 28,977 29,126 28,916 29,041
Dividends per share: $ 0.07 $ 0.07 $ 0.14 $ 0.14
Forward Air Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
June 30, December 31,
2009 2008(a)
Assets
Current assets:
Cash $ 24,072 $ 22,093
Accounts receivable, net 50,039 57,206
Other current assets 17,667 12,290
Total current assets 91,778 91,589
Property and equipment 199,819 186,377
Less accumulated depreciation and amortization 69,345 63,401
Total property and equipment, net 130,474 122,976
Goodwill and other acquired intangibles:
Goodwill 43,332 50,230
Other acquired intangibles, net 38,144 40,708
Total goodwill and other acquired intangibles 81,476 90,938
Other assets 1,655 2,024
Total assets $ 305,383 $ 307,527
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 9,477 $ 11,633
Accrued expenses 16,471 12,927
Current portion of debt and capital lease obligations 1,231 1,602
Total current liabilities 27,179 26,162
Long-term debt and capital lease obligations, less 52,633 53,035
current portion
Other long-term liabilities 3,602 3,055
Deferred income taxes 6,572 8,841
Shareholders' equity:
Common stock 289 289
Additional paid-in capital 13,527 10,249
Retained earnings 201,581 205,896
Total shareholders' equity 215,397 216,434
Total liabilities and shareholders' equity $ 305,383 $ 307,527
(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
June 30, June 30,
2009 2008
Operating activities:
Net income $ 2,844 $ 12,102
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 4,823 3,998
Share-based compensation 1,635 1,585
(Gain) loss on sale or disposal of property and (21 ) 5
equipment
Provision for (recovery) loss on receivables (256 ) 18
Provision for revenue adjustments 574 908
Deferred income taxes (583 ) 914
Tax benefit for stock options exercised -- (354 )
Changes in operating assets and liabilities:
Accounts receivable (1,915 ) (12,864 )
Prepaid expenses and other current assets (1,064 ) (2,830 )
Accounts payable and accrued expenses (1,101 ) 2,831
Net cash provided by operating activities 4,936 6,313
Investing activities:
Proceeds from disposal of property and equipment 90 29
Purchases of property and equipment (10,288 ) (2,710 )
Acquisition of businesses -- (120 )
Other 468 (44 )
Net cash used in investing activities (9,730 ) (2,845 )
Financing activities:
Payments of debt and capital lease obligations (437 ) (264 )
Borrowings on line of credit -- 10,000
Payments on line of credit -- (15,000 )
Proceeds from exercise of stock options -- 1,182
Payments of cash dividends (2,028 ) (2,023 )
Common stock issued under employee stock purchase plan 99 145
Cash settlement of share-based awards for minimum tax (9 ) (15 )
withholdings
Tax benefit for stock options exercised -- 354
Net cash used in financing activities (2,375 ) (5,621 )
Net decrease in cash (7,169 ) (2,153 )
Cash at beginning of period 31,241 3,235
Cash at end of period $ 24,072 $ 1,082
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Six months ended
June 30, June 30,
2009 2008
Operating activities:
Net (loss) income $ (261 ) $ 22,110
Adjustments to reconcile net (loss) income to net cash
provided by operating activities
Depreciation and amortization 9,682 7,696
Impairment of goodwill and other intangible assets 7,157 --
Share-based compensation 3,415 3,120
(Gain) loss on sale or disposal of property and (12 ) 21
equipment
Provision for (recovery) loss on receivables (291 ) 113
Provision for revenue adjustments 1,368 1,904
Deferred income taxes (2,543 ) 1,428
Tax benefit for stock options exercised -- (1,079 )
Changes in operating assets and liabilities:
Accounts receivable 6,091 (18,301 )
Prepaid expenses and other current assets (359 ) (2,371 )
Accounts payable and accrued expenses (2,852 ) 2,514
Net cash provided by operating activities 21,395 17,155
Investing activities:
Proceeds from disposal of property and equipment 217 33
Purchases of property and equipment (15,025 ) (5,355 )
Acquisition of businesses -- (18,646 )
Other 356 (93 )
Net cash used in investing activities (14,452 ) (24,061 )
Financing activities:
Payments of debt and capital lease obligations (773 ) (870 )
Borrowings on line of credit -- 30,000
Payments on line of credit -- (25,000 )
Proceeds from exercise of stock options -- 2,138
Payments of cash dividends (4,053 ) (4,036 )
Common stock issued under employee stock purchase plan 99 145
Cash settlement of share-based awards for minimum tax (237 ) (377 )
withholdings
Tax benefit for stock options exercised -- 1,079
Net cash (used in) provided by financing activities (4,964 ) 3,079
Net increase (decrease) in cash 1,979 (3,827 )
Cash at beginning of period 22,093 4,909
Cash at end of period $ 24,072 $ 1,082
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
June Percent June Percent Percent
30, of 30, of
2009 Revenue 2008 Revenue Change Change
Operating
revenue
Forward Air $ 83.3 83.6 % $ 110.9 91.2 % $ (27.6 ) (24.9 ) %
FASI 16.7 16.7 11.4 9.4 5.3 46.5
Intercompany (0.3 ) (0.3 ) (0.7 ) (0.6 ) 0.4 (57.1 )
Eliminations
Total 99.7 100.0 121.6 100.0 (21.9 ) (18.0 )
Purchased
transportation
Forward Air 38.7 46.5 45.9 41.4 (7.2 ) (15.7 )
FASI 3.6 21.5 2.7 23.7 0.9 33.3
Intercompany (0.3 ) 100.0 (0.7 ) 100.0 0.4 (57.1 )
Eliminations
Total 42.0 42.2 47.9 39.4 (5.9 ) (12.3 )
Salaries,
wages and
employee
benefits
Forward Air 21.1 25.3 24.7 22.3 (3.6 ) (14.6 )
FASI 8.1 48.5 4.7 41.2 3.4 72.3
Total 29.2 29.3 29.4 24.2 (0.2 ) (0.7 )
Operating
leases
Forward Air 4.7 5.6 4.6 4.2 0.1 2.2
FASI 2.1 12.6 1.3 11.4 0.8 61.5
Total 6.8 6.8 5.9 4.8 0.9 15.3
Depreciation
and
amortization
Forward Air 3.9 4.7 3.6 3.2 0.3 8.3
FASI 0.9 5.4 0.4 3.5 0.5 125.0
Total 4.8 4.8 4.0 3.3 0.8 20.0
Insurance and
claims
Forward Air 1.7 2.0 1.6 1.4 0.1 6.2
FASI 0.5 3.0 -- -- 0.5 100.0
Total 2.2 2.2 1.6 1.3 0.6 37.5
Fuel expense
Forward Air 0.7 0.8 1.8 1.6 (1.1 ) (61.1 )
FASI 0.9 5.4 1.5 13.2 (0.6 ) (40.0 )
Total 1.6 1.6 3.3 2.7 (1.7 ) (51.5 )
Other
operating
expenses
Forward Air 6.7 8.1 8.0 7.2 (1.3 ) (16.3 )
FASI 1.5 9.0 1.2 10.5 0.3 25.0
Total 8.2 8.2 9.2 7.6 (1.0 ) (10.9 )
Income (loss)
from
operations
Forward Air 5.8 7.0 20.7 18.7 (14.9 ) (72.0 )
FASI (0.9 ) (5.4 ) (0.4 ) (3.5 ) (0.5 ) 125.0
Total $ 4.9 4.9 % $ 20.3 16.7 % $ (15.4 ) (75.9 ) %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Six months ended
June Percent June Percent Percent
30, of 30, of
2009 Revenue 2008 Revenue Change Change
Operating
revenue
Forward Air $ 165.5 84.3 % $ 211.2 92.0 % $ (45.7 ) (21.6 ) %
FASI 31.4 16.0 19.2 8.4 12.2 63.5
Intercompany (0.6 ) (0.3 ) (0.9 ) (0.4 ) 0.3 (33.3 )
Eliminations
Total 196.3 100.0 229.5 100.0 (33.2 ) (14.5 )
Purchased
transportation
Forward Air 76.2 46.1 88.2 41.8 (12.0 ) (13.6 )
FASI 6.4 20.4 4.1 21.4 2.3 56.1
Intercompany (0.5 ) 83.3 (0.9 ) 100.0 0.4 (44.4 )
Eliminations
Total 82.1 41.8 91.4 39.8 (9.3 ) (10.2 )
Salaries,
wages and
employee
benefits
Forward Air 42.5 25.7 47.3 22.4 (4.8 ) (10.1 )
FASI 15.7 50.0 8.6 44.8 7.1 82.6
Total 58.2 29.7 55.9 24.3 2.3 4.1
Operating
leases
Forward Air 9.5 5.7 8.9 4.2 0.6 6.7
FASI 4.3 13.7 1.8 9.4 2.5 138.9
Total 13.8 7.0 10.7 4.7 3.1 29.0
Depreciation
and
amortization
Forward Air 7.9 4.8 7.0 3.3 0.9 12.9
FASI 1.8 5.7 0.7 3.6 1.1 157.1
Total 9.7 4.9 7.7 3.4 2.0 26.0
Insurance and
claims
Forward Air 4.0 2.4 3.4 1.6 0.6 17.6
FASI 0.9 2.9 0.5 2.6 0.4 80.0
Total 4.9 2.5 3.9 1.7 1.0 25.6
Fuel expense
Forward Air 1.5 0.9 3.1 1.4 (1.6 ) (51.6 )
FASI 1.8 5.7 2.3 12.0 (0.5 ) (21.7 )
Total 3.3 1.7 5.4 2.4 (2.1 ) (38.9 )
Other
operating
expenses
Forward Air 14.1 8.5 15.4 7.3 (1.3 ) (8.4 )
FASI 3.2 10.2 2.1 10.9 1.1 52.4
Intercompany (0.1 ) 16.7 -- -- (0.1 ) (100.0 )
Eliminations
Total 17.2 8.8 17.5 7.6 (0.3 ) (1.7 )
Impairment of
goodwill and
other
intangible
assets
Forward Air 0.2 0.1 -- -- 0.2 100.0
FASI 7.0 22.3 -- -- 7.0 100.0
Total 7.2 3.7 -- -- 7.2 100.0
(Loss) income
from
operations
Forward Air 9.6 5.8 37.9 18.0 (28.3 ) (74.7 )
FASI (9.7 ) (30.9 ) (0.9 ) (4.7 ) (8.8 ) 977.8
Total $ (0.1 ) (0.1 )% $ 37.0 16.1 % $ (37.1 ) (100.3 ) %
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 20, 2009