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