Forward Air Corporation Reports Third Quarter 2010 Results
Forward Air Corporation Reports Third Quarter 2010 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the third quarter and nine months ended September 30, 2010.
Operating revenue for the quarter ended September 30, 2010 increased 17.8% to $121.5 million from $103.1 million for the same quarter in 2009. Income from operations was $15.5 million, compared with $6.7 million in the prior-year quarter. As a percent of operating revenue, income from operations increased to 12.8% from 6.5% for the same quarter last year. Net income during the period increased to $8.9 million from $3.8 million in the prior-year quarter. Income per diluted share for the third quarter of 2010 was $0.31 compared with $0.13 in the prior-year quarter.
Operating revenue for the nine months ended September 30, 2010 increased 17.1% to $350.6 million from $299.4 million for the same period in 2009. Income from operations was $35.1 million, compared with $6.5 million in the prior-year period. As a percent of operating revenue, income from operations increased to 10.0% for the first nine months of 2010 from 2.2% for the same period in 2009. Net income during the period was $20.2 million compared to $3.5 million in the prior-year period. Income per diluted share for the first nine months of 2010 was $0.69 compared with $0.12 in the prior-year period.
Bruce A. Campbell, Chairman, President, and CEO, commenting on the third quarter said, "We are pleased with another strong quarterly performance in our Forward Air, Inc. business segment. We were encouraged that our airport-to-airport tonnages in the third quarter and thus far into the fourth quarter resemble what we typically experience in a normal operating environment. After a midsummer lull, volumes for the balance of the quarter and into October steadily increased in a peak-like fashion. While this gives us cause for optimism, we will monitor our tonnage trends closely in order to be ready to react in the event of a premature pull-back."
Commenting further, Mr. Campbell said, "We continued to make progress in our Forward Air Solutions segment through better cost control as well as our efforts to diversify our customer base. Operating at near a breakeven for the third quarter we anticipate Solutions to be an earnings contributor in the fourth quarter at least to the same degree as that same quarter in 2009."
In closing Mr. Campbell said, "The continued efforts of our employees and independent contractors does not go unnoticed. Their consistent commitment to quality and safety allow us to remain a leader in our industry. Thank you to those men and women for their dedication to excellence."
Commenting on the Company's guidance for the fourth quarter, Rodney L. Bell, Senior Vice President and CFO, said, "We anticipate that our fourth quarter 2010 revenues will increase in the range of 12% to 17% over the comparable 2009 period, and we expect income per diluted share to be between $0.35 and $0.39 per share. This compares to $0.22 per share in the fourth quarter of 2009."
Review of Financial Results
Forward Air will hold a conference call to discuss third quarter 2010 results on Thursday, October 21, 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, pass code 57279270. 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 Nine months ended
September September 30, September 30, September 30,
30,
2010 2009 2010 2009
Operating revenue:
Forward Air
Airport-to-airport $ 81,828 $ 66,667 $ 234,456 $ 194,908
Logistics 16,774 13,172 47,789 38,645
Other 6,481 5,596 18,745 16,975
Forward Air
Solutions
Pool distribution 16,439 17,644 49,639 48,864
Total operating 121,522 103,079 350,629 299,392
revenue
Operating
expenses:
Purchased
transportation
Forward Air
Airport-to-airport 32,852 28,025 94,152 82,008
Logistics 12,942 10,329 36,780 30,127
Other 1,703 1,387 4,811 3,681
Forward Air
Solutions
Pool distribution 3,680 3,747 10,625 9,774
Total purchased 51,177 43,488 146,368 125,590
transportation
Salaries, wages
and employee 31,845 28,591 95,682 86,834
benefits
Operating leases 6,508 6,631 19,388 20,440
Depreciation and 5,228 5,006 15,283 14,687
amortization
Insurance and 1,546 2,045 5,983 6,984
claims
Fuel expense 1,949 1,880 6,051 5,199
Other operating 7,764 8,767 26,813 25,983
expenses
Impairment of
goodwill and other -- -- -- 7,157
intangible assets
Total operating 106,017 96,408 315,568 292,874
expenses
Income from 15,505 6,671 35,061 6,518
operations
Other income
(expense):
Interest expense (191 ) (177 ) (557 ) (469 )
Other, net 26 51 38 50
Total other (165 ) (126 ) (519 ) (419 )
expense
Income before 15,340 6,545 34,542 6,099
income taxes
Income taxes 6,452 2,766 14,323 2,581
Net income $ 8,888 $ 3,779 $ 20,219 $ 3,518
Net income per
share:
Basic $ 0.31 $ 0.13 $ 0.70 $ 0.12
Diluted $ 0.31 $ 0.13 $ 0.69 $ 0.12
Weighted average
shares
outstanding:
Basic 29,000 28,942 28,975 28,924
Diluted 29,129 29,026 29,101 28,978
Dividends per $ 0.07 $ 0.07 $ 0.21 $ 0.21
share:
Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September 30, December 31,
2010 2009 (a)
Assets
Current assets:
Cash $ 63,219 $ 42,035
Accounts receivable, net 62,438 55,720
Other current assets 11,484 9,471
Total current assets 137,141 107,226
Property and equipment 210,954 204,716
Less accumulated depreciation and amortization 83,615 75,990
Total property and equipment, net 127,339 128,726
Goodwill and other acquired intangibles:
Goodwill 43,332 43,332
Other acquired intangibles, net 32,406 35,849
Total goodwill and other acquired intangibles 75,738 79,181
Other assets 1,595 1,597
Total assets $ 341,813 $ 316,730
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 11,383 $ 10,333
Accrued expenses 23,326 18,531
Current portion of debt and capital lease 672 919
obligations
Total current liabilities 35,381 29,783
Debt and capital lease obligations, less current 51,023 52,169
portion
Other long-term liabilities 6,159 4,485
Deferred income taxes 5,116 5,786
Shareholders' equity:
Common stock 290 290
Additional paid-in capital 22,130 16,631
Retained earnings 221,714 207,586
Total shareholders' equity 244,134 224,507
Total liabilities and shareholders' equity $ 341,813 $ 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
September 30, September 30,
2010 2009
Operating activities:
Net income $ 8,888 $ 3,779
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 5,228 5,006
Share-based compensation 1,506 1,607
Gain on disposal of property and equipment (641 ) (1 )
Provision for (recovery) loss on receivables (22 ) 217
Provision for revenue adjustments 625 548
Deferred income taxes 40 (466 )
Tax benefit for stock options exercised (19 ) (1 )
Changes in operating assets and liabilities
Accounts receivable 500 (3,721 )
Prepaid expenses and other current assets (415 ) (1,208 )
Accounts payable and accrued expenses 3,260 3,552
Net cash provided by operating activities 18,950 9,312
Investing activities:
Proceeds from disposal of property and 1,371 14
equipment
Purchases of property and equipment (3,150 ) (3,803 )
Other 30 49
Net cash used in investing activities (1,749 ) (3,740 )
Financing activities:
Payments of debt and capital lease obligations (232 ) (390 )
Proceeds from exercise of stock options 346 8
Payments of cash dividends (2,031 ) (2,028 )
Cash settlement of share-based awards for -- (5 )
minimum tax withholdings
Tax benefit for stock options exercised 19 1
Net cash used in financing activities (1,898 ) (2,414 )
Net increase in cash 15,303 3,158
Cash at beginning of period 47,916 24,072
Cash at end of period $ 63,219 $ 27,230
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Nine months ended
September 30, September 30,
2010 2009
Operating activities:
Net income $ 20,219 $ 3,518
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 15,283 14,687
Impairment of goodwill and other intangible -- 7,157
assets
Share-based compensation 4,887 5,022
Gain on disposal of property and equipment (648 ) (13 )
Provision for loss (recovery) on receivables 202 (74 )
Provision for revenue adjustments 1,462 1,916
Deferred income taxes (1,624 ) (3,009 )
Tax benefit for stock options exercised (28 ) (1 )
Changes in operating assets and liabilities
Accounts receivable (8,382 ) 2,370
Prepaid expenses and other current assets (1,029 ) (1,567 )
Accounts payable and accrued expenses 7,519 701
Net cash provided by operating activities 37,861 30,707
Investing activities:
Proceeds from disposal of property and 1,413 231
equipment
Purchases of property and equipment (11,889 ) (18,828 )
Other -- 405
Net cash used in investing activities (10,476 ) (18,192 )
Financing activities:
Payments of debt and capital lease obligations (722 ) (1,163 )
Proceeds from exercise of stock options 490 8
Payments of cash dividends (6,088 ) (6,081 )
Common stock issued under employee stock 91 99
purchase plan
Cash settlement of share-based awards for -- (242 )
minimum tax withholdings
Tax benefit for stock options exercised 28 1
Net cash used in financing activities (6,201 ) (7,378 )
Net increase in cash 21,184 5,137
Cash at beginning of period 42,035 22,093
Cash at end of period $ 63,219 $ 27,230
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Three months ended
September Percent September Percent Percent
30, of 30, of
2010 Revenue 2009 Revenue Change Change
Operating
revenue
Forward Air $ 105.3 86.7 % $ 85.7 83.1 % $ 19.6 22.9 %
FASI 16.5 13.6 17.8 17.3 (1.3 ) (7.3 )
Intercompany (0.3 ) (0.3 ) (0.4 ) (0.4 ) 0.1 (25.0 )
Eliminations
Total 121.5 100.0 103.1 100.0 18.4 17.8
Purchased
transportation
Forward Air 47.5 45.1 39.8 46.4 7.7 19.3
FASI 3.9 23.6 4.0 22.5 (0.1 ) (2.5 )
Intercompany (0.3 ) 100.0 (0.3 ) 75.0 -- --
Eliminations
Total 51.1 42.1 43.5 42.2 7.6 17.5
Salaries,
wages and
employee
benefits
Forward Air 24.7 23.4 20.6 24.0 4.1 19.9
FASI 7.2 43.6 8.0 44.9 (0.8 ) (10.0 )
Total 31.9 26.3 28.6 27.7 3.3 11.5
Operating
leases
Forward Air 4.7 4.5 4.6 5.4 0.1 2.2
FASI 1.8 10.9 2.0 11.2 (0.2 ) (10.0 )
Total 6.5 5.3 6.6 6.4 (0.1 ) (1.5 )
Depreciation
and
amortization
Forward Air 4.2 4.0 4.1 4.8 0.1 2.4
FASI 1.0 6.1 0.9 5.1 0.1 11.1
Total 5.2 4.3 5.0 4.9 0.2 4.0
Insurance and
claims
Forward Air 1.2 1.1 1.6 1.9 (0.4 ) (25.0 )
FASI 0.3 1.8 0.4 2.2 (0.1 ) (25.0 )
Total 1.5 1.2 2.0 1.9 (0.5 ) (25.0 )
Fuel expense
Forward Air 0.9 0.9 0.8 0.9 0.1 12.5
FASI 1.1 6.7 1.1 6.2 -- --
Total 2.0 1.6 1.9 1.8 0.1 5.3
Other
operating
expenses
Forward Air 6.4 6.1 7.0 8.2 (0.6 ) (8.6 )
FASI 1.4 8.5 1.9 10.7 (0.5 ) (26.3 )
Intercompany - - (0.1 ) 25.0 0.1 (100.0 )
Eliminations
Total 7.8 6.4 8.8 8.6 (1.0 ) (11.4 )
Income (loss)
from
operations
Forward Air 15.7 14.9 7.2 8.4 8.5 118.1
FASI (0.2 ) (1.2 ) (0.5 ) (2.8 ) 0.3 (60.0 )
Total $ 15.5 12.8 % $ 6.7 6.5 % $ 8.8 131.3 %
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
Nine months ended
September Percent September Percent Percent
30, of 30, of
2010 Revenue 2009 Revenue Change Change
Operating
revenue
Forward Air $ 301.8 86.1 % $ 251.2 83.9 % $ 50.6 20.1 %
FASI 49.8 14.2 49.2 16.4 0.6 1.2
Intercompany (1.0 ) (0.3 ) (1.0 ) (0.3 ) -- --
Eliminations
Total 350.6 100.0 299.4 100.0 51.2 17.1
Purchased
transportation
Forward Air 135.9 45.0 116.1 46.2 19.8 17.1
FASI 11.4 22.9 10.4 21.1 1.0 9.6
Intercompany (0.9 ) 90.0 (0.9 ) 90.0 -- --
Eliminations
Total 146.4 41.8 125.6 42.0 20.8 16.6
Salaries,
wages and
employee
benefits
Forward Air 73.4 24.3 63.1 25.1 10.3 16.3
FASI 22.3 44.8 23.7 48.2 (1.4 ) (5.9 )
Total 95.7 27.3 86.8 29.0 8.9 10.3
Operating
leases
Forward Air 13.6 4.5 14.1 5.6 (0.5 ) (3.5 )
FASI 5.8 11.7 6.3 12.8 (0.5 ) (7.9 )
Total 19.4 5.5 20.4 6.8 (1.0 ) (4.9 )
Depreciation
and
amortization
Forward Air 12.3 4.1 12.0 4.8 0.3 2.5
FASI 2.9 5.8 2.7 5.5 0.2 7.4
Total 15.2 4.3 14.7 4.9 0.5 3.4
Insurance and
claims
Forward Air 4.7 1.6 5.6 2.2 (0.9 ) (16.1 )
FASI 1.3 2.6 1.4 2.8 (0.1 ) (7.1 )
Total 6.0 1.7 7.0 2.3 (1.0 ) (14.3 )
Fuel expense
Forward Air 2.7 0.9 2.3 0.9 0.4 17.4
FASI 3.3 6.6 2.9 5.9 0.4 13.8
Total 6.0 1.7 5.2 1.7 0.8 15.4
Other
operating
expenses
Forward Air 22.1 7.3 21.0 8.4 1.1 5.2
FASI 4.8 9.6 5.1 10.4 (0.3 ) (5.9 )
Intercompany (0.1 ) 10.0 (0.1 ) 10.0 -- --
Eliminations
Total 26.8 7.7 26.0 8.7 0.8 3.1
Impairment of
goodwill
and other
intangible
assets
Forward Air -- -- 0.2 0.1 (0.2 ) (100.0 )
FASI -- -- 7.0 14.2 (7.0 ) (100.0 )
Total -- -- 7.2 2.4 (7.2 ) (100.0 )
Income (loss)
from
operations
Forward Air 37.1 12.3 16.8 6.7 20.3 120.8
FASI (2.0 ) (4.0 ) (10.3 ) (20.9 ) 8.3 (80.6 )
Total $ 35.1 10.0 % $ 6.5 2.2 % $ 28.6 440.0 %
Forward Air Corporation
Forward Air Inc. Operating Statistics
Three months ended
September 30, September 30, Percent
2010 2009 Change
Operating ratio 85.1 % 91.6 % (7.1 ) %
Business days 64.0 64.0 --
Business weeks 12.8 12.8 --
Airport-to-airport:
Tonnage
Total pounds (1) 414,508 357,768 15.9
Average weekly pounds (1) 32,383 27,951 15.9
Linehaul shipments
Total linehaul 563,448 511,959 10.1
Average weekly 44,019 39,997 10.1
Forward Air Complete 80,684 73,696 9.5
shipments
As a percentage of linehaul 14.3 % 14.4 % (0.7 )
shipments
Average linehaul shipment 736 699 5.3
size
Revenue per pound (2)
Linehaul yield $ 16.64 $ 15.91 3.9
Fuel surcharge impact 1.20 0.93 1.4
Forward Air Complete impact 1.93 1.83 0.5
Total airport-to-airport $ 19.77 $ 18.67 5.9
yield
Logistics:
Miles
Owner operator (1) 6,964 6,111 14.0
Third party (1) 3,212 2,288 40.4
Total Miles 10,176 8,399 21.2
Revenue per mile $ 1.66 $ 1.58 5.1
Cost per mile $ 1.27 $ 1.23 3.3 %
(1) - In thousands
(2) - In cents per pound; percentage change is expressed as a percent of
total yield.
Forward Air Corporation
Forward Air Inc. Operating Statistics
Nine months ended
September 30, September 30, Percent
2010 2009 Change
Operating ratio 87.7 % 93.3 % (6.0 ) %
Business days 191.0 191.0 --
Business weeks 38.2 38.2 --
Airport-to-airport:
Tonnage
Total pounds (1) 1,217,097 1,054,048 15.5
Average weekly pounds (1) 31,861 27,593 15.5
Linehaul shipments
Total linehaul 1,685,257 1,529,301 10.2
Average weekly 44,117 40,034 10.2
Forward Air Complete 228,286 194,694 17.3
shipments
As a percentage of linehaul 13.5 % 12.7 % 6.4
shipments
Average linehaul shipment 722 689 4.8
size
Revenue per pound (2)
Linehaul yield $ 16.29 $ 16.14 0.8
Fuel surcharge impact 1.18 0.79 2.1
Forward Air Complete impact 1.82 1.60 1.2
Total airport-to-airport $ 19.29 $ 18.53 4.1
yield
Logistics:
Miles
Owner operator (1) 19,907 17,916 8.1
Third party (1) 9,326 6,709 10.6
Total Miles 29,233 24,625 18.7
Revenue per mile $ 1.65 $ 1.58 4.4
Cost per mile $ 1.26 $ 1.22 3.3 %
(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 October 20, 2010