Forward Air Corporation Reports Third Quarter 2007 Results
Forward Air Corporation Reports Third Quarter 2007 Results
GREENEVILLE, Tenn.--(BUSINESS WIRE)--
Forward Air Corporation (NASDAQ:FWRD) today reported results for the third quarter and nine months ended September 30, 2007.
Operating revenue for the quarter ended September 30, 2007 increased 8.1% to $97.7 million from $90.4 million for the same quarter in 2006. Income from operations was $16.9 million, compared with $19.8 million in the prior-year quarter, a decrease of 14.6%. As a percent of operating revenue, income from operations decreased to 17.3% from 21.9% for the same quarter last year. Net income during the period decreased by $1.9 million, or 15.5% to $10.8 million from $12.7 million in the prior-year quarter. Income per diluted share for the third quarter of 2007 was $0.36 compared with $0.41 in the prior-year quarter, a decrease of 12.2%.
Operating revenue for the nine months ended September 30, 2007 increased 7.2% to $278.2 million from $259.6 million for the same period in 2006. Income from operations was $51.1 million, compared with $56.5 million in the prior-year period, a decrease of 9.7%. As a percent of operating revenue, income from operations decreased to 18.3% for the first nine months of 2007 from 21.8% in 2006. Net income during the period decreased 11.5% to $32.5 million from $36.8 million in the prior-year period. Income per diluted share for the first nine months of 2007 was $1.08 compared with $1.16 in the prior-year period, a decrease of 6.9%.
Bruce Campbell, President, CEO and Chairman, commented, "As we previously announced, our core airport-to-airport business was impacted by the sluggish freight environment resulting in pressure on both our volumes and pricing yields. Despite these difficult conditions, the Forward Air model continues to work, producing one of the best operating margins in the industry. Our team will continue to work hard to provide our customers the best possible value for their transportation needs while striving to position us for future success."
Commenting further, Mr. Campbell stated, "We continue to make strides in our "Completing the Model" initiatives that we introduced at the beginning of this year, led once again by strong growth in our logistics initiative. Additionally, we are pleased with the progress of our pool distribution initiative driven by our recent acquisition of pool distributor, USA Carriers (soon to be re-branded "Forward Air Solutions"), and we look forward to more progress in this segment as we move forward."
Rodney Bell, Senior Vice President and CFO, commented, "The Company's recently announced $100 million credit facility will provide us the financial flexibility needed to take advantage of acquisition opportunities and will continue to enable us to prudently repurchase our company stock."
Segment Information:
Three Months Ended Nine Months Ended
-------------------- --------------------
September September September September
30, 30, 30, 30,
2007 2006 2007 2006
In thousands
------------------------------------------
Income from Operations:
Forward Air $ 16,437 $ 19,788 $ 50,590 $ 56,511
Forward Air Solutions 467 -- 467 --
---------- ---------- ---------- ----------
Total: $ 16,904 $ 19,788 $ 51,057 $ 56,511
========== ========== ========== ==========
Review of Financial Results
Forward Air will hold a conference call to discuss third quarter 2007 results on Monday, October 22, 2007, at 6:00 p.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
Forward Air is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of 81 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 Nine Months Ended
------------------- -------------------
September September September September
30, 30, 30, 30,
2007 2006 2007 2006
--------- --------- --------- ---------
Operating revenue:
Forward Air
Airport-to-airport $ 75,671 $ 77,220 $ 227,128 $ 223,118
Logistics 11,785 8,236 30,650 21,964
Other 5,220 4,985 15,399 14,468
Forward Air Solutions
Pool distribution 5,070 -- 5,070 --
--------- --------- --------- ---------
Total operating revenue 97,746 90,441 278,247 259,550
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 29,779 30,794 90,049 86,214
Logistics 9,255 5,949 23,551 15,726
Other 1,530 1,196 4,303 3,568
Forward Air Solutions
Pool distribution 720 -- 720 --
--------- --------- --------- ---------
Total purchased
transportation 41,284 37,939 118,623 105,508
Salaries, wages and
employee benefits 22,026 18,385 61,004 55,508
Operating leases 4,474 3,750 12,091 10,619
Depreciation and
amortization 2,855 2,083 7,729 6,534
Insurance and claims 1,649 1,556 5,251 4,747
Other operating expenses 8,554 6,940 22,492 20,123
--------- --------- --------- ---------
Total operating expenses 80,842 70,653 227,190 203,039
--------- --------- --------- ---------
Income from operations 16,904 19,788 51,057 56,511
Other income (expense):
Interest expense (55) (17) (136) (58)
Other, net 304 793 1,525 2,314
--------- --------- --------- ---------
Total other income 249 776 1,389 2,256
--------- --------- --------- ---------
Income before income taxes 17,153 20,564 52,446 58,767
Income taxes 6,400 7,839 19,925 22,013
--------- --------- --------- ---------
Net income $ 10,753 $ 12,725 $ 32,521 $ 36,754
--------- --------- --------- ---------
Net income per share:
Basic $ 0.36 $ 0.41 $ 1.09 $ 1.18
========= ========= ========= =========
Diluted $ 0.36 $ 0.41 $ 1.08 $ 1.16
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 29,472 30,863 29,868 31,247
Diluted 29,866 31,235 30,229 31,704
FORWARD AIR CORPORATION
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
September December
30, 31,
2007 2006 (a)
--------- --------
Assets:
Current assets:
Cash $ 8,306 $ 8,231
Short-term investments 10,600 61,650
Accounts receivable, net 55,665 48,486
Other current assets 6,073 9,196
---------- ---------
Total current assets 80,644 127,563
Property and equipment 152,044 101,190
Less accumulated depreciation and amortization 52,675 47,875
---------- ---------
Total property and equipment, net 99,369 53,315
Goodwill and other acquired intangibles:
Goodwill 15,588 15,588
Other acquired intangibles, net 18,925 10,731
---------- ---------
Total goodwill and other acquired intangibles 34,513 26,319
Other assets 1,438 5,817
---------- ---------
Total assets $ 215,964 $ 213,014
========== =========
Liabilities and Shareholders' Equity:
Current liabilities:
Accounts payable $ 9,689 $ 7,949
Accrued expenses 10,780 11,144
Current portion of debt and capital lease
obligations 859 40
---------- ---------
Total current liabilities 21,328 19,133
Debt and capital lease obligations, less current
portion 983 796
Other long-term liabilities 3,370 1,271
Deferred income taxes 7,457 6,587
Shareholders' equity:
Common stock 295 304
Additional paid in capital 1,896 --
Retained earnings 180,635 184,923
---------- ---------
Total shareholders' equity 182,826 185,227
---------- ---------
Total liabilities and shareholders' equity $ 215,964 $ 213,014
========== =========
(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)
Nine Months Ended
--------------------
September September
30, 30,
2007 2006
--------- ---------
Operating activities:
Net income $ 32,521 $ 36,754
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 7,729 6,534
Share-based compensation 2,429 923
Gain on sale of property and equipment (215) (143)
Provision for (recovery) loss on receivables (23) 134
Provision for revenue adjustments 1,801 1,571
Deferred income taxes 1,212 66
Tax benefit of stock options exercised (362) (1,549)
Changes in operating assets and liabilities, net
of acquired assets and liabilities:
Accounts receivable (6,727) (9,153)
Prepaid expenses and other current assets 3,913 51
Accounts payable and accrued expenses 1,478 2,985
---------- ----------
Net cash provided by operating activities 43,756 38,173
Investing activities:
Proceeds from disposal of property and equipment 327 3,275
Purchases of property and equipment (44,613) (9,914)
Deposits in escrow for construction of
facilities -- (4,793)
Acquisition of business, net of cash acquired (12,983) --
Proceeds from sales or maturities of available-
for-sale securities 133,310 193,905
Purchases of available-for-sale securities (82,260) (175,705)
Other (881) 42
---------- ----------
Net cash (used in) provided by investing
activities (7,100) 6,810
Financing activities:
Payments of capital lease obligations (207) (28)
Payments on line of credit -- (1,504)
Proceeds from exercise of stock options 881 4,231
Payments of cash dividends (6,293) (6,548)
Common stock issued under employee stock
purchase plan 138 115
Repurchase of common stock (31,220) (38,774)
Cash settlement of share-based awards for
minimum tax withholdings (242) --
Tax benefit of stock options exercised 362 1,549
---------- ----------
Net cash used in financing activities (36,581) (40,959)
---------- ----------
Net increase in cash 75 4,024
Cash at beginning of period 8,231 332
---------- ----------
Cash at end of period $ 8,306 $ 4,356
========== ==========
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 22, 2007