NEWS RELEASE
FORWARD AIR CORPORATION REPORTS
FIRST QUARTER 2012 RESULTS

GREENEVILLE, Tenn.- (BUSINESS WIRE) - April 19, 2012 - Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the three months ended March 31, 2012.

Operating revenue for the quarter ended March 31, 2012 increased 14.1% to $137.1 million from $120.2 million for the same quarter in 2011. Income from operations was $16.8 million, compared with $13.3 million in the prior-year quarter. As a percent of operating revenue, income from operations increased to 12.3% from 11.1% for the same quarter last year. Net income during the period increased to $10.3 million from $7.9 million in the prior-year quarter. Income per diluted share for the first quarter of 2012 was $0.35 compared with $0.27 in the prior-year quarter.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the first quarter said, “Our team delivered another solid operating performance achieving top line growth of 14% and impressive operating income and earnings growth of 26.3% and 29.6%, respectively.”
 
Commenting further, Mr. Campbell said, “Within our Forward Air, Inc. business segment, we continued to experience strong demand for our airport-to-airport service offering which was nicely complemented by considerable revenue growth from both our Logistics group, as well as, from our Forward Air Complete pick-up and delivery product. In the first quarter, Logistics revenue grew over 29% while Complete revenues grew nearly 31% as we achieved a record 19.4% attachment rate to our linehaul shipments.”

Turning to the Forward Air Solutions business segment, Mr. Campbell said, “Solutions showed year-over-year improvement and generated a small profit in March. As we exit the historically most challenging quarter for this service offering, we anticipate continued improvement in our year-over-year results as a number of key initiatives, begun in the first quarter, are completed and fully implemented.”

In closing, Mr. Campbell said, “As always, I would like to thank the Forward Air team of employees and independent contractors for their dedication and hard work. Without them, these results would not have been possible.”

Commenting on the Company's guidance for the second quarter, Rodney L. Bell, Senior Vice President and CFO said, “We anticipate that our second quarter 2012 revenues will increase in the range of 8% to 12% over the comparable 2011 period, and we expect income per diluted share to be between $0.43 and $0.47 per share. This compares to $0.40 per share in the second quarter of 2011.”


1


Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2012 results on Friday, April 20, 2012 at 9:00 a.m. EDT. The Company's conference call will be available online at www.forwardair.com or by dialing 800-230-1951. 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 85 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 20 cities within the Mid-Atlantic, Southeast, Midwest and Southwestern United States.

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Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
 
 
 
Three months ended
 
March 31,
2012
 
March 31,
2011
Operating revenue:
 
 
 
Forward Air
 
 
 
Airport-to-airport
$
90,627

 
$
82,147

Logistics
21,313

 
16,494

Other
6,202

 
6,403

Forward Air Solutions
 
 
 
Pool distribution
18,939

 
15,157

Total operating revenue
137,081

 
120,201

 
 
 
 
Operating expenses:
 

 
 
Purchased transportation
 
 
 
Forward Air
 
 
 
Airport-to-airport
36,758

 
32,593

Logistics
15,716

 
12,799

Other
1,598

 
1,473

Forward Air Solutions
 
 
 
Pool distribution
5,126

 
3,457

Total purchased transportation
59,198

 
50,322

Salaries, wages and employee benefits
33,174

 
30,495

Operating leases
7,106

 
6,706

Depreciation and amortization
5,121

 
5,082

Insurance and claims
2,798

 
2,175

Fuel expense
2,541

 
2,388

Other operating expenses
10,354

 
9,747

Total operating expenses
120,292

 
106,915

Income from operations
16,789

 
13,286

 
 
 
 
Other income (expense):
 

 
 
Interest expense
(51
)
 
(195
)
Other, net
17

 
16

Total other expense
(34
)
 
(179
)
Income before income taxes
16,755

 
13,107

Income taxes
6,482

 
5,238

Net income and comprehensive income
$
10,273

 
$
7,869

 
 
 
 
Net income per share:
 

 
 
Basic
$
0.36

 
$
0.27

Diluted
$
0.35

 
$
0.27

Weighted average shares outstanding:
 

 
 
Basic
28,692

 
29,135

Diluted
29,363

 
29,371

 
 
 
 
Dividends per share:
$
0.07

 
$
0.07




3


Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
March 31,
2012
 
December 31, 2011 (a)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
69,397

 
$
58,801

Accounts receivable, net
75,376

 
70,922

Other current assets
10,669

 
9,994

Total current assets
155,442

 
139,717

 
 
 
 
Property and equipment
235,138

 
223,135

Less accumulated depreciation and amortization
96,531

 
93,267

Net property and equipment
138,607

 
129,868

Goodwill and other acquired intangibles:
 

 
 

Goodwill
43,332

 
43,332

Other acquired intangibles, net of accumulated amortization
25,521

 
26,668

Total net goodwill and other acquired intangibles
68,853

 
70,000

Other assets
1,858

 
1,566

Total assets
$
364,760

 
$
341,151

 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
16,563

 
$
12,392

Accrued expenses
23,163

 
20,986

Current portion of debt and capital lease obligations
521

 
552

Total current liabilities
40,247

 
33,930

 
 
 
 
Debt and capital lease obligations, less current portion
228

 
333

Other long-term liabilities
9,470

 
8,860

Deferred income taxes
10,058

 
11,126


 

 
 

Shareholders’ equity:
 

 
 

Common stock
289

 
285

Additional paid-in capital
52,212

 
42,212

Retained earnings
252,256

 
244,405

Total shareholders’ equity
304,757

 
286,902

Total liabilities and shareholders’ equity
$
364,760

 
$
341,151

 
 
 
 
(a) Taken from audited financial statements, which are not presented in their entirety.


4


Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
 
 
 
Three months ended
 
March 31,
2012
 
March 31,
2011
Operating activities:
 
 
 
Net income
$
10,273

 
$
7,869

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
5,121

 
5,082

Share-based compensation
1,606

 
1,443

Loss on disposal of property and equipment
196

 
21

Provision for loss (recovery) on receivables
110

 
(50
)
Provision for revenue adjustments
427

 
484

Deferred income taxes
(804
)
 
20

Tax benefit for stock options exercised
(204
)
 
(88
)
Changes in operating assets and liabilities
 
 
 
Accounts receivable
(2,491
)
 
(6,058
)
Prepaid expenses and other current assets
(925
)
 
(881
)
Accounts payable and accrued expenses
4,646

 
7,377

Net cash provided by operating activities
17,955

 
15,219

 
 
 
 
Investing activities:
 
 
 
Proceeds from disposal of property and equipment
205

 
279

Purchases of property and equipment
(13,098
)
 
(7,329
)
Other
(306
)
 
308

Net cash used in investing activities
(13,199
)
 
(6,742
)
 
 
 
 
Financing activities:
 
 
 
Payments of debt and capital lease obligations
(136
)
 
(171
)
Proceeds from exercise of stock options
8,192

 
4,838

Payments of cash dividends
(2,034
)
 
(2,055
)
Cash settlement of share-based awards for minimum tax withholdings
(386
)
 
—

Tax benefit for stock options exercised
204

 
88

Net cash provided by financing activities
5,840

 
2,700

Net increase in cash
10,596

 
11,177

Cash at beginning of period
58,801

 
74,504

Cash at end of period
$
69,397

 
$
85,681




5


Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
 
 
 
Three months ended
 
March 31,
 
Percent of
 
March 31,
 
Percent of
 
 
 
Percent
 
2012
 
Revenue
 
2011
 
Revenue
 
Change
 
Change
Operating revenue
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
$
118.4

 
86.4
 %
 
$
105.2

 
87.5
 %
 
$
13.2

 
12.5
 %
      FASI
19.2

 
14.0

 
15.2

 
12.6

 
4.0

 
26.3

      Intercompany eliminations
(0.5
)
 
(0.4
)
 
(0.2
)
 
(0.1
)
 
(0.3
)
 
150.0

            Total
137.1

 
100.0

 
120.2

 
100.0

 
16.9

 
14.1

 
 
 
 
 
 
 
 
 
 
 
 
Purchased transportation
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
54.3

 
45.9

 
46.9

 
44.6

 
7.4

 
15.8

      FASI
5.3

 
27.6

 
3.6

 
23.7

 
1.7

 
47.2

      Intercompany eliminations
(0.4
)
 
80.0

 
(0.2
)
 
100.0

 
(0.2
)
 
100.0

            Total
59.2

 
43.2

 
50.3

 
41.8

 
8.9

 
17.7

 
 
 
 
 
 
 
 
 
 
 
 
Salaries, wages and employee benefits
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
25.7

 
21.7

 
23.9

 
22.7

 
1.8

 
7.5

      FASI
7.5

 
39.1

 
6.6

 
43.4

 
0.9

 
13.6

            Total
33.2

 
24.2

 
30.5

 
25.4

 
2.7

 
8.9

 
 
 
 
 
 
 
 
 
 
 
 
Operating leases
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
5.1

 
4.3

 
4.9

 
4.7

 
0.2

 
4.1

      FASI
2.0

 
10.4

 
1.8

 
11.8

 
0.2

 
11.1

            Total
7.1

 
5.2

 
6.7

 
5.6

 
0.4

 
6.0

 
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
4.0

 
3.4

 
4.1

 
3.9

 
(0.1
)
 
(2.4
)
      FASI
1.1

 
5.7

 
1.0

 
6.6

 
0.1

 
10.0

            Total
5.1

 
3.7

 
5.1

 
4.2

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
Insurance and claims
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
2.1

 
1.8

 
1.6

 
1.5

 
0.5

 
31.3

      FASI
0.7

 
3.6

 
0.6

 
3.9

 
0.1

 
16.7

            Total
2.8

 
2.0

 
2.2

 
1.8

 
0.6

 
27.3

 
 
 
 
 
 
 
 
 
 
 
 
Fuel expense
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
1.1

 
0.9

 
1.1

 
1.0

 
—

 
—

      FASI
1.4

 
7.3

 
1.3

 
8.6

 
0.1

 
7.7

            Total
2.5

 
1.8

 
2.4

 
2.0

 
0.1

 
4.2

 
 
 
 
 
 
 
 
 
 
 
 
Other operating expenses
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
8.7

 
7.3

 
8.4

 
8.0

 
0.3

 
3.6

      FASI
1.8

 
9.4

 
1.3

 
8.6

 
0.5

 
38.5

      Intercompany eliminations
(0.1
)
 
20.0

 
—

 
—

 
(0.1
)
 
(100.0
)
            Total
10.4

 
7.6

 
9.7

 
8.1

 
0.7

 
7.2

 
 
 
 
 
 
 
 
 
 
 
 
Income (loss) from operations
 
 
 
 
 
 
 
 
 
 
 
      Forward Air
17.4

 
14.7

 
14.3

 
13.6

 
3.1

 
21.7

      FASI
(0.6
)
 
(3.1
)
 
(1.0
)
 
(6.6
)
 
0.4

 
(40.0
)
            Total
$
16.8

 
12.3
 %
 
$
13.3

 
11.1
 %
 
$
3.5

 
26.3
 %



6


Forward Air Corporation
Forward Air Inc. Operating Statistics
 
 
 
 
 
 

Three months ended

March 31,

March 31,

Percent

2012

2011

Change






Operating ratio
85.3
%

86.4
%

(1.3
)%






Business days
64.0


64.0


—

Business weeks
12.8


12.8


—













Airport-to-airport:





Tonnage





    Total pounds ¹
422,139


400,558


5.4

    Average weekly pounds ¹
32,980


31,294


5.4







Linehaul shipments





    Total linehaul
637,438


572,456


11.4

    Average weekly
49,800


44,723


11.4







Forward Air Complete shipments
123,366


83,006


48.6

As a percentage of linehaul shipments
19.4
%

14.5
%

33.8







Average linehaul shipment size
662


700


(5.4
)






Revenue per pound ²





    Linehaul yield
$
16.89


$
16.69


1.0

    Fuel surcharge impact
1.91


1.66


1.2

    Forward Air Complete impact
2.70


2.18


2.5

Total airport-to-airport yield
$
21.50


$
20.53


4.7













Logistics:





Miles





    Owner operator ¹
8,920


6,980


27.8

    Third party ¹
3,687


3,259


13.1

Total Miles
12,607


10,239


23.1







Revenue per mile
$
1.69


$
1.62


4.3







Cost per mile
$
1.25


$
1.25


—
 %












¹ - In thousands





² - In cents per pound; percentage change is expressed as a percent of total yield.

7




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.

-END-

CONTACT:
Forward Air Corporation
Rodney L. Bell, 423-636-7000
rbell@forwardair.com



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