corplogoa22.jpg
NEWS RELEASE

FORWARD AIR CORPORATION REPORTS FOURTH QUARTER 2018 RESULTS
Reports record quarterly revenue, operating income and EBITDA
Reports record full year financial results, including revenue, operating income,
net income, EPS, EBITDA, cash flow from operations and free cash flow


GREENEVILLE, Tenn.- (BUSINESS WIRE) - February 7, 2019 - Forward Air Corporation (NASDAQ:FWRD) today reported financial results for the fourth quarter and year ended December 31, 2018.

Revenue for the quarter ended December 31, 2018 increased 9.7% to $356.6 million from $325.1 million for the same quarter in 2017. Income from operations was $35.0 million compared to $27.8 million in the prior year quarter. Net income during the quarter was $27.7 million compared to $34.7 million in the same quarter of 2017. Net income per diluted share for the fourth quarter of 2018 was $0.95 compared to $1.16 in the prior year quarter, which included a $0.53 benefit related to the fourth quarter 2017 enactment of the Tax Cuts and Jobs Act ("TCJA").
Revenue for the year ended December 31, 2018 increased 13.0% to $1.3 billion from $1.2 billion for the same period in 2017. Income from operations was $122.0 million compared to $108.8 million in the prior year. Net income during the period was $92.1 million compared to $87.3 million in the same period of 2017. Net income per diluted share was $3.12 for the year ended December 31, 2018 compared to $2.89 in the same period of 2017, which included a $0.53 benefit related to the 2017 enactment of the TCJA.
For the three and twelve months ended December 31, 2018, the Company generated $38.7 million and $152.6 million of cash flow from operations, respectively, compared to $25.7 million and $103.4 million for the same periods in 2017.
Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $45.9 million in the fourth quarter of 2018 compared to $38.3 million in the same period of 2017. EBITDA increased to $164.2 million for the year ended December 31, 2018 from $149.8 million for the same period in 2017. Free cash flow was $31.8 million in the fourth quarter of 2018 compared to $1.9 million in the prior year quarter. Free cash flow was $117.3 million in the year ended December 31, 2018 compared to $67.5 million in the same period of 2017. EBITDA and free cash flow are non-GAAP financial measures and reconciliations of these non-GAAP financial measures are provided in the attached financial tables.
Tom Schmitt, President and CEO, commenting on fourth quarter results said, “Our strong fourth quarter growth fueled our full year record results.  Consolidated revenues grew 9.7% driven by solid revenue management across the portfolio.  Consolidated operating income grew 25.9% from improved business mix and outstanding Intermodal performance.”
In closing, Mr. Schmitt said, “During 2018, we achieved record financial performance.  I would like to thank all of our teammates for their hard work in helping us achieve this milestone.”

Commenting on the Company’s fourth quarter results, Michael J. Morris, Senior Vice President and CFO, said, “Our fourth quarter earnings per share of $0.95 exceeded our $0.81 to $0.85 guidance range, driven by strong Intermodal results, improved safety performance and a low book tax rate.”  Regarding the Company’s first quarter 2019 guidance, Mr. Morris said, “We expect first quarter year-on-year revenue growth to be 6% to 10%.  We expect net income per diluted share to be between $0.60 and $0.64 in the first quarter of 2019 compared to $0.60 in the first quarter of 2018.”


1



On February 5, 2019, our Board of Directors declared a quarterly cash dividend of $0.18 per share of common stock.  The dividend is payable to shareholders of record at the close of business on March 7, 2019 and is expected to be paid on March 22, 2019.
This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.72 for the full year 2019, payable in quarterly increments of $0.18 per share of common stock.  The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by the Board of Directors each quarter after its review of the Company’s financial performance.

Also, on February 5, 2019, our Board approved a stock repurchase authorization plan for up to five million shares of the Company’s common stock. In connection with this action, the Board cancelled the Company’s 2016 stock repurchase authorization. The amount and timing of any repurchases under the Company’s new repurchase authorization will be at such prices as determined by management of the Company. Repurchases of common stock may also be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws. Stock repurchases may be commenced or suspended from time to time for any reason. The Company currently has approximately 28,909,744 shares outstanding as of February 5, 2019.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter 2018 results on Friday, February 8, 2019 at 9:00 a.m. EST. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, where investors can easily find or navigate to pertinent information about us, or by dialing (800) 230-1059. A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com beginning shortly after completion of the live call.

About Forward Air Corporation
Forward Air keeps your business moving forward by providing services within four business segments: Expedited LTL (provides expedited regional, inter-regional and national LTL services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, final mile solutions and customs brokerage by utilizing a comprehensive national network of terminals); Truckload Premium Services (provides expedited truckload brokerage, dedicated fleet services, as well as high-security and temperature-controlled logistics services); Intermodal (provides first-and last-mile high-value drayage services both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services); and Pool Distribution (provides high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region). For more information, visit our website at www.forwardaircorp.com.
Financial Statement Presentation
Our results reflect the impact of the new revenue recognition standard, adopted under ASC 606, on a full retrospective basis, which required us to adjust each prior reporting period presented to conform to the current year presentation.


2



Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
 
 
 
 
 
Three months ended
 
Year ended
 
December 31,
2018
 
December 31,
2017
 
December 31,
2018
 
December 31,
2017
 
 
 
(As Adjusted)
 
 
 
(As Adjusted)
Operating revenue:
 
 
 
 
 
 
 
Expedited LTL
$
196,220

 
$
181,202

 
$
747,562

 
$
655,838

Truckload Premium Services
49,600

 
52,753

 
192,582

 
201,752

Intermodal
52,730

 
44,377

 
201,006

 
154,684

Pool Distribution
60,861

 
51,742

 
194,117

 
168,483

Eliminations and other operations
(2,850
)
 
(4,938
)
 
(14,381
)
 
(11,411
)
Operating revenue
356,561

 
325,136

 
1,320,886

 
1,169,346

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Purchased transportation
162,804

 
155,964

 
613,636

 
545,091

Salaries, wages and employee benefits
82,548

 
73,562

 
300,230

 
265,842

Operating leases
21,036

 
16,594

 
75,677

 
63,799

Depreciation and amortization
10,837

 
10,477

 
42,183

 
41,055

Insurance and claims
8,738

 
8,199

 
35,180

 
29,578

Fuel expense
6,335

 
5,094

 
23,121

 
16,542

Other operating expenses
29,216

 
27,403

 
108,828

 
98,682

Total operating expenses
321,514

 
297,293

 
1,198,855

 
1,060,589

Income (loss) from operations
 
 
 
 
 
 
 
Expedited LTL
25,361

 
22,805

 
96,385

 
87,969

Truckload Premium Services
1,708

 
(519
)
 
5,055

 
3,215

Intermodal
6,933

 
3,415

 
23,266

 
12,963

Pool Distribution
2,175

 
2,706

 
5,870

 
6,378

Other operations
(1,130
)
 
(564
)
 
(8,545
)
 
(1,768
)
Income from operations
35,047

 
27,843

 
122,031

 
108,757

 
 
 
 
 
 
 
 
Other expense:
 
 
 
 
 
 
 
Interest expense
(457
)
 
(403
)
 
(1,783
)
 
(1,209
)
Other, net

 

 
(2
)
 
(11
)
Total other expense
(457
)
 
(403
)
 
(1,785
)
 
(1,220
)
Income before income taxes
34,590

 
27,440

 
120,246

 
107,537

Income tax expense (benefit)
6,906

 
(7,241
)
 
28,195

 
20,282

Net income and comprehensive income
$
27,684

 
$
34,681

 
$
92,051

 
$
87,255

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
0.95

 
$
1.17

 
$
3.14

 
$
2.90

Diluted
$
0.95

 
$
1.16

 
$
3.12

 
$
2.89

 
 
 
 
 
 
 
 
Dividends per share:
$
0.18

 
$
0.15

 
$
0.63

 
$
0.60




3



Expedited LTL Segment Information
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31,
 
Percent of
 
December 31,
 
Percent of
 
 
 
Percent
 
2018
 
Revenue
 
2017
 
Revenue
 
Change
 
Change
 
 
 
 
 
(As Adjusted)

 
 
 
 
 
 
Operating revenue
$
196.2

 
100.0
%
 
$
181.2

 
100.0
%
 
$
15.0

 
8.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Purchased transportation
89.8

 
45.8

 
85.1

 
46.9

 
4.7

 
5.5

Salaries, wages and employee benefits
43.2

 
22.0

 
39.0

 
21.5

 
4.2

 
10.8

Operating leases
11.0

 
5.6

 
9.1

 
5.0

 
1.9

 
20.9

Depreciation and amortization
5.8

 
3.0

 
5.6

 
3.1

 
0.2

 
3.6

Insurance and claims
3.6

 
1.8

 
5.1

 
2.8

 
(1.5
)
 
(29.4
)
Fuel expense
1.8

 
0.9

 
1.0

 
0.6

 
0.8

 
80.0

Other operating expenses
15.6

 
8.0

 
13.5

 
7.5

 
2.1

 
15.6

Total operating expenses
170.8

 
87.1

 
158.4

 
87.4

 
12.4

 
7.8

Income from operations
$
25.4

 
12.9
%
 
$
22.8

 
12.6
%
 
$
2.6

 
11.4
 %

Expedited LTL Operating Statistics
 
 
 
 
 
 
 
Three months ended
 
December 31,
 
December 31,
 
Percent
 
2018
 
2017
 
Change
 
 
 
(As Adjusted)
 
 
 
 
 
 
 
 
Business days
64

 
63

 
1.6
 %
 
 
 
 
 
 
Tonnage
 
 
 
 
 
    Total pounds ¹
648,423

 
666,308

 
(2.7
)
Pounds per day ¹
10,132

 
10,576

 
(4.2
)
 
 
 
 
 
 
Shipments
 
 
 
 
 
Total shipments ¹
1,104

 
1,136

 
(2.8
)
Shipments per day ¹
17

 
18

 
(3.9
)
Total shipments with pickup and/or delivery ¹
260

 
245

 
6.1

 
 
 
 
 
 
Weight per shipment
587

 
587

 

 
 
 
 
 
 
Revenue per hundredweight
$
26.72

 
$
24.25

 
10.2

Revenue per hundredweight, ex fuel
$
22.33

 
$
21.28

 
4.9

 
 
 
 
 
 
Revenue per shipment
$
157

 
$
142

 
10.6

Revenue per shipment, ex fuel
$
131

 
$
125

 
4.8
 %
 
 
 
 
 
 
¹ - In thousands
 
 
 
 
 

4




Truckload Premium Services Segment Information
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31,
 
Percent of
 
December 31,
 
Percent of
 
 
 
Percent
 
2018
 
Revenue
 
2017
 
Revenue
 
Change
 
Change
 
 
 
 
 
(As adjusted)
 
 
 
 
 
 
Operating revenue
$
49.6

 
100.0
%
 
$
52.8

 
100.0
 %
 
$
(3.2
)
 
(6.1
)%
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Purchased transportation
37.2

 
75.0

 
41.8

 
79.2

 
(4.6
)
 
(11.0
)
Salaries, wages and employee benefits
4.7

 
9.5

 
5.2

 
9.8

 
(0.5
)
 
(9.6
)
Operating leases
0.1

 
0.2

 
0.4

 
0.8

 
(0.3
)
 
(75.0
)
Depreciation and amortization
1.6

 
3.2

 
1.6

 
3.0

 

 

Insurance and claims
1.4

 
2.8

 
1.2

 
2.3

 
0.2

 
16.7

Fuel expense
0.7

 
1.4

 
1.0

 
1.9

 
(0.3
)
 
(30.0
)
Other operating expenses
2.2

 
4.4

 
2.1

 
4.0

 
0.1

 
4.8

Total operating expenses
47.9

 
96.6

 
53.3

 
100.9

 
(5.4
)
 
(10.1
)
Results from operations
$
1.7

 
3.4
%
 
$
(0.5
)
 
(0.9
)%
 
$
2.2

 
NM



Truckload Premium Services Operating Statistics
 
 
 
Three months ended
 
December 31,
 
December 31,
 
Percent
 
2018
 
2017
 
Change
 
 
 
(As Adjusted)
 
 
 
 
 
 
 
 
Total Miles ¹
19,485

 
24,516

 
(20.5
)%
Empty Miles Percentage
8.3
%
 
8.9
%
 
(6.7
)
Tractors (avg)
315

 
354

 
(11.0
)
Miles per tractor per week 2
1,886

 
2,585

 
(27.0
)
 
 
 
 
 
 
Revenue per mile
$
2.55

 
$
2.08

 
22.6

Cost per mile
$
2.02

 
$
1.77

 
14.1
 %
 
 
 
 
 
 
¹ - In thousands
2 - Calculated using Company driver and owner operator miles


5



Intermodal Segment Information
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31,
 
Percent of
 
December 31,
 
Percent of
 
 
 
Percent
 
2018
 
Revenue
 
2017
 
Revenue
 
Change
 
Change
 
 
 
 
 
(As Adjusted)
 
 
 
 
 
 
Operating revenue
$
52.7

 
100.0
%
 
$
44.4

 
100.0
%
 
$
8.3

 
18.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Purchased transportation
19.7

 
37.4

 
18.8

 
42.3

 
0.9

 
4.8

Salaries, wages and employee benefits
12.2

 
23.1

 
9.7

 
21.8

 
2.5

 
25.8

Operating leases
4.0

 
7.6

 
3.5

 
7.9

 
0.5

 
14.3

Depreciation and amortization
1.7

 
3.2

 
1.6

 
3.6

 
0.1

 
6.3

Insurance and claims
1.5

 
2.8

 
0.9

 
2.0

 
0.6

 
66.7

Fuel expense
1.7

 
3.2

 
1.2

 
2.7

 
0.5

 
41.7

Other operating expenses
5.0

 
9.5

 
5.3

 
11.9

 
(0.3
)
 
(5.7
)
Total operating expenses
45.8

 
86.9

 
41.0

 
92.3

 
4.8

 
11.7

Income from operations
$
6.9

 
13.1
%
 
$
3.4

 
7.7
%
 
$
3.5

 
102.9
 %

Intermodal Operating Statistics
 
 
 
Three months ended
 
December 31,
 
December 31,
 
Percent
 
2018
 
2017
 
Change
 
 
 
(As Adjusted)
 
 
 
 
 
 
 
 
Drayage shipments
81,566

 
76,007

 
7.3
%
Drayage revenue per shipment
$
560

 
$
519

 
7.9

Number of locations
20

 
19

 
5.3
%



6



Pool Distribution Segment Information
(In millions)
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended
 
December 31,
 
Percent of
 
December 31,
 
Percent of
 
 
 
Percent
 
2018
 
Revenue
 
2017
 
Revenue
 
Change
 
Change
 
 
 
 
 
(As Adjusted)
 
 
 
 
 
 
Operating revenue
$
60.9

 
100.0
%
 
$
51.7

 
100.0
%
 
$
9.2

 
17.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
Purchased transportation
18.5

 
30.4

 
14.6

 
28.2

 
3.9

 
26.7

Salaries, wages and employee benefits
22.2

 
36.5

 
18.9

 
36.6

 
3.3

 
17.5

Operating leases
6.0

 
9.9

 
3.8

 
7.4

 
2.2

 
57.9

Depreciation and amortization
1.7

 
2.8

 
1.7

 
3.3

 

 

Insurance and claims
1.4

 
2.3

 
1.5

 
2.9

 
(0.1
)
 
(6.7
)
Fuel expense
2.1

 
3.4

 
1.8

 
3.5

 
0.3

 
16.7

Other operating expenses
6.8

 
11.2

 
6.7

 
13.0

 
0.1

 
1.5

Total operating expenses
58.7

 
96.4

 
49.0

 
94.8

 
9.7

 
19.8

Income from operations
$
2.2

 
3.6
%
 
$
2.7

 
5.2
%
 
$
(0.5
)
 
(18.5
)%

Pool Operating Statistics
 
 
 
Three months ended
 
December 31,
 
December 31,
 
Percent
 
2018
 
2017
 
Change
 
 
 
(As Adjusted)
 
 
 
 
 
 
 
 
Cartons ¹
30,435

 
26,172

 
16.3
%
Revenue per carton
$
2.00

 
$
1.98

 
1.0

Terminals
28

 
28

 

 
 
 
 
 
 
¹ In thousands
 
 
 
 
 


7



Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
December 31,
2018
 
December 31,
 2017
 
 
 
(As Adjusted)
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
25,657

 
$
3,893

Accounts receivable, net
156,359

 
147,948

Other current assets
19,066

 
15,807

Total current assets
201,082

 
167,648

 
 
 
 
Property and equipment
413,900

 
399,235

Less accumulated depreciation and amortization
204,005

 
193,123

Net property and equipment
209,895

 
206,112

Goodwill and other acquired intangibles:
 

 
 

Goodwill
199,092

 
191,671

Other acquired intangibles, net of accumulated amortization
113,661

 
111,247

Total goodwill and other acquired intangibles, net
312,753

 
302,918

Other assets
36,485

 
15,944

Total assets
$
760,215

 
$
692,622

 
 
 
 
 
 
 
 
Liabilities and Shareholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
34,630

 
$
30,723

Accrued expenses
39,784

 
35,069

Current portion of debt and capital lease obligations
309

 
359

Total current liabilities
74,723

 
66,151

 
 
 
 
Debt and capital lease obligations, less current portion
47,335

 
40,588

Other long-term liabilities
47,739

 
24,104

Deferred income taxes
37,174

 
29,080


 

 
 

Shareholders’ equity:
 

 
 

Common stock
285

 
295

Additional paid-in capital
210,296

 
195,346

Retained earnings
342,663

 
337,058

Total shareholders’ equity
553,244

 
532,699

Total liabilities and shareholders’ equity
$
760,215

 
$
692,622







8



Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
 
 
 
 
Three months ended
 
December 31,
2018
 
December 31,
2017
 
 
 
(As Adjusted)
Operating activities:
 
 
 
Net income
$
27,684

 
$
34,681

Adjustments to reconcile net income to net cash provided by operating activities
 
 
 
Depreciation and amortization
10,837

 
10,477

Share-based compensation
3,024

 
2,138

(Gain) loss on disposal of property and equipment
(157
)
 
580

Provision for loss on receivables
191

 
26

Provision for revenue adjustments
707

 
924

Deferred income tax
1,418

 
(12,592
)
Changes in operating assets and liabilities
 
 
 
Accounts receivable
(8,792
)
 
(10,563
)
Prepaid expenses and other assets
2,315

 
207

Income taxes
1,937

 
(3,056
)
Accounts payable and accrued expenses
(456
)
 
2,831

Net cash provided by operating activities
38,708

 
25,653

 
 
 
 
Investing activities:
 
 
 
Proceeds from disposal of property and equipment
1,070

 
943

Purchases of property and equipment
(7,949
)
 
(24,655
)
Acquisition of business
(16,250
)
 
(640
)
Other
115

 
(150
)
Net cash used in investing activities
(23,014
)
 
(24,502
)
 
 
 
 
Financing activities:
 
 
 
Payments of debt and capital lease obligations
(74
)
 
(75
)
Borrowings on line of credit
7,000

 

Proceeds from exercise of stock options
239

 
1,630

Payments of cash dividends
(5,214
)
 
(4,468
)
Repurchase of common stock (repurchase program)
(21,141
)
 
(7,000
)
Common stock issued under employee stock purchase plan
242

 
232

Net cash used in by financing activities
(18,948
)
 
(9,681
)
Net decrease in cash
(3,254
)
 
(8,530
)
Cash at beginning of period
28,911

 
12,423

Cash at end of period
$
25,657

 
$
3,893





9



Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
 
Year ended
 
December 31,
2018
 
December 31,
2017
 
 
 
(As Adjusted)
Operating activities:
 
 
 
Net income
$
92,051

 
$
87,255

Adjustments to reconcile net income to net cash provided by operating activities
 

 
 

Depreciation and amortization
42,183

 
41,055

Change in fair value of earn-out liability
(455
)
 

Share-based compensation
10,549

 
8,103

(Gain) loss on disposal of property and equipment
(171
)
 
1,281

Provision for loss on receivables
139

 
1,814

Provision for revenue adjustments
3,628

 
3,055

Deferred income taxes
8,094

 
(12,068
)
Changes in operating assets and liabilities
 

 
 

Accounts receivable
(12,178
)
 
(33,457
)
Prepaid expenses and other assets
(2,565
)
 
(1,204
)
Income taxes
(1,256
)
 
(3,480
)
Accounts payable and accrued expenses
12,535

 
11,010

Net cash provided by operating activities
152,554

 
103,364

 
 
 
 
Investing activities:
 

 
 

Proceeds from disposal of property and equipment
7,059

 
2,440

Purchases of property and equipment
(42,293
)
 
(38,265
)
Acquisition of business, net of cash acquired
(19,987
)

(23,140
)
Other
(242
)
 
(222
)
Net cash used in investing activities
(55,463
)
 
(59,187
)
 
 
 
 
Financing activities:
 

 
 

Payments of debt and capital lease obligations
(302
)
 
(42,790
)
Proceeds from senior credit facility
7,000

 
55,000

Proceeds from exercise of stock options
3,921

 
7,272

Payments of cash dividends
(18,427
)
 
(18,052
)
Repurchase of common stock (repurchase program)
(66,126
)
 
(48,983
)
Common stock issued under employee stock purchase plan
479

 
458

Cash settlement of share-based awards for tax withholdings
(1,872
)
 
(1,700
)
Net cash used in financing activities
(75,327
)
 
(48,795
)
Net increase (decrease) in cash
21,764

 
(4,618
)
Cash at beginning of year
3,893

 
8,511

Cash at end of year
$
25,657

 
$
3,893





10



Forward Air Corporation Reconciliation of U.S. GAAP and Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP (also referred to herein as “reported”). However, the Company also uses “non-GAAP financial measures” that are derived on the basis of methodologies other than in accordance with GAAP. Specifically, the Company believes that meaningful analysis of its financial performance in 2018 and 2017 requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the Company’s performance.

This press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the three months and year ended December 31, 2018 and 2017 on a consolidated basis; and free cash flow for the three months and year ended December 31, 2018 and 2017. The Company believes that including these items will assist investors in understanding its core operating performance and allow for more accurate comparisons of results.

The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization), tax impacts and other adjustments as set out in the attached tables. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance stockholder value.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the tables below present, for the periods indicated, a reconciliation of the Company's presented non-GAAP financial measures to the most directly comparable GAAP financial measures.
Forward Air Corporation
Reconciliation to U.S. GAAP
(In thousands)
(Unaudited)
 
 
 
 
 
Three months ended
 
Year ended
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
 
 
 
(As Adjusted)
 
 
 
(As Adjusted)
Net income
$
27,684

 
$
34,681

 
$
92,051

 
$
87,255

Interest expense
457

 
403

 
1,783

 
1,209

Income tax expense (benefit)
6,906

 
(7,241
)
 
28,195

 
20,282

Depreciation and amortization
10,837

 
10,477

 
42,183

 
41,055

EBITDA
$
45,884

 
$
38,320

 
$
164,212

 
$
149,801

 
 
 
 
 
 
 
 
 
Three months ended
 
Year ended
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
 
 
 
(As Adjusted)
 
 
 
(As Adjusted)
Net cash provided by operating activities
$
38,708

 
$
25,653

 
$
152,553

 
$
103,364

Proceeds from disposal of property and equipment
1,070

 
943

 
7,059

 
2,440

Purchases of property and equipment
(7,949
)
 
(24,655
)
 
(42,293
)
 
(38,265
)
Free cash flow
$
31,829

 
$
1,941

 
$
117,319

 
$
67,539



11



The following table summarizes supplemental guidance information that management believes to be useful.

Forward Air Corporation
Additional Guidance Data
(In thousands, except per share data)
(Unaudited)
 
 
 
Three months ended
Actual
December 31, 2018
Net income
$
27,684

Income allocated to participating securities
(315
)
Numerator for diluted income per share - net income
$
27,369

 
 
Fully diluted share count
28,829

Diluted earnings per share
$
0.95

 
 
 
 
Projected
Full year 2019
Projected tax rate
25.5
%
 
 
Projected capital expenditures, net
$
38,000

 
 
 
Three months ended
Projected
December 31, 2019
Projected year end fully diluted share count
28,100




12



Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements included in this press release relate to expected 2019 guidance, including first quarter 2019 revenue growth, net income per diluted shares, full year 2019 projected tax rate, fully diluted share count (before consideration of future share repurchase), projected capital expenditures, the future declaration of dividends and the quarterly and full year 2019 anticipated dividends per share.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these 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, the creditworthiness of our customers and their ability to pay for services rendered, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2017 and quarterly reports on Form 10-Q filed thereafter.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

SOURCE: Forward Air Corporation

Forward Air Corporation
Michael J. Morris, 404-362-8933
mmorris@forwardair.com

13