When it’s bigger than a box and it really matters, “Think Forward” Investor Presentation June 2019 NASDAQ:FWRD www.ForwardAirCorp.com


 
Forward Looking Statements Disclosure Today’s presentation and discussion will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “estimates,” or similar expressions are intended to identify these forward-looking statements. These statements, which include statements regarding our ability to leverage our strong demand execution capabilities across all business segments; our growth opportunities and strategies for each of our business segments and potential positive impact to our financial and operational results; the opportunity to expand our business through acquisitions; the potential to grow our national footprint and customer base (including to 3PLs and international freight forwarders); the impact of our IT initiatives including business intelligence tools such as data-driven pricing and improved operating systems; positive effects of safety, sustainability and community initiatives; expected capital allocation activities including expectations relating to capital expenditures, dividends, share repurchases and leverage; and medium-term revenue, EBIT and ROIC goals are based on Forward Air’s current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. For further information, please refer to Forward Air’s reports and filings with the Securities and Exchange Commission. To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), we have included the following non-GAAP financial information in this presentation: adjusted revenue, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating income, adjusted operating margin, adjusted income taxes, adjusted net income, adjusted EPS and free cash flow. The reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the Appendix to this presentation. Because these non-GAAP financial measures exclude certain items as described herein, they may not be indicative of the results that the Company expects to recognize for future periods. As a result, these non-GAAP financial measures should be considered in addition to, and not a substitute for, financial information prepared in accordance with GAAP. 2


 
History Origins: Expedited Ground Alternative to Airline Linehaul 1981 – Landair Services “Time definite Truckload services for the air cargo industry” Asset-based Truckload 1990 – Forward Air Operations “Scheduled LTL services to air freight forwarders, air cargo carriers & airlines” of Landair Services Asset-light LTL 1.2M lbs/week 1993 – Landair IPO 1998 – Forward Air Separation “Largest and most comprehensive surface transportation network for deferred air freight” (Landair spin-off) 17.3M lbs/week • Speedy (1994) • Dedicated Transportation Services (2000) • TQI Holdings (2013) • Rocket/Red Arrow (1996) • Expedited Delivery Services (2001) Organic • CST + 8 tuck-ins (2014-2018) • Adams Air Cargo (1997) • Xpress Global (2005) + M&A • Towne Air Freight (2015) Growth • Quick Delivery Service (1999) • Black Hawk Freight Services (2007) • FSA Logistix (2019) • LTD Air Cargo (1999) • USAC (2007) + Service Express (2008) + Pinch (2008) 2019 “Asset-light freight and logistics company” Expedited LTL: 50.2M lbs/week 3


 
Grounding Air Freight Simple Concept: Grounding an Airline Freight Move Benefits Cheaper On Time Less Carbon Emissions 4


 
Precision Execution 38 Years of A2A Experience Trained Our Precision Execution “Muscle” Expedited Services Scheduled Network Tight Time Windows A2A Premium Handling Precision Execution Asset Light 5


 
Muscle Development Training, Developing and Building Customer Trust in Our Precision Execution “The 10,000 hours rule says that if you look Trained our precision execution muscle for over 30 years at any kind of cognitively complex field, doing what we do best over a million times from playing chess to being a neurosurgeon, Train we see this incredibly consistent pattern that Think Malcolm Gladwell’s 10,000 hours of practice rule you cannot be good at that unless you practice for 10,000 hours.” – Malcom Gladwell Stretching a muscle leads to increased muscle control, flexibility and range of motion Near Far For us, this reflects stretching LTL beyond A2A and into Stretch Stretch Stretch PUD. Then stretching that same precision execution muscle into Final Mile, Premium Intermodal Drayage, aggregation into Truckload and scheduled mall deliveries Trust is a muscle too, and it’s a muscle that can only be Our customers can focus on whatever strengthened through exercising it is important for them. Trust Customers start to trust in our muscle, and the reliability of You do what you do best. our operations We've got you covered. 6


 
Forward Air Portfolio Stretching this Muscle to Other Modes LTL Pickup & Delivery Final Mile Intermodal Drayage A2A Expedited Truckload Precision Execution Pool Distribution 7


 
LTL Footprint 8


 
LTL Footprint with Pickup and Delivery 9


 
Final Mile Footprint 10


 
Intermodal Footprint 11


 
TLS Footprint 12


 
Pool Distribution Footprint 13


 
New Forward Air When it is bigger than a box and it really matters, “Think Forward” 14


 
Forward Air Footprint 15


 
Mega Trends Supply Chain Trends Increasingly Demand Precision Execution E-Commerce Final Mile Precision Omni Growth Execution Channel Regional Supply Chain 16


 
Addressable Market Significant Opportunity for Future Growth Source: Studies performed by Tompkins International and SJ Consulting LTM Business Unit Revenue TAM TAM Comments $M at 3/31/19 $M Expedited LTL 756 5,500 $1,500 traditional A2A + $4,000 3PL Intermodal 207 7,100 Midwest + SE region Truckload Premium Services 192 3,000 $1,500 expedited + $1,500 medical / refrigerated Pool Distribution 197 4,000 $1,500 retail + $2,500 other verticals Intercompany Eliminations (12) Total 1,340 19,600 FSA Logistix (run rate) 75 6,800 Pro Forma 1,415 26,400 ~ 5% of estimated total addressable market 17


 
Operating Model Driven By Teams that Focus on What They Do Best Growth Management Compete Sales Pricing Business Development Collectively Marketing Customer Service Expedited LTL Intermodal Truckload Pool Focused LTL Operations Operations Operations Operations Factories Final Mile Operations Shared Services Shared Support Finance & Accounting Insurance & Claims Recruiting Legal Human Resources IT 18


 
Management Team Seasoned Leadership Team Tom Schmitt As of September 1, 2018 Chairman, President and CEO Previous: Schenker AG, Purolator, FedEx Matt Casey 1 year with Forward Air SVP, Safety Previous: Forest City Technologies, Panther Premium Logistics Michael Hance 12 years with Forward Air Chief Legal Officer Previous: Baker, Donelson, Bearman, Caldwell & Berkowitz PLC Matthew Jewell 18 years with Forward Air Chief Commercial Officer Previous: Austin & Sparks, PC Kyle Mitchin 5 years with Forward Air Chief People Officer Previous: Panther Premium Logistics Mike Morris 3 years with Forward Air Chief Financial Officer Previous: XPO, Con-way Chris Ruble 22 years with Forward Air Chief Operating Officer Previous: FedEx Jay Tomasello Joined Forward Air Chief Information Officer Previous: FedEx 19


 
Social Responsibility SAFETY SUSTAINABILITY COMMUNITY/SOCIAL Applying innovation and Implementing new practices and Donating time, materials and enhanced safety practices to technologies to incorporate financial resources to support drive safer operating sustainability objectives in our the communities where we live environments operations and growth strategies and work Adopting in-vehicle safety . Increasing Forward Air’s . Addressing the societal issues technology such as event landfill diversion rate by caused by human trafficking recorders and risk alerts to partnering with Waste through partnering with facilitate safer driving Harmonics Truckers Against Trafficking . Improving fuel efficiency and . Volunteering, fundraising and Implementing workplace safety reducing emissions by partnering with various initiatives to identify and reduce partnering with the EPA Smart organizations across 53 of our environmental impact of Way program locations nationwide chemicals being transported 20


 
Financial Overview


 
2018 Results Record Year Across Every Major Financial Metric ($M except per share) 2017 2018 % Change Revenue 1,169.3 1,320.9 13.0% Operating Income 108.8 122.0 12.1% Net Income 87.3 92.1 5.5% EPS $2.89 $3.12 8.0% EBITDA 149.9 164.2 9.5% Free Cash Flow 67.6 117.3 73.5% Note: EBITDA and Free Cash Flow are non-GAAP metrics. See reconciliation to Operating Income (GAAP) and Operating Cash Flow (GAAP) in the Appendix 22


 
1Q19 Results Record First Quarter Across Every Major Financial Metric ($M except per share) 1Q18 1Q19 % Change Revenue 302.6 321.5 6.2% Operating Income 24.2 24.7 2.1% Net Income 17.7 18.4 4.0% EPS $0.60 $0.64 6.7% EBITDA 34.9 35.5 1.7% Free Cash Flow 35.2 37.8 7.4% Note: EBITDA and Free Cash Flow are non-GAAP metrics. See reconciliation to Operating Income (GAAP) and Operating Cash Flow (GAAP) in the Appendix 23


 
LTM Results ($M except per share) LTM 2018 2017 Revenue 1,339.8 1,320.9 1,169.3 Operating Income 122.5 122.0 108.8 Net Income 92.6 92.1 87.3 EPS $3.17 $3.12 $2.89 EBITDA 164.9 164.2 149.9 Free Cash Flow 119.9 117.3 67.6 Debt / EBITDA 0.3 x 0.3 x 0.3 x ROIC 16.3% 16.2% 13.4% Note:EBITDA and Free Cash Flow are non-GAAP metrics. See reconciliation to Operating Income (GAAP) and Operating Cash Flow (GAAP) in the Appendix Return on Investor Capital (ROIC) is calculated as Non Operating Profit After Tax (adjusted for the amortization of intangibles) divided by Operating Invested Capital 24


 
Summary Financials Double Digit Growth Rates This Decade 1 1 Revenue EBIT (CAGR = 13%) (CAGR = 11%) 1,400 125 1,200 1,000 100 GAAP) 800 GAAP) - 75 - 600 50 400 $M $M (non 200 $M (non 25 - 3 - 3,4 5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 1,2 EBITDA EPS 1 (CAGR = 10%) (CAGR = 14%) 180 3.50 160 3.00 140 ) 120 2.50 GAAP) - 2.00 100 GAAP 80 - 1.50 60 1.00 ($non $M $M (non 40 20 0.50 - 0.00 3,4 5 6 7 2010 2011 2012 2013 2014 2015 2016 2017 2018 2010 2011 2012 2013 2014 2015 2016 2017 2018 1 Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010-2013 5 Adjusted to exclude $42.4 million for the TQI impairment charge (non-GAAP) 2 See GAAP to Non-GAAP reconciliation of this non-GAAP metric in the Appendix 6 Adjusted to exclude $0.29 of costs related to the Towne integration (non-GAAP) 3 Adjusted to exclude $0.6 million of revenue related to the Towne integration (non-GAAP) 7 Adjusted to exclude $1.18 for the TQI impairment charge (non-GAAP) 25 4 Adjusted to exclude $23.7 million of costs related to the Towne integration (non-GAAP)


 
Cash Flow Strong Free Cash Flow and Conversion 125 160% High cash flow business 140% model 100 . Operating leverage without 120% capital expenditure intensity 100% 75 5-year average free cash 80% flow conversion of 102% GAAP) - 50 60% . Swings driven primarily by working capital from Conversion ($M non ($M 40% 25 acquired companies Free Free CashFlow 20% Expect free cash flow to 0 0% 2014 2015 2016 2017 2018 approximate net income over the medium term FCF Conversion Rate Note: FCF Conversion defined as Free Cash Flow (Operating Cash Flow less Net Capital Expenditures) divided by Net Income (non-GAAP) 26 See reconciliation of Free Cash Flow (non-GAAP) to Operating Cash Flow (GAAP) in the Appendix


 
Capital Returned to Shareholders Commitment to Return Capital to Shareholders Shareholder Returns Dividends Share Repurchase 90 80 70 60 50 $M 40 30 20 10 - 2014 2015 2016 2017 2018 27


 
Appendix


 
LTL: Operations Overview 2018 OPERATIONS Terminals 92 PUD Zip Codes 92% Tractors ~1,350 Trailers ~4,200 Employees ~2,700 Owner-Operators ~900 Daily Lbs. 10M Daily Lanes Served ~8,200 Daily Shipments ~16,400 Lbs. per Shipment 614 Warehouse Space (sq. ft.) 3.4M 29


 
LTL: Final Mile Entered market with 2015 Towne acquisition . Small final mile operation, serving 4 markets and generating $13M in annualized revenue Grew organically to 8 markets generating $39M in revenue in 2018 Operated at LTL-like margins Significantly expanded footprint with FSA Logistix acquisition . Grew footprint to 63 terminals 300 Independent Contractors servicing 500+ routes daily Meaningful platform for future organic and inorganic growth 30


 
LTL: Financial Overview Revenue1 EBIT 1 (CAGR = 11%) (CAGR = 5%) 800 120 700 100 600 80 500 GAAP) GAAP) - 400 - 60 300 $M $M (non $M $M (non 40 200 20 100 - - 3 3,4 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2018 Results 2 2 2 Revenue EBIT EBIT Margin EBITDA EBITDA Margin $747.6 M $96.4 M 12.9% $118.9 M 15.9% 1 Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010-2013 3 Adjusted to exclude $0.6 million of revenue related to the Towne integration (non-GAAP) 2 See GAAP to Non-GAAP reconciliation of this non-GAAP metric in the Appendix 4 Adjusted to exclude $23.7 million of costs related to the Towne integration (non-GAAP) 31


 
Intermodal: Operations Overview 2018 OPERATIONS Terminals 22 Tractors ~220 Trailers ~175 Chassis ~370 Employees ~670 Owner-Operators ~725 Daily Shipments ~1,200 CFS Space (sq. ft.) 184k Yards 25 32


 
Intermodal: Financial Overview Revenue1 EBIT 1 (CAGR = 24%) (CAGR = 34%) 225 25 200 175 20 150 15 125 100 (GAAP) 10 $M $M (GAAP) 75 $M 50 5 25 - - 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2018 Results 2 2 Revenue EBIT EBIT Margin EBITDA EBITDA Margin $201.0 M $23.3 M 11.6% $29.6 M 14.7% 1 Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010-2013 2 See GAAP to Non-GAAP reconciliation of this non-GAAP metric in the Appendix 33


 
Truckload: Operations Overview 2018 OPERATIONS Tractors ~300 Trailers: Dry Van ~1,100 Trailers: Reefer ~50 Employees ~200 Owner-Operators ~225 Broker Carriers ~5,150 Weekly Loads ~1,900 34


 
Truckload: Financial Overview Revenue 1 EBIT 1 (CAGR = 10%) (CAGR = -13%) 225 14 200 12 175 10 150 ) 8 125 GAAP) - (GAAP 100 6 $M $M 75 $M $M (non 4 50 25 2 - - 5 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2018 Results 2 Revenue EBIT EBIT Margin EBITDA 2 EBITDA Margin $192.6 M $5.1 M 2.6% $11.5 M 6.0% 1 Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010-2013 5 Adjusted to exclude $42.4 million for the TQI impairment charge (non-GAAP) 2 See GAAP to Non-GAAP reconciliation of this non-GAAP metric in the Appendix 35


 
Pool: Operations Overview 2018 OPERATIONS Terminals / Locations 36 Power Units ~700 Trailers ~650 Employees ~1,450 Owner-Operators ~350 Daily Deliveries ~3,500 Daily Carton Sorts ~600k Warehouse Space (sq. ft.) 1.7M 36


 
Pool: Solutions Overview 6 Separate LTL or Parcel Shipments Weekly Delivery to Stores Parcel Service P Center / Hub LTL Terminal Store 1 T LTL Terminal T T T T LTL Terminal Store 2 T T LTL Terminal Store 3 P P Parcel Store 4 Origin DC P P Parcel Store 5 P P Parcel Store 6 37


 
Pool: Solutions Overview Daily Delivery to Stores Store 1 Store 2 Single TL Shipment Store 3 TL Store 4 Origin DC Pool Facility Store 5 Store 6 38


 
Pool: Financial Overview Revenue1 EBIT 1 (CAGR = 11%) (CAGR = 23%) 225 7 200 6 175 5 150 125 4 100 3 $M $M (GAAP) 75 $M (GAAP) 2 50 25 1 - - 2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018 2018 Results 2 2 Revenue EBIT EBIT Margin EBITDA EBITDA Margin $194.1 M $5.9 M 3.0% $12.8 M 6.6% 1 Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010-2013 2 See GAAP to Non-GAAP reconciliation of this non-GAAP metric in the Appendix 39


 
GAAP vs Non-GAAP Reconciliation $ in millions, shares in 000s GAAP Revenue Reconciliation Q1 2019 Q1 2018 2018 2017 2016 2015 2014 2013 2012 2011 2010 Segment EBITDA GAAP Revenue 321.5 302.6 1,320.9 1,169.3 1,030.2 987.9 824.7 672.2 603.9 557.4 494.0 Reconciliation Towne Integration - - - - - 0.6 - - - - - Adjusted Revenue 321.5 302.6 1,320.9 1,169.3 1,030.2 987.3 824.7 672.2 603.9 557.4 494.0 Expedited LTL 2018 GAAP Financials Q1 2019 Q1 2018 2018 2017 2016 2015 2014 2013 2012 2011 2010 GAAP Revenue $ 747.6 Operating Income 24.7 24.2 122.0 108.8 59.7 81.7 96.3 84.4 83.5 77.0 53.7 Operating Margin 7.7% 8.0% 9.2% 9.3% 5.8% 8.3% 11.7% 12.6% 13.8% 13.8% 10.9% GAAP Operating Income $ 96.4 Net Interest & Other Expense (0.6) (0.4) (1.8) (1.2) (1.6) (2.1) (0.3) (0.4) (0.4) (0.5) (0.6) (+) Depreciation & Amortization 22.5 Income Taxes 5.8 6.1 28.2 20.3 30.6 24.1 34.9 29.5 30.5 29.4 21.1 = EBITDA $ 118.9 Net Income (Loss) 18.4 17.7 92.1 87.3 27.5 55.5 61.1 54.5 52.7 47.1 32.0 Fully Diluted Share Count 28,648 29,480 29,190 29,964 30,444 31,040 31,072 30,762 29,536 29,435 29,111 EBITDA Margin 15.9% Income Allocated to Participating Securities (0.2) (0.1) (0.9) (0.7) (0.2) (0.4) (0.4) 0.0 0.0 0.0 0.0 Fully Diluted EPS 0.64 0.60 3.12 2.89 0.90 1.78 1.95 1.77 1.78 1.60 1.10 Cash Flow from Operations 41.5 40.8 152.6 103.4 130.4 85.7 91.7 90.8 68.6 77.0 54.0 Intermodal 2018 GAAP Revenue $ 201.0 Non GAAP Adjustments Q1 2019 Q1 2018 2018 2017 2016 2015 2014 2013 2012 2011 2010 Towne Integration - - (24.3) - - - - - GAAP Operating Income $ 23.3 TQI Impairment - - (42.4) - - - - - - (+) Depreciation & Amortization 6.3 Operating Income - - - - (42.4) (24.3) - - - - - = EBITDA $ 29.6 Net Interest & Other Expense - - - - - (0.4) - - - - - Income Taxes - - - - (6.4) (15.7) - - - - - EBITDA Margin 14.7% Net Income (Loss) - - - - (36.0) (9.0) - - - - - Fully Diluted Share Count 28,648 29,480 29,190 29,964 30,444 31,040 31,072 30,762 29,536 29,435 29,111 Fully Diluted EPS - - - - (1.18) (0.29) - - - - - Truckload Premium Services 2018 Non GAAP Financials Q1 2019 Q1 2018 2018 2017 2016 2015 2014 2013 2012 2011 2010 GAAP Revenue $ 192.6 Adjusted Operating Income 24.7 24.2 122.0 108.8 102.1 106.0 96.3 84.4 83.5 77.0 53.7 GAAP Operating Income $ 5.1 Adjusted Operating Margin 7.7% 8.0% 9.2% 9.3% 9.9% 10.7% 11.7% 12.6% 13.8% 13.8% 10.9% (+) Depreciation & Amortization 6.4 Net Interest & Other Expense (0.6) (0.4) (1.8) (1.2) (1.6) (1.7) (0.3) (0.4) (0.4) (0.5) (0.6) = EBITDA $ 11.5 Adjusted Income Taxes 5.8 6.1 28.2 20.3 37.0 39.8 34.9 29.5 30.5 29.4 21.1 Adjusted Net Income (Loss) 18.4 17.7 92.1 87.3 63.5 64.5 61.1 54.5 52.7 47.1 32.0 EBITDA Margin 6.0% Fully Diluted Share Count 28,648 29,480 29,190 29,964 30,444 31,040 31,072 30,762 29,536 29,435 29,111 Income Allocated to Participating Securities (0.2) (0.1) (0.9) (0.7) (0.2) (0.4) (0.4) 0.0 0.0 0.0 0.0 Adjusted EPS 0.64 0.60 3.12 2.89 2.08 2.07 1.95 1.77 1.78 1.60 1.10 Pool Distribution 2018 GAAP Revenue $ 194.1 Adjusted Operating Income 24.7 24.2 122.0 108.8 102.1 106.0 96.3 84.4 83.5 77.0 53.7 (+) Depreciation & Amortization 10.8 10.7 42.2 41.1 38.2 37.1 31.1 23.6 21.0 21.0 20.5 GAAP Operating Income $ 5.9 Adjusted EBITDA 35.5 34.9 164.2 149.9 140.3 143.1 127.4 108.0 104.5 98.0 74.2 (+) Depreciation & Amortization 6.9 Adjusted EBITDA Margin 11.0% 11.5% 12.4% 12.8% 13.6% 14.5% 15.5% 16.1% 17.3% 17.6% 15.0% = EBITDA $ 12.8 Cash Flow from Operations 41.5 40.8 152.6 103.4 130.4 85.7 91.7 90.8 68.6 77.0 54.0 EBITDA Margin 6.6% Net Capex (3.7) (5.6) (35.3) (35.8) (40.3) (38.8) (37.6) (33.4) (20.5) (19.9) (13.7) Free Cash Flow 37.8 35.2 117.3 67.6 90.1 46.9 54.1 57.4 48.1 57.1 40.3 Free Cash Flow Conversion 205% 199% 127% 77% 142% 73% 89% 105% 91% 121% 126% 40


 
Thank You For Your Time Investor Relations Contact: Mike Morris, CFO & Treasurer mmorris@forwardair.com (404) 362-8933