Exhibit 99.1
Forward Air Corporation Reports
Fourth Quarter and Fiscal 2007 Results
Forward Air Reports Record Quarterly and Annual Revenues and Quarterly EPS
Forward Air Announces Appointment of Michael P. McLean as Chief Accounting Officer
GREENEVILLE, Tenn.--(BUSINESS WIRE)--Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth quarter and fiscal year ended December 31, 2007.
Operating revenue for the quarter ended December 31, 2007 increased 22.8% to a record $114.5 million from $93.2 million for the same quarter in 2006. Income from operations was $20.0 million, compared with $18.9 million in the prior-year quarter, an increase of 5.9%. As a percent of operating revenue, income from operations declined to 17.5% from 20.3% for the same quarter last year. Net income for the quarter ended December 31, 2007 was $12.4 million, compared with $12.2 million in the prior-year quarter. Net income per diluted share increased 7.5% for the fourth quarter of 2007 to a record $0.43 compared to $0.40 in the prior-year quarter.
Operating revenue for the year ended December 31, 2007 increased 11.3% to $392.7 million from $352.8 million for the same period in 2006. Income from operations was $71.0 million, compared with $75.4 million in the prior year, a decrease of 5.8%. As a percent of operating revenue, income from operations decreased to 18.1% from 21.4% in 2006. Net income during the year decreased 8.2% to $44.9 million from $48.9 million in the prior year. Net income per diluted share for 2007 was $1.50 compared with $1.55 in 2006, a decrease of 3.2%.
Commenting on the Company’s fourth quarter results, Bruce A. Campbell, President and CEO, said, “We are most pleased with our performance in the fourth quarter. Our team, in addition to maintaining our standard operating discipline, was able to successfully complete the acquisition of Black Hawk Freight Services, as well as selectively obtain business from a fallen competitor.”
Commenting further, Mr. Campbell said, “Without a doubt, 2007 presented one of the most-challenging freight environments in the history of our Company. However, due to our business model being at its current scale and the ability of our team to quickly react to change, we were able to mitigate the impact of a slowing economy once again producing one of the best operating ratios in the industry. We continue to be even more vigilant controlling costs as we anticipate the current operating conditions to persist throughout 2008.”
Rodney L. Bell, Senior Vice President and CFO, said, “Early in 2007, we announced and began implementation of our “Completing the Model” strategic initiative which was designed to supplement the growth in our core airport-to-airport business with other faster growth-potential complementary transportation services. We knew that while these ancillary services had good margins, they lacked the superior margins enjoyed in our core business. Depending upon our business mix, we anticipate our 2008 margins will be comparable to those experienced in the fourth quarter of 2007.”
Commenting further Mr. Bell said, “Once again, we posted a record year for cash flows generated from operations. Year-over-year, we were able to increase cash flows from operations 18.9% to $62.4 million further exhibiting the strength of our operating model. Our guidance for the first quarter is as follows: Revenue should be within a growth range over the prior year first quarter of 8 to 12%. Net income per diluted share should be within $0.32 to $0.36.”
Lastly, Mr. Bell commented, “We are pleased to announce the appointment of Michael P. McLean as Chief Accounting Officer. In his relatively short time with our Company, Mike has proven himself an invaluable member of our management team. Mr. McLean has been Vice President and Controller since May 2006 and will continue in that capacity. Mr. McLean is a Certified Public Accountant who joined the Company as Vice President, Accounting in February 2006.
Review of Financial Results
Forward Air will hold a conference call to discuss fourth quarter and fiscal year 2007 results on Tuesday, February 12, 2008 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. 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 85 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 | Year Ended | ||||||||||||
December 31, | December 31, | December 31, | December 31, | ||||||||||
2007 | 2006 | 2007 | 2006 | ||||||||||
Operating revenue: | |||||||||||||
Forward Air | |||||||||||||
Airport-to-airport | $ | 86,034 | $ | 78,433 | $ | 313,162 | $ | 301,551 | |||||
Logistics | 11,976 | 9,357 | 42,626 | 31,321 | |||||||||
Other | 5,524 | 5,418 | 20,923 | 19,886 | |||||||||
Forward Air Solutions (FASI) | |||||||||||||
Pool distribution | 10,956 | -- | 16,026 | -- | |||||||||
Total operating revenue | 114,490 | 93,208 | 392,737 | 352,758 | |||||||||
Operating expenses: | |||||||||||||
Purchased transportation | |||||||||||||
Forward Air | |||||||||||||
Airport-to-airport | 33,608 | 32,796 | 123,658 | 119,011 | |||||||||
Logistics | 9,176 | 7,041 | 32,727 | 22,767 | |||||||||
Other | 1,737 | 1,375 | 6,049 | 4,943 | |||||||||
Forward Air Solutions (FASI) | |||||||||||||
Pool distribution | 1,292 | -- | 2,003 | -- | |||||||||
Total purchased transportation | 45,813 | 41,212 | 164,437 | 146,721 | |||||||||
Salaries, wages and employee benefits | 27,800 | 18,941 | 88,803 | 74,448 | |||||||||
Operating leases | 4,670 | 3,839 | 16,761 | 14,458 | |||||||||
Depreciation and amortization | 3,095 | 2,400 | 10,824 | 8,934 | |||||||||
Insurance and claims | 2,434 | 1,220 | 7,685 | 5,967 | |||||||||
Other operating expenses | 10,687 | 6,711 | 33,179 | 26,834 | |||||||||
Total operating expenses | 94,499 | 74,323 | 321,689 | 277,362 | |||||||||
Income from operations | 19,991 | 18,885 | 71,048 | 75,396 | |||||||||
Other income (expense): | |||||||||||||
Interest expense | (355 | ) | (23 | ) | (491 | ) | (81 | ) | |||||
Other, net | 231 | 915 | 1,756 | 3,229 | |||||||||
Total other (expense) income | (124 | ) | 892 | 1,265 | 3,148 | ||||||||
Income before income taxes | 19,867 | 19,777 | 72,313 | 78,544 | |||||||||
Income taxes | 7,463 | 7,608 | 27,388 | 29,621 | |||||||||
Net income | $ | 12,404 | $ | 12,169 | $ | 44,925 | $ | 48,923 | |||||
Net income per share: | |||||||||||||
Basic | $ | 0.43 | $ | 0.40 | $ | 1.52 | $ | 1.57 | |||||
Diluted | $ | 0.43 | $ | 0.40 | $ | 1.50 | $ | 1.55 | |||||
Weighted average shares outstanding | |||||||||||||
Basic | 28,832 | 30,453 | 29,609 | 31,091 | |||||||||
Diluted | 29,154 | 30,803 | 29,962 | 31,521 |
Forward Air Corporation | ||||||
Condensed Consolidated Balance Sheets | ||||||
(In thousands, except share data) | ||||||
(Unaudited) | ||||||
December 31, | December 31, | |||||
2007 | 2006 | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 4,909 | $ | 8,231 | ||
Short-term investments | 522 | 61,650 | ||||
Accounts receivable, net | 59,734 | 48,486 | ||||
Other current assets | 6,285 | 9,196 | ||||
Total current assets | 71,450 | 127,563 | ||||
Property and equipment | 158,354 | 101,190 | ||||
Less accumulated depreciation and amortization | 55,322 | 47,875 | ||||
Total property and equipment, net | 103,032 | 53,315 | ||||
Goodwill and other acquired intangibles: | ||||||
Goodwill | 36,053 | 15,588 | ||||
Other acquired intangibles, net | 29,991 | 10,731 | ||||
Total goodwill and other acquired intangibles | 66,044 | 26,319 | ||||
Other assets | 1,358 | 5,817 | ||||
Total assets | $ | 241,884 | $ | 213,014 | ||
Liabilities and Shareholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 11,714 | $ | 7,949 | ||
Accrued expenses | 14,274 | 11,144 | ||||
Current portion of capital lease and note obligations | 830 | 40 | ||||
Total current liabilities | 26,818 | 19,133 | ||||
Capital lease and note obligations, less current portion | 1,486 | 796 | ||||
Other long-term liabilities | 4,476 | 1,271 | ||||
Senior credit facility | 30,000 | -- | ||||
Deferred income taxes | 7,371 | 6,587 | ||||
Shareholders' equity: | ||||||
Common stock | 286 | 304 | ||||
Retained earnings | 171,447 | 184,923 | ||||
Total shareholders' equity | 171,733 | 185,227 | ||||
Total liabilities and shareholders' equity | $ | 241,884 | $ | 213,014 |
Forward Air Corporation | ||||||||
Condensed Consolidated Statements of Cash Flows | ||||||||
(In thousands) | ||||||||
(Unaudited) | ||||||||
Year Ended |
||||||||
December 31, | December 31, | |||||||
2007 | 2006 | |||||||
Operating activities: | ||||||||
Net income | $ | 44,925 | $ | 48,923 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 10,824 | 8,934 | ||||||
Share-based compensation | 3,710 | 1,307 | ||||||
Gain on sale of property and equipment | (172 | ) | (42 | ) | ||||
Recovery on receivables | (33 | ) | (223 | ) | ||||
Provision for revenue adjustments | 2,237 | 2,095 | ||||||
Deferred income taxes | 596 | (136 | ) | |||||
Tax benefit of stock options exercised | (1,261 | ) | (1,967 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (11,399 | ) | (6,516 | ) | ||||
Other current assets | 291 | 407 | ||||||
Accounts payable and accrued expenses | 12,675 | (315 | ) | |||||
Net cash provided by operating activities | 62,393 | 52,467 | ||||||
Investing activities: | ||||||||
Proceeds from disposal of property and equipment | 574 | 3,665 | ||||||
Purchases of property and equipment | (47,026 | ) | (15,454 | ) | ||||
Deposits in escrow for construction of facilities | -- | (4,793 | ) | |||||
Proceeds from sales or maturities of available-for-sale securities | 143,410 | 229,330 | ||||||
Purchases of available-for-sale securities | (82,282 | ) | (211,980 | ) | ||||
Acquisition of businesses | (48,627 | ) | -- | |||||
Other | (119 | ) | 26 | |||||
Net cash (used in) provided by investing activities | (34,070 | ) | 794 | |||||
Financing activities: | ||||||||
Payments on line of credit | (10,000 | ) | (1,504 | ) | ||||
Borrowings under line of credit | 40,000 | -- | ||||||
Payments of capital lease obligations | (493 | ) | (39 | ) | ||||
Proceeds from exercise of stock options | 1,017 | 4,362 | ||||||
Dividends | (8,305 | ) | (8,694 | ) | ||||
Proceeds from common stock issued under employee stock purchase plan | 259 | 268 | ||||||
Repurchase of common stock | (55,384 | ) | (41,722 | ) | ||||
Tax benefit of stock options exercised | 1,261 | 1,967 | ||||||
Net cash used in financing activities | (31,645 | ) | (45,362 | ) | ||||
Net (decrease) increase in cash | (3,322 | ) | 7,899 | |||||
Cash at beginning of year | 8,231 | 332 | ||||||
Cash at end of year | $ | 4,909 | $ | 8,231 |
Forward Air Corporation
Segment Information (In thousands) |
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(Unaudited) | ||||||||||||||||||
Three Months Ended December 31, |
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Percent of | Percent of | % | ||||||||||||||||
2007 | Revenue | 2006 | Revenue | Change | Change | |||||||||||||
Operating Revenue | ||||||||||||||||||
Forward Air | $ | 103,534 | 90.4 | % | $ | 93,208 | 100.0 | % | $ | 10,326 | 11.1 | % | ||||||
FASI | 10,956 | 9.6 | -- | -- | 10,956 | 100.0 | ||||||||||||
Total | 114,490 | 100.0 | 93,208 | 100.0 | 21,282 | 22.8 | ||||||||||||
Purchased Transportation | ||||||||||||||||||
Forward Air | 44,530 | 43.0 | 41,212 | 44.2 | 3,318 | 8.1 | ||||||||||||
FASI | 1,283 | 11.7 | -- | -- | 1,283 | 100.0 | ||||||||||||
Total | 45,813 | 40.0 | 41,212 | 44.2 | 4,601 | 11.2 | ||||||||||||
Salaries, wages and employee benefits | ||||||||||||||||||
Forward Air | 23,230 | 22.4 | 18,941 | 20.3 | 4,289 | 22.6 | ||||||||||||
FASI | 4,570 | 41.7 | -- | -- | 4,570 | 100.0 | ||||||||||||
Total | 27,800 | 24.3 | 18,941 | 20.3 | 8,859 | 46.8 | ||||||||||||
Operating Leases | ||||||||||||||||||
Forward Air | 4,055 | 3.9 | 3,839 | 4.1 | 216 | 5.6 | ||||||||||||
FASI | 615 | 5.6 | -- | -- | 615 | 100.0 | ||||||||||||
Total | 4,670 | 4.1 | 3,839 | 4.1 | 831 | 21.6 | ||||||||||||
Depreciation and Amortization | ||||||||||||||||||
Forward Air | 2,903 | 2.8 | 2,400 | 2.6 | 503 | 21.0 | ||||||||||||
FASI | 192 | 1.8 | -- | -- | 192 | 100.0 | ||||||||||||
Total | 3,095 | 2.7 | 2,400 | 2.6 | 695 | 29.0 | ||||||||||||
Insurance and claims | ||||||||||||||||||
Forward Air | 2,074 | 2.0 | 1,220 | 1.3 | 854 | 70.0 | ||||||||||||
FASI | 360 | 3.3 | -- | -- | 360 | 100.0 | ||||||||||||
Total | 2,434 | 2.1 | 1,220 | 1.3 | 1,214 | 99.5 | ||||||||||||
Other operating expenses | ||||||||||||||||||
Forward Air | 8,700 | 8.4 | 6,711 | 7.2 | 1,989 | 29.6 | ||||||||||||
FASI | 1,987 | 18.1 | -- | -- | 1,987 | 100.0 | ||||||||||||
Total | 10,687 | 9.3 | 6,711 | 7.2 | 3,976 | 59.2 | ||||||||||||
Income from operations | ||||||||||||||||||
Forward Air | 18,042 | 17.5 | 18,885 | 20.3 | (843 | ) | (4.5 | ) | ||||||||||
FASI | 1,949 | 17.8 | -- | -- | 1,949 | 100.0 | ||||||||||||
Total | $ | 19,991 | 17.5 | % | $ | 18,885 | 20.3 | % | $ | 1,106 | 5.9 | % |
Forward Air Corporation
Segment Information (In thousands) |
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(Unaudited) | ||||||||||||||||||
Year Ended December 31, |
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Percent of | Percent of | % | ||||||||||||||||
2007 | Revenue | 2006 | Revenue | Change | Change | |||||||||||||
Operating Revenue | ||||||||||||||||||
Forward Air | $ | 376,711 | 95.9 | % | $ | 352,758 | 100.0 | % | $ | 23,953 | 6.8 | % | ||||||
FASI | 16,026 | 4.1 | -- | -- | 16,026 | 100.0 | ||||||||||||
Total | 392,737 | 100.0 | 352,758 | 100.0 | 39,979 | 11.3 | ||||||||||||
Purchased Transportation | ||||||||||||||||||
Forward Air | 162,434 | 43.1 | 146,721 | 41.6 | 15,713 | 10.7 | ||||||||||||
FASI | 2,003 | 12.5 | -- | -- | 2,003 | 100.0 | ||||||||||||
Total | 164,437 | 41.9 | 146,721 | 41.6 | 17,716 | 12.1 | ||||||||||||
Salaries, wages and employee benefits | ||||||||||||||||||
Forward Air | 81,973 | 21.8 | 74,448 | 21.1 | 7,525 | 10.1 | ||||||||||||
FASI | 6,830 | 42.6 | -- | -- | 6,830 | 100.0 | ||||||||||||
Total | 88,803 | 22.6 | 74,448 | 21.1 | 14,355 | 19.3 | ||||||||||||
Operating Leases | ||||||||||||||||||
Forward Air | 15,791 | 4.2 | 14,458 | 4.1 | 1,333 | 9.2 | ||||||||||||
FASI | 970 | 6.1 | -- | -- | 970 | 100.0 | ||||||||||||
Total | 16,761 | 4.3 | 14,458 | 4.1 | 2,303 | 15.9 | ||||||||||||
Depreciation and Amortization | ||||||||||||||||||
Forward Air | 10,372 | 2.7 | 8,934 | 2.5 | 1,438 | 16.1 | ||||||||||||
FASI | 452 | 2.8 | -- | -- | 452 | 100.0 | ||||||||||||
Total | 10,824 | 2.8 | 8,934 | 2.5 | 1,890 | 21.2 | ||||||||||||
Insurance and claims | ||||||||||||||||||
Forward Air | 7,176 | 1.9 | 5,967 | 1.7 | 1,209 | 20.3 | ||||||||||||
FASI | 509 | 3.2 | -- | -- | 509 | 100.0 | ||||||||||||
Total | 7,685 | 1.9 | 5,967 | 1.7 | 1,718 | 28.8 | ||||||||||||
Other operating expenses | ||||||||||||||||||
Forward Air | 30,335 | 8.1 | 26,834 | 7.6 | 3,501 | 13.0 | ||||||||||||
FASI | 2,844 | 17.7 | -- | -- | 2,844 | 100.0 | ||||||||||||
Total | 33,179 | 8.4 | 26,834 | 7.6 | 6,345 | 23.6 | ||||||||||||
Income from operations | ||||||||||||||||||
Forward Air | 68,630 | 18.2 | 75,396 | 21.4 | (6,766 | ) | (9.0 | ) | ||||||||||
FASI | 2,418 | 15.1 | -- | -- | 2,418 | 100.0 | ||||||||||||
Total | $ | 71,048 | 18.1 | % | $ | 75,396 | 21.4 | % | $ | (4,348 | ) | (5.8 | ) | % |
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.
CONTACT:
Forward Air Corporation
Rodney L. Bell, 423-636-7000
rbell@forwardair.com