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NEWS RELEASE

FORWARD AIR CORPORATION REPORTS FIRST QUARTER 2023 RESULTS
Net income per diluted share of $1.37 exceeds guidance range
Record level quality of freight positions Forward well

GREENEVILLE, Tenn.- (BUSINESS WIRE) - May 1, 2023 - Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”, “our”, or “us”) today reported financial results for the three months ended March 31, 2023 as presented in the tables below.

Tom Schmitt, Chairman, President and CEO, commenting on first quarter results said, “Our reported net income per diluted share of $1.37 exceeded the high end of our $1.30 to $1.34 guidance range. Having said that, we would not have made guidance if not for a one-time benefit of approximately $0.24 from the substantial reversal of an accrual for an incentive plan established for employees in 2021. The reversal was driven by the headwinds we continue to experience from the weaker-than-expected freight environment. The softer than anticipated demand throughout the first quarter resulted in a 9% decline in revenue, below the low end of our guidance range of minus 4% to plus 2%.”

Mr. Schmitt continued, “Looking ahead, we believe our revenue growth strategies position the company to perform extremely well as the freight recession abates. Our revenue quality continues to improve notwithstanding a decline in revenue. Compared to our performance in a robust freight environment in March 2022, our revenue per ton mile excluding fuel increased 2.5% for airport-to-airport and 4% for door-to-door. Similarly, our freight quality remains at top levels. Our weight per shipment in March of 786 pounds is comparable to March of last year and roughly 140 pounds higher than it was in March 2021. Our linehaul network continues to operate efficiently with our outside miles at 5% - in record low territory. Still, we are not there yet. On a year over year basis, we saw pounds per day down 12% in the first quarter and that softness persisted in the first few weeks of April. However, we may be seeing the beginnings of an improving freight environment, as our tonnage per day edged up to minus 5% in the most recent weeks. Even with some early signs of a recovery, we believe the current freight environment will be more challenging than anticipated leading to a revised target net income per diluted share for 2023 that we now expect will be less than 2022. In light of this, at this point, we are targeting net income per diluted share of $6.20 to $6.60 for the full year 2023, which assumes that the freight environment will significantly improve in the second half of the year. These updated targets align with the updated revenue growth and cost savings bridge that we reviewed on our previous earnings call.”

In closing, Mr. Schmitt said, “In the first quarter, our teammates and independent contractors went above and beyond to keep our commitments to our customers. We are proud to be the best in the LTL industry in damage-free, intact, on-time shipments - making us the most compelling choice for customers with shipments of consequence.”

Regarding the Company’s second quarter 2023 guidance, Rebecca J. Garbrick, CFO, said, “We expect our year-over-year revenue to decline 7% to 17% and net income per diluted share in the range of $1.28 to $1.32, compared to reported net income per diluted share of $2.04 in the second quarter of 2022.”



Three Months Ended
(in thousands, except per share data)March 31, 2023March 31, 2022ChangePercent Change
Operating revenue$427,066 $466,961 $(39,895)(8.5)%
Income from operations $50,509 $57,351 $(6,842)(11.9)%
Operating margin11.8 %12.3 %(50) bps
Net income$36,368 $42,686 $(6,318)(14.8)%
Net income per diluted share$1.37 $1.57 $(0.20)(12.7)%
Cash provided by operating activities$65,993 62,486 $3,507 5.6 %
Non-GAAP Financial Measures: 1
EBITDA$64,144 $68,481 $(4,337)(6.3)%
Free cash flow$61,019 $53,089 $7,930 14.9 %
1 Reconciliation of these non-GAAP financial measures are provided below the financial tables.

On April 28, 2023, our Board of Directors declared a quarterly cash dividend of $0.24 per share of common stock. The dividend is payable to shareholders of record at the close of business on May 25, 2023 and is expected to be paid on June 13, 2023. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.96 for the full year 2023, payable in quarterly increments of $0.24 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 and position.

Review of Financial Results
Forward Air will hold a conference call to discuss first quarter 2023 results on Tuesday, May 2, 2023 at 9:00 a.m. EDT. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, or by dialing (877) 336-4435, Access Code: 2402511.

A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investor Relations portion of the Company’s website to easily find or navigate to current and pertinent information about us.

About Forward Air Corporation
Forward Air is a leading asset-light provider of transportation services across the United States, Canada and Mexico. We provide expedited less-than-truckload (“LTL”) services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer final mile services, including delivery of heavy-bulky freight, truckload brokerage services, including dedicated fleet services; and intermodal, 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. We are more than a transportation company. Forward is a single resource for your shipping needs. For more information, visit our website at www.forwardaircorp.com.
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Forward Air Corporation
Condensed Consolidated Statements of Comprehensive Income
(Unaudited, in thousands, except per share data)
 Three Months Ended
March 31,
2023		March 31,
2022
Operating revenue:
Expedited Freight$338,934 $376,591 
Intermodal88,169 90,440 
Eliminations and other operations(37)(70)
Operating revenues427,066 466,961 
Operating expenses:  
Purchased transportation185,217 224,832 
Salaries, wages and employee benefits79,520 86,081 
Operating leases27,248 22,673 
Depreciation and amortization13,635 11,130 
Insurance and claims13,782 11,968 
Fuel expense5,784 5,865 
Other operating expenses51,371 47,061 
Total operating expenses376,557 409,610 
Income (loss) from operations:
Expedited Freight32,998 47,680 
Intermodal11,203 11,146 
Other Operations6,308 (1,475)
Income from operations50,509 57,351 
Other expense:  
Interest expense(2,355)(784)
Total other expense(2,355)(784)
Income before income taxes48,154 56,567 
Income tax expense11,786 13,881 
Net income and comprehensive income $36,368 $42,686 
Net income per share: 
Basic $1.37 $1.57 
Diluted$1.37 $1.57 
Dividends per share:$0.24 $0.24 

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Expedited Freight Segment Information
(In thousands)
(Unaudited)
Three Months Ended
 March 31,
2023		Percent of RevenueMarch 31,
2022		Percent of RevenueChangePercent Change
Operating revenue:
Network 1
$205,931 60.8 %$233,700 62.1 %$(27,769)(11.9)%
Truckload41,744 12.3 55,908 14.8 $(14,164)(25.3)
Final Mile69,357 20.5 65,758 17.5 $3,599 5.5 
Other21,902 6.5 21,225 5.6 $677 3.2 
Total operating revenue338,934 100.0 376,591 100.0 $(37,657)(10.0)
Operating expenses:
Purchased transportation165,240 48.8 200,034 53.1 $(34,794)(17.4)
Salaries, wages and employee benefits68,791 20.3 68,220 18.1 $571 0.8 
Operating leases18,913 5.6 15,731 4.2 $3,182 20.2 
Depreciation and amortization8,889 2.6 7,481 2.0 $1,408 18.8 
Insurance and claims9,743 2.9 8,751 2.3 $992 11.3 
Fuel expense2,611 0.8 2,650 0.7 $(39)(1.5)
Other operating expenses31,749 9.4 26,044 6.9 $5,705 21.9 
Total operating expenses305,936 90.3 328,911 87.3 $(22,975)(7.0)
Income from operations$32,998 9.7 %$47,680 12.7 %$(14,682)(30.8)%
1Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

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Expedited Freight Operating Statistics
Three Months Ended
March 31,
2023		March 31,
2022		Percent Change
Business days64 64 — %
Tonnage 1,2
    Total pounds629,080 717,611 (12.3)
    Pounds per day9,829 11,213 (12.3)
Shipments 1,2
    Total shipments817 892 (8.4)
    Shipments per day12.8 13.9 (7.9)
Weight per shipment770 804 (4.2)
Revenue per hundredweight 3
$33.36 $32.84 1.6 
Revenue per hundredweight, ex fuel 3
$25.75 $25.92 (0.7)
Revenue per shipment 3
$256.89 $264.17 (2.8)
Revenue per shipment, ex fuel 3
$198.30 $208.55 (4.9)
1 In thousands
2 Excludes accessorial, Truckload and Final Mile products
3 Includes intercompany revenue between the Network and Truckload revenue streams

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Intermodal Segment Information
(In thousands)
(Unaudited)
Three Months Ended
 March 31,
2023		Percent of RevenueMarch 31,
2022		Percent of RevenueChangePercent Change
Operating revenue$88,169 100.0 %90,440 100.0 %(2,271)(2.5)%
Operating expenses:
Purchased transportation20,014 22.7 24,868 27.5 (4,854)(19.5)
Salaries, wages and employee benefits18,914 21.5 17,935 19.8 979 5.5 
Operating leases8,335 9.5 6,941 7.7 1,394 20.1 
Depreciation and amortization4,746 5.4 3,610 4.0 1,136 31.5 
Insurance and claims2,349 2.7 2,060 2.3 289 14.0 
Fuel expense3,173 3.6 3,215 3.6 (42)(1.3)
Other operating expenses19,435 22.0 20,665 22.8 (1,230)(6.0)
Total operating expenses76,966 87.3 79,294 87.7 (2,328)(2.9)
Income from operations11,203 12.7 %11,146 12.3 %57 0.5 %

Intermodal Operating Statistics
Three Months Ended
March 31,
2023		March 31,
2022		Percent Change
Drayage shipments72,465 88,312 (17.9)%
Drayage revenue per shipment1,100 890 23.6 %

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Forward Air Corporation
Condensed Consolidated Balance Sheets
(In thousands)
(Unaudited)
 March 31,
2023		December 31,
2022
Assets
Current assets: 
Cash and cash equivalents$32,028 $45,822 
Accounts receivable, net201,385 221,028 
Other receivables, net— — 
Other current assets24,381 37,465 
Total current assets257,794 304,315 
Property and equipment, net252,932 249,080 
Operating lease right-of-use assets150,282 141,865 
Goodwill356,627 306,184 
Other acquired intangibles, net155,726 154,801 
Other assets53,205 51,831 
Total assets$1,226,566 $1,208,076 
Liabilities and Shareholders’ Equity 
Current liabilities: 
Accounts payable$42,994 $54,601 
Accrued expenses52,807 54,291 
Other current liabilities6,207 3,956 
Current portion of debt and finance lease obligations11,619 9,444 
Current portion of operating lease liabilities52,143 47,106 
Total current liabilities165,770 169,398 
Finance lease obligations, less current portion18,328 15,844 
Long-term debt, less current portion and debt issuance costs150,681 106,588 
Operating lease liabilities, less current portion102,697 98,865 
Other long-term liabilities50,507 59,044 
Deferred income taxes52,950 51,093 
Shareholders’ equity:
Preferred stock— — 
Common stock261 265 
Additional paid-in capital274,007 270,855 
Retained earnings411,365 436,124 
Total shareholders’ equity685,633 707,244 
Total liabilities and shareholders’ equity$1,226,566 $1,208,076 
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Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2023		March 31,
2022
Operating activities:
Net income from operations$36,368 $42,686 
Adjustments to reconcile net income of operations to net cash provided by operating activities of operations
Depreciation and amortization13,635 11,130 
Change in fair value of earn-out liability— (294)
Share-based compensation expense3,149 2,761 
Provision for revenue adjustments2,157 1,304 
Deferred income tax expense1,857 1,643 
Other(300)132 
Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses:
Accounts receivable16,669 (30,278)
Other receivables— 3,609 
Other current and noncurrent assets11,422 13,818 
Accounts payable and accrued expenses(18,964)15,975 
Net cash provided by operating activities 65,993 62,486 
Investing activities:
Proceeds from sale of property and equipment1,815 511 
Purchases of property and equipment(6,789)(9,908)
Purchases of a business, net of cash acquired(56,567)— 
Net cash used in investing activities(61,541)(9,397)
Financing activities:
Repayments of finance lease obligations(2,118)(1,070)
Proceeds from credit facility45,000 — 
Payments on credit facility— (375)
Proceeds from issuance of common stock upon stock option exercises— 206 
Payments of dividends to shareholders(6,345)(6,502)
Repurchases and retirement of common stock(50,491)(17,780)
Payment of minimum tax withholdings on share-based awards(4,292)(3,254)
Net cash used in financing activities(18,246)(28,775)
Net (decrease) increase in cash and cash equivalents(13,794)24,314 
Cash and cash equivalents at beginning of period45,822 37,316 
Cash and cash equivalents at end of period$32,028 $61,630 
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Forward Air Corporation Reconciliation of Non-GAAP Financial Measures

In this press release, the Company uses non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with GAAP. The Company believes that meaningful analysis of its financial performance 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 as well as evaluating the Company’s performance.

For the three months ended March 31, 2023 and 2022, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow.

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) and tax impacts. 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 shareholder value.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s financial 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 Company has included, for the periods indicated, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure.

The following is a reconciliation of net income to EBITDA for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended
March 31, 2023March 31, 2022
Net income$36,368 $42,686 
Interest expense2,355 784 
Income tax expense11,786 13,881 
Depreciation and amortization13,635 11,130 
EBITDA$64,144 $68,481 

The following is a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended
March 31, 2023March 31, 2022
Net cash provided by operating activities$65,993 $62,486 
Proceeds from sale of property and equipment1,815 511 
Purchases of property and equipment(6,789)(9,908)
Free cash flow$61,019 $53,089 








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The following information is provided to supplement this press release.
ActualThree Months Ended March 31, 2023
Net income$36,368 
Income allocated to participating securities(185)
Numerator for diluted net income per share - net income$36,183 
Weighted-average common shares and common share equivalent outstanding - diluted26,479 
Diluted net income per share$1.37 
ProjectedFull year 2023
Projected tax rate25.7 %
Projected purchases of property and equipment, net of proceeds from sale of property and equipment$37,000 
ProjectedDecember 31, 2023
Projected weighted-average common shares and common share equivalent outstanding - diluted26,000 
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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 the expected performance of the Company as the freight recession abates, freight environment, expectations regarding the Company's second quarter 2023 guidance, including with respect to revenue and net income per diluted share, the future declaration of dividends and, the quarterly and full year 2023 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 COVID-19 pandemic, our ability to manage our growth and ability to grow, in part, through acquisitions, while being able to successfully integrate such acquisitions, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, 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, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022.

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
Brandon Hammer, 423-636-7173
bhammer@forwardair.com

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