Forward Air Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

Segment Reporting

3 Months Ended

Mar. 31, 2020

The Company operates in three reportable segments based on information available to and used by the chief operating decision maker ("CODM"). This classification is consistent with how the CODM makes decisions about resource allocation and assesses the Company's performance. The Company evaluates the performance of its segments based on income from operations. The Company’s business is conducted in the U.S. and Canada.

Expedited Freight operates a comprehensive national network to provide expedited regional, inter-regional and national LTL services and offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling. Included within the $251,158 of Expedited Freight revenue for the three months ended March 31, 2020 were defined services including Network revenue of $152,010, Truckload revenue of $45,058, Final Mile revenue of $47,802 and other revenue of $6,288. Intermodal primarily provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads. Pool Distribution provides high-frequency handling and distribution of time sensitive product to numerous destinations.

Except for certain insurance activity, the accounting policies of the segments are the same as those described in the summary of significant accounting policies disclosed in Note 1 of the Forward Air Corporation Annual Report on Form 10-K for the year ended December 31, 2019. For workers compensation and vehicle claims, each segment is charged an insurance premium and is also charged a deductible that corresponds with each segment's individual self-retention limit. However, any losses beyond these deductibles and any loss development factors applied to outstanding claims as a result of actuary analysis are not passed to the segments, but recorded at the corporate level ("Eliminations & other").

Segment data includes intersegment revenues and shared costs. Costs of the corporate headquarters, shared services and shared assets, such as trailers, are allocated to the segments based on usage. The cost basis of shared assets are not allocated. Instead, the cost basis for the majority of shared assets, such as trailers, are included in Expedited Freight.

The following tables summarize segment information for the three months ended March 31, 2020 and 2019.



	Three months ended March 31, 2020
	Expedited Freight		Intermodal		Pool Distribution			Eliminations & other			Consolidated
External revenues	$	250,673	$	52,455	$	39,382		$	(1	)	$	342,509
Intersegment revenues	485		5		42			(532		)	—
Depreciation	4,858		1,053		1,097			8			7,016
Amortization	1,788		1,568		257			—			3,613
Share-based compensation expense	2,667		389		188			22			3,266
Interest expense	3		54		—			796			853
Income (loss) from operations	14,698		3,713		(3,562		)	(3,147		)	11,702
Total assets	773,917		213,060		98,254			(18,995		)	1,066,236
Capital expenditures	2,405		246		521			—			3,172

	Three months ended March 31, 2019 (As Adjusted)
	Expedited Freight		Intermodal		Pool Distribution			Eliminations & other			Consolidated
External revenues	$	222,278	$	54,097	$	45,096		$	—		$	321,471
Intersegment revenues	705		18		89			(812		)	—
Depreciation	6,532		469		1,315			—			8,316
Amortization	847		1,407		257			—			2,511
Share-based compensation expense	2,169		531		182			165			3,047
Interest expense	1		13		—			561			575
Income (loss) from operations	20,388		6,181		1,251			(3,086		)	24,734
Total assets	641,525		182,489		102,678			(41,115		)	885,577
Capital expenditures	2,237		73		1,780			—			4,090