Forward Air Corporation
Q1 2010 Earnings Call Transcript
April 22, 2010 9:00 am ET
Bruce Campbell – Chairman, President and CEO
Rodney Bell – SVP, Treasurer and CFO
Todd Fowler – Keybanc Capital Markets
Ben Hartford – Baird
David Ross – Stifel Nicolaus
Alex Brand – Stephens
Matt Brooklier – Piper Jaffray
Nate Brochmann – William Blair & Company
David Campbell – Thompson Davis & Company
Mike Addeo – Wolfe Trahan
Previous Statements by FWRD
» Forward Air Q4 2008 Earnings Call Transcript
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Thank you for joining Forward Air Corporation's first quarter 2010 earnings release conference call. Before we begin, I'd like to point out that both the press release and this call are accessible on the Investor Relations section of Forward Air's website at www.forwardair.com. With us this morning are Chairman, President and CEO, Bruce Campbell; and Senior Vice President and Chief Financial Officer, Rodney Bell.
By now, you should have received the press release announcing first quarter 2010 results, which was furnished to the SEC on Form 8-K and on the wire yesterday after market closed. Please be aware this conference call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements among others regarding the company's expected future financial performance.
For this purpose, any statements made during this call that are not the statements of historical facts may be deemed to be forward-looking statements. Without limiting the foregoing words such as believe, anticipate, plan, expect, and similar expressions are intended to identify forward-looking statements.
You are hereby cautioned that these statements may be affected by the important factors, among others, set forth in our filings with the Securities and Exchange Commission and in the press release issued yesterday. And consequently, actual operations and results may differ materially from the results discussed in the forward-looking statements. The company undertakes no obligation to update publicly any forward-looking statement, whether as a new result of new information, future events or otherwise.
And now, I’ll turn the call over to Bruce Campbell, Chairman –.
Thank you, operator.
Good morning and thanks to each of you joining us this morning. Allow me to begin by addressing the logistics of this call. I’m currently in Houston. And Rodney and the balance of our team are in Greeneville. So bear with us, especially during the question-and-answer session.
Overall, we are pleased with the results of the first quarter. I want to address each of our operating segments separately. First, our airport-to-airport group continued to experience good volume growth on a year-over-year basis, as we saw these volumes improve throughout the quarter. We are pleased with the hard work of our team professionals to once again grow our business.
Additionally, our push to grow the other areas of revenue opportunities within this operating segment continued to meet success, led by outstanding growth in our Forward Air Complete product, which provides pickup and/or delivery services for our Forward Air customer base. We expect this product line along with our normal network volume to continue to grow throughout 2010.
Our Solutions group business went to an operating loss for the quarter, struggling through January and February on low volumes, only to see reasonable growth return in March, which allowed us to generate a profit for the month. While we are never happy with the loss, we are pleased with the progress, as we continued to tighten on the cost side of this model and are hopeful the return of the consumer, as reported, in fact is true and our revenue continues to be at least at levels sufficient for us to generate profits.
I would like now to introduce Rodney Bell, our Chief Financial Officer, for his comments.
Thank you, Bruce. Information, please be aware that my commentary ignores the impact of the Q1 2009 impairment charge in our Solutions segment. Operating revenue for the first quarter was $107 million, an increase of 10.7% from the first quarter of 2009.
In our Forward Air, Inc. segment, airport-to-airport revenues were $70.9 million, a $7.8 million increase or 12.4% as compared to last year. This resulted from a 11.8 increase in total tonnage and 0.5% increase in yield. The yield increase consisted of a minus 3.6% from linehaul crossing, a positive 1.9% benefit from net fuel surcharges along with a 2.2% positive impact from Forward Air Complete, which grew 47.8% compared to the first quarter of 2009.
Logistics revenues were $13.9 million, an increase of just over $800,000. This 6.2% growth is the first quarter-over-quarter growth increase since the first quarter of last year from the logistics group. In our Forward Air Solutions segments, revenues were $16.4 million, an increase of 10.8% compared to Q1 2009.
Turning to expenses for the first quarter, our operations and linehaul teams did another outstanding job managing load factors and network miles, matching last year’s solid performance on a percentage of revenue basis. Salaries and wages were up $1.6 million or 5.5%, but were down 140 basis points as a percentage of revenue. The dollar increase resulted primarily from $1.1 million increase in first quarter performance based incentives along with $600,000 charge for developing workers’ compensation claims as well as increased health claims.
In the aggregate, the expense line items of operating leases, depreciation and amortization, and insurance to clients, which include components that are fixed in nature or $654,000 less than Q1 2009, a 210 basis points improvement as a percentage of revenue. Other operating expenses, which are mostly variable in nature, were $728,000 more than the prior year quarter, sliding 20 basis points as a percentage of revenue.