Forward Air Corporation Reports Third Quarter 2012 Results

Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating income, net income and diluted earnings per share for the third quarter and nine months ended September 30, 2012.

Operating revenue for the quarter ended September 30, 2012 increased 5.7% to $143.5 million from $135.7 million for the same quarter in 2011. Income from operations was $19.6 million, compared with $20.3 million in the prior-year quarter. As a percent of operating revenue, income from operations was 13.7%, compared with 15.0% in the same quarter last year. Net income during the period decreased to $12.3 million from $12.9 million in the prior-year quarter. Income per diluted share for the third quarter of 2012 was $0.41 compared with $0.44 in the prior-year quarter.

Operating revenue for the nine months ended September 30, 2012 increased 10.5% to $428.9 million from $388.1 million for the same period in 2011. Income from operations was $59.5 million, compared with $53.5 million in the prior-year period. As a percent of operating revenue, income from operations increased to 13.9% for the first nine months of 2012 from 13.8% for the same period in 2011. Net income during the period was $36.7 million compared to $32.8 million in the prior-year period. Income per diluted share from operations for the first nine months of 2012 was $1.24 compared with $1.11 in the prior-year period.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the third quarter said, “On September 24 th, we disclosed that, in large part due to macroeconomic issues, our airport-to-airport volumes had fallen off to the point that we needed to revise our guidance for the third quarter. Since that announcement, we have continued to experience choppiness in our daily tonnage numbers but there were some signs of firming last week. With limited visibility and realizing that one week certainly doesn't make a trend, we remain cautiously optimistic that volumes will continue to improve.”

Commenting further, Mr. Campbell said, “Our operations group will continue to monitor our volumes and freight flows and will dynamically adjust to fluctuations in network volumes to effectively control our costs.”

Turning to the Forward Air Solutions business segment, Mr. Campbell said, “We were extremely pleased to see that our pooled distribution segment performed according to plan and produced a modest profit for the quarter. As you know, the fourth quarter is traditionally our strongest period for this operating group. With decent year-over-year same store volumes as well as recent new business wins, we expect Solutions to make a meaningful contribution to our fourth quarter.”

Commenting on the Company's guidance for the fourth quarter, Rodney L. Bell, Senior Vice President and CFO said, “We anticipate that our fourth quarter 2012 revenues will increase in the range of 5% to 8% over the comparable 2011 period, and we expect income per diluted share to be between $0.48 and $0.52 per share. This compares to $0.50 per share in the fourth quarter of 2011.”

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2012 results on Friday, October 19, 2012 at 9:00 a.m. EDT. The Company's conference call will be available online at www.forwardair.com or by dialing 800-230-1092. 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 Corporation

Forward Air Corporation operates two business segments, Forward Air, Inc. and Forward Air Solutions, Inc.

Forward Air, Inc. is a high-service-level contractor to the air cargo industry providing time-definite ground transportation services through a network of terminals located on or near major airports in 85 cities in the United States and Canada. It 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 Solutions, Inc. is a provider of pool distribution services. Pool distribution involves the consolidation and shipment of several smaller less-than-truckload shipments to a common area or region. Once at the regional destination, the loads are deconsolidated, then grouped with other shipments with common delivery points, and delivered in a very precise, time-sensitive manner. Our pool distribution network consists of terminals and service locations in 20 cities within the Mid-Atlantic, Southeast, Midwest and Southwestern United States.
 
Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
     
Three months ended Nine months ended
September 30, 2012   September 30, 2011 September 30, 2012 September 30, 2011
Operating revenue:
Forward Air
Airport-to-airport $ 96,914 $ 92,966 $ 290,006 $ 266,606
Logistics 20,878 18,409 63,315 52,909
Other 6,528 7,250 19,498 20,524
Forward Air Solutions
Pool distribution 19,194   17,124   56,102   48,104  
Total operating revenue 143,514 135,749 428,921 388,143
 
Operating expenses:
Purchased transportation
Forward Air
Airport-to-airport 40,150 36,142 119,546 104,411
Logistics 15,954 14,041 47,756 40,214
Other 1,822 1,797 5,252 4,929
Forward Air Solutions
Pool distribution 5,176   4,109   14,989   11,067  
Total purchased transportation 63,102 56,089 187,543 160,621
Salaries, wages and employee benefits 31,698 33,402 97,408 95,336
Operating leases 6,895 6,672 20,826 20,083
Depreciation and amortization 5,425 5,429 15,940 15,734
Insurance and claims 3,098 2,120 8,132 6,140
Fuel expense 2,318 2,406 7,271 7,357
Other operating expenses 11,352   9,311   32,303   29,390  
Total operating expenses 123,888   115,429   369,423   334,661  
Income from operations 19,626 20,320 59,498 53,482
 
Other income (expense):
Interest expense (111 ) (131 ) (241 ) (468 )
Other, net (21 ) 10   (6 ) 57  
Total other expense (132 ) (121 ) (247 ) (411 )
Income before income taxes 19,494 20,199 59,251 53,071
Income taxes 7,227   7,287   22,544   20,321  
Net income and comprehensive income $ 12,267   $ 12,912   $ 36,707   $ 32,750  
 
Net income per share:
Basic $ 0.42   $ 0.44   $ 1.27   $ 1.12  
Diluted $ 0.41   $ 0.44   $ 1.24   $ 1.11  
Weighted average shares outstanding:
Basic 29,088 29,237 28,895 29,236
Diluted 29,660 29,552 29,484 29,591
 
Dividends per share: $ 0.10   $ 0.07   $ 0.24   $ 0.21  
 
 
Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
  September 30, 2012  

December 31, 2011 (a)
Assets
Current assets:
Cash and cash equivalents $ 92,988 $ 58,801
Accounts receivable, net 74,878 70,922
Other current assets 13,607   9,994
Total current assets 181,473 139,717
 
Property and equipment 238,704 223,135
Less accumulated depreciation and amortization 101,941   93,267
Net property and equipment 136,763 129,868
Goodwill and other acquired intangibles:
Goodwill 43,332 43,332
Other acquired intangibles, net of accumulated amortization 23,225   26,668
Total net goodwill and other acquired intangibles 66,557 70,000
Other assets 1,825   1,566
Total assets $ 386,618   $ 341,151
 
 
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable $ 12,896 $ 12,392
Accrued expenses 16,475 20,986
Current portion of debt and capital lease obligations 386   552
Total current liabilities 29,757 33,930
 
Debt and capital lease obligations, less current portion 88 333
Other long-term liabilities 6,805 8,860
Deferred income taxes 12,991 11,126
 
Shareholders’ equity:
Common stock 292 285
Additional paid-in capital 62,971 42,212
Retained earnings 273,714   244,405
Total shareholders’ equity 336,977   286,902
Total liabilities and shareholders’ equity $ 386,618   $ 341,151
 
(a) Taken from audited financial statements, which are not presented in their entirety.
 
 
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
   
Three months ended
September 30, 2012 September 30, 2011
Operating activities:
Net income $ 12,267 $ 12,912
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 5,425 5,429
Share-based compensation 1,427 1,502
Loss (gain) on disposal of property and equipment 92 (76 )
Provision for loss on receivables 115 45
Provision for revenue adjustments 490 547
Deferred income taxes 1,023 4,140
Tax benefit for stock options exercised (148 ) (13 )
Changes in operating assets and liabilities
Accounts receivable (426 ) (387 )
Prepaid expenses and other current assets 1,499 (82 )
Accounts payable and accrued expenses (5 ) (1,746 )
Net cash provided by operating activities 21,759 22,271
 
Investing activities:
Proceeds from disposal of property and equipment 131 330
Purchases of property and equipment (2,181 ) (4,851 )
Other 80   15  
Net cash used in investing activities (1,970 ) (4,506 )
 
Financing activities:
Payments of debt and capital lease obligations (139 ) (160 )
Proceeds from exercise of stock options 7,295 90
Payments of cash dividends (2,937 ) (2,066 )
Repurchase of common stock (repurchase program) (24,294 )
Tax benefit for stock options exercised 148   13  
Net cash provided by (used in) financing activities 4,367   (26,417 )
Net increase (decrease) in cash 24,156 (8,652 )
Cash at beginning of period 68,832   96,119  
Cash at end of period $ 92,988   $ 87,467  
 
 
Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
   
Nine months ended
September 30, 2012 September 30, 2011
Operating activities:
Net income $ 36,707 $ 32,750
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization 15,940 15,734
Share-based compensation 4,550 4,457
Loss (gain) on disposal of property and equipment 259 (76 )
Provision for loss on receivables 226 17
Provision for revenue adjustments 1,417 1,480
Deferred income taxes 2,460 6,079
Tax benefit for stock options exercised (354 ) (232 )
Changes in operating assets and liabilities
Accounts receivable (5,599 ) (8,308 )
Prepaid expenses and other current assets (1,629 ) (1,828 )
Accounts payable and accrued expenses (8,298 ) 4,757  
Net cash provided by operating activities 45,679 54,830
 
Investing activities:
Proceeds from disposal of property and equipment 867 997
Purchases of property and equipment (20,499 ) (20,292 )
Other (267 ) 316  
Net cash used in investing activities (19,899 ) (18,979 )
 
Financing activities:
Payments of debt and capital lease obligations (411 ) (488 )
Proceeds from exercise of stock options 15,740 7,721
Payments of cash dividends (7,009 ) (6,187 )
Repurchase of common stock (repurchase program) (24,294 )
Common stock issued under employee stock purchase plan 119 128
Cash settlement of share-based awards for minimum tax withholdings (386 )
Tax benefit for stock options exercised 354   232  
Net cash provided by (used in) financing activities 8,407   (22,888 )
Net increase in cash 34,187 12,963
Cash at beginning of period 58,801   74,504  
Cash at end of period $ 92,988   $ 87,467  
 
 
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
 
Three months ended
September 30,   Percent of   September 30,   Percent of     Percent
2012 Revenue 2011 Revenue Change Change
Operating revenue
Forward Air $ 124.5 86.8 % $ 118.9 87.6 % $ 5.6 4.7 %
FASI 19.5 13.6 17.2 12.7 2.3 13.4
Intercompany eliminations (0.5 ) (0.4 ) (0.4 ) (0.3 ) (0.1 ) 25.0  
Total 143.5   100.0   135.7   100.0   7.8   5.7  
 
Purchased transportation
Forward Air 58.1 46.7 52.1 43.8 6.0 11.5
FASI 5.4 27.7 4.4 25.6 1.0 22.7
Intercompany eliminations (0.4 ) 80.0   (0.4 ) 100.0      
Total 63.1   44.0   56.1   41.3   7.0   12.5  
 
Salaries, wages and employee benefits
Forward Air 24.3 19.5 26.4 22.2 (2.1 ) (8.0 )
FASI 7.4   37.9   7.0   40.7   0.4   5.7  
Total 31.7   22.1   33.4   24.6   (1.7 ) (5.1 )
 
Operating leases
Forward Air 5.2 4.2 4.9 4.1 0.3 6.1
FASI 1.7   8.7   1.7   9.9      
Total 6.9   4.8   6.6   4.9   0.3   4.5  
 
Depreciation and amortization
Forward Air 4.3 3.4 4.4 3.7 (0.1 ) (2.3 )
FASI 1.2   6.2   1.0   5.8   0.2   20.0  
Total 5.5   3.8   5.4   4.0   0.1   1.9  
 
Insurance and claims
Forward Air 2.6 2.1 1.8 1.5 0.8 44.4
FASI 0.5   2.6   0.4   2.3   0.1   25.0  
Total 3.1   2.1   2.2   1.6   0.9   40.9  
 
Fuel expense
Forward Air 1.0 0.8 1.0 0.9
FASI 1.3   6.7   1.4   8.1   (0.1 ) (7.1 )
Total 2.3   1.6   2.4   1.8   (0.1 ) (4.2 )
 
Other operating expenses
Forward Air 9.7 7.8 7.7 6.5 2.0 26.0
FASI 1.7 8.7 1.6 9.3 0.1 6.3
Intercompany eliminations (0.1 ) 20.0       (0.1 ) NM  
Total 11.3   7.9   9.3   6.8   2.0   21.5  
 
Income (loss) from operations
Forward Air 19.3 15.5 20.6 17.3 (1.3 ) (6.3 )
FASI 0.3   1.5   (0.3 ) (1.7 ) 0.6   (200.0 )
Total $ 19.6   13.7 % $ 20.3   15.0 % $ (0.7 ) (3.4 )%
 
 
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
 
Nine months ended
September 30,   Percent of   September 30,   Percent of     Percent
2012 Revenue 2011 Revenue Change Change
Operating revenue
Forward Air $ 373.4 87.1 % $ 340.6 87.7 % $ 32.8 9.6 %
FASI 57.0 13.3 48.4 12.5 8.6 17.8
Intercompany eliminations (1.5 ) (0.4 ) (0.9 ) (0.2 ) (0.6 ) 66.7  
Total 428.9   100.0   388.1   100.0   40.8   10.5  
 
Purchased transportation
Forward Air 173.3 46.4 149.8 44.0 23.5 15.7
FASI 15.5 27.2 11.6 24.0 3.9 33.6
Intercompany eliminations (1.3 ) 86.7   (0.8 ) 88.9   (0.5 ) 62.5  
Total 187.5   43.7   160.6   41.4   26.9   16.7  
 
Salaries, wages and employee benefits
Forward Air 75.4 20.2 75.0 22.0 0.4 0.5
FASI 22.0   38.6   20.3   41.9   1.7   8.4  
Total 97.4   22.7   95.3   24.5   2.1   2.2  
 
Operating leases
Forward Air 15.3 4.1 14.7 4.3 0.6 4.1
FASI 5.5   9.7   5.4   11.1   0.1   1.9  
Total 20.8   4.9   20.1   5.2   0.7   3.5  
 
Depreciation and amortization
Forward Air 12.5 3.4 12.6 3.7 (0.1 ) (0.8 )
FASI 3.5   6.1   3.1   6.4   0.4   12.9  
Total 16.0   3.7   15.7   4.0   0.3   1.9  
 
Insurance and claims
Forward Air 6.4 1.7 4.8 1.4 1.6 33.3
FASI 1.7   3.0   1.3   2.7   0.4   30.8  
Total 8.1   1.9   6.1   1.6   2.0   32.8  
 
Fuel expense
Forward Air 3.2 0.9 3.4 1.0 (0.2 ) (5.9 )
FASI 4.1   7.2   4.0   8.3   0.1   2.5  
Total 7.3   1.7   7.4   1.9   (0.1 ) (1.4 )
 
Other operating expenses
Forward Air 27.4 7.3 25.0 7.4 2.4 9.6
FASI 5.1 8.9 4.5 9.3 0.6 13.3
Intercompany eliminations (0.2 ) 13.3   (0.1 ) 11.1   (0.1 ) 100.0  
Total 32.3   7.5   29.4   7.6   2.9   9.9  
 
Income (loss) from operations
Forward Air 59.9 16.0 55.3 16.2 4.6 8.3
FASI (0.4 ) (0.7 ) (1.8 ) (3.7 ) 1.4   (77.8 )
Total $ 59.5   13.9 % $ 53.5   13.8 % $ 6.0   11.2 %
 
 
Forward Air Corporation
Forward Air Inc. Operating Statistics
     
Three months ended
September 30, September 30, Percent
2012 2011 Change
 
Operating ratio 84.5 % 82.7 % 2.2 %
 
Business days 63.0 64.0 (1.6 )
Business weeks 12.6 12.8 (1.6 )
 
 
Airport-to-airport:
Tonnage
Total pounds ¹ 438,265 437,870 0.1
Average weekly pounds ¹ 34,783 34,209 1.7
 
Linehaul shipments
Total linehaul 691,228 601,150 15.0
Average weekly 54,859 46,965 16.8
 
Forward Air Complete shipments 177,216 97,257 82.2
As a percentage of linehaul shipments 25.6 % 16.2 % 58.0
 
Average linehaul shipment size 634 728 (12.9 )
 

Revenue per pound ²
Linehaul yield $ 17.14 $ 16.95 0.9
Fuel surcharge impact 1.80 1.91 (0.5 )
Forward Air Complete impact 3.20   2.41   3.7  
Total airport-to-airport yield $ 22.14 $ 21.27 4.1
 
 
Logistics:
Miles
Owner operator ¹ 8,485 7,866 7.9
Third party ¹ 4,500   3,334   35.0  
Total Miles 12,985 11,200 15.9
 
Revenue per mile $ 1.61 $ 1.66 (3.0 )
 
Cost per mile $ 1.23 $ 1.25 (1.6 )%
 
 

¹ - In thousands
² - In cents per pound; percentage change is expressed as a percent of total yield.
 
 
Forward Air Corporation
Forward Air Inc. Operating Statistics
     
Nine months ended
September 30, September 30, Percent
2012 2011 Change
 
Operating ratio 84.0 % 83.8 % 0.2 %
 
Business days 191.0 192.0 (0.5 )
Business weeks 38.2 38.4 (0.5 )
 
 
Airport-to-airport:
Tonnage
Total pounds ¹ 1,322,390 1,276,636 3.6
Average weekly pounds ¹ 34,618 33,246 4.1
 
Linehaul shipments
Total linehaul 2,064,323 1,770,198 16.6
Average weekly 54,040 46,099 17.2
 
Forward Air Complete shipments 509,527 269,973 88.7
As a percentage of linehaul shipments 24.7 % 15.3 % 61.4
 
Average linehaul shipment size 641 721 (11.1 )
 
Revenue per pound ²
Linehaul yield $ 17.04 $ 16.80 1.1
Fuel surcharge impact 1.88 1.84 0.2
Forward Air Complete impact 3.04   2.27   3.7  
Total airport-to-airport yield $ 21.96 $ 20.91 5.0
 
 
Logistics:
Miles
Owner operator ¹ 26,590 22,413 18.6
Third party ¹ 12,010   9,706   23.7  
Total Miles 38,600 32,119 20.2
 
Revenue per mile $ 1.64 $ 1.66 (1.2 )
 
Cost per mile $ 1.24 $ 1.25 (0.8 )%
 
 
¹ - In thousands
² - In cents per pound; percentage change is expressed as a percent of total yield.
 

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.

Copyright Business Wire 2010

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