Forward Air Corporation Reports Third Quarter 2012 Results

Forward Air Corporation Reports Third Quarter 2012 Results

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NAS: 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 24th, 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

$