Forward Air Corporation Reports Second Quarter 2013 Results

Forward Air Corporation Reports Second Quarter 2013 Results

GREENEVILLE, Tenn.--(BUSINESS WIRE)-- Forward Air Corporation (NAS: FWRD) today reported revenue, operating income, net income and diluted earnings per share for the second quarter and six months ended June 30, 2013.

Operating revenue for the quarter ended June 30, 2013 increased 7.8% to $159.8 million from $148.3 million for the same quarter in 2012. Income from operations was $22.5 million, compared with $23.1 million in the prior-year quarter. As a percent of operating revenue, income from operations was 14.1%, compared with 15.6% in the same quarter last year. Net income during the period was $13.8 million compared to $14.2 million in the prior-year quarter. Income per diluted share for the second quarter of 2013 was $0.45 compared with $0.48 in the prior-year quarter.

Operating revenue for the six months ended June 30, 2013 increased 5.6% to $301.4 million from $285.4 million for the same period in 2012. Income from operations was $38.3 million, compared with $39.9 million in the prior-year period. As a percent of operating revenue, income from operations was 12.7% for the first six months of 2013 compared to 14.0% for the same period in 2012. Net income during the period was $24.7 million compared to $24.4 million in the prior-year period. Income per diluted share from operations for the first six months of 2013 was $0.81 compared with $0.83 in the prior-year period.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the second quarter said, "Within our Forward Air, Inc. business segment, the overall tepid macroeconomic environment, the loss of a large customer which created a tough prior year comparison and our continued pricing challenges all conspired to make for a difficult second quarter. Fortunately, we believe that each of these headwinds will be short-lived. With respect to the macroeconomic environment, we have been experiencing increased network volumes. While a few weeks don't equate to a trend, we are hopeful that it is a positive sign for an improved freight environment. As for the customer loss creating a difficult year-over-year comparison, the third quarter will mark the last full quarter where this is an issue as the former customer exited our services during the fourth quarter of last year. Lastly, we believe the irrational pricing behavior of some of our competitors is not financially sustainable. Those who maintained pricing discipline will ultimately be rewarded."

Turning to the Forward Air Solutions business segment, Mr. Campbell said, "We mentioned on our first quarter call that Solutions was bringing on our second large customer for 2013. While this did in fact happen, and while most of our effected locations handled this well, three of our terminals struggled with the integration. This resulted in a small loss for the quarter and we are in the process of addressing those challenged locations."

Commenting on the first full quarter of our newly acquired Total Quality, Inc. (TQI) business segment, Mr. Campbell said, "Our team continued to make substantial progress integrating TQI. We improved our operating margins each month and ended the quarter with a 92.7% operating ratio for June. We believe that our continued integration initiatives, including, most notably, a new operating system due to be online in early fourth quarter, along with a robust new business pipeline should get us to a sub-90 operating ratio in fairly short order."

In closing, Mr. Campbell said, "As always, I would like to thank the Forward Air team of employees and independent contractors for their dedication and hard work. Their superlative efforts differentiate us from others in the industry."

Commenting on the Company's guidance for the third quarter, Rodney L. Bell, Senior Vice President and CFO said, "We anticipate that our third quarter 2013 revenues will increase in the range of 10% to 15% over the comparable 2012 period. We estimate that approximately 8% of that growth will result from the TQI acquisition. We expect income per diluted share to be between $0.43 and $0.48 per share. This compares to $0.41 per share in the third quarter of 2012."

Review of Financial Results

Forward Air will hold a conference call to discuss second quarter 2013 results on Friday, July 19, 2013 at 9:00 a.m. EDT. The Company's conference call will be available online at or by dialing 800-230-1059. A replay of the conference call will be available at beginning shortly after the completion of the live call.

About Forward Air Corporation

Forward Air Corporation operates three business segments, Forward Air, Inc., Forward Air Solutions, Inc. and Total Quality, 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 88 terminals located on or near major airports 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 24 terminals within the mid-Atlantic, Southeast, Midwest and Southwestern United States.

Total Quality, Inc. utilizes industry-leading temperature-controlled equipment, 24-hour monitoring and tracking technology and layered security features to provide our customers with the highest level of service. In addition to our core pharmaceutical services, we provide truckload and less-than-truckload brokerage transportation services. Headquartered in central Michigan, we service the United States, Canada and Mexico.

Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
Three months endedSix months ended

June 30,


June 30,

June 30,

June 30,

Operating revenue:
Pool distribution24,123 17,969 46,193 36,908 
Total operating revenue159,804148,326301,364285,407
Operating expenses:
Purchased transportation
Pool distribution7,442 4,686 13,838 9,813 
Total purchased transportation70,25365,243131,252124,441
Salaries, wages and employee benefits36,03132,53669,98365,710
Operating leases6,8886,82413,93213,931
Depreciation and amortization5,9715,39411,15710,515
Insurance and claims3,2152,2365,8745,034
Fuel expense3,6562,4126,6644,953
Other operating expenses11,285 10,598 24,207 20,951 
Total operating expenses137,299 125,243 263,069 245,535 
Income from operations22,50523,08338,29539,872
Other income (expense):
Interest expense(128)(79)(256)(130)
Other, net14 (2)45 15 
Total other expense(114)(81)(211)(115)
Income before income taxes22,39123,00238,08439,757
Income taxes8,560 8,835 13,399 15,317 
Net income and comprehensive income$13,831 $14,167 $24,685 $24,440 
Net income per share:
Basic$0.46 $0.49 $0.83 $0.85 
Diluted$0.45 $0.48 $0.81 $0.83 
Weighted average shares outstanding:
Dividends per share:$0.10 $0.07 $0.20 $0.14 
Forward Air Corporation
Consolidated Balance Sheets
(In thousands)

June 30,


December 31,
2012 (a)

Current assets:
Cash and cash equivalents$81,101$112,182
Accounts receivable, net76,28075,262
Other current assets19,900 10,952
Total current assets177,281198,396
Property and equipment266,811239,138
Less accumulated depreciation and amortization109,346 105,581
Net property and equipment157,465133,557
Goodwill and other acquired intangibles:
Other acquired intangibles, net of accumulated amortization43,138 22,102
Total net goodwill and other acquired intangibles130,90965,434
Other assets2,537 1,800
Total assets$468,192 $399,187
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable$12,189$11,168
Accrued expenses17,22016,476
Current portion of debt and capital lease obligations121 276
Total current liabilities29,53027,920
Debt and capital lease obligations, less current portion2358
Other long-term liabilities8,9857,098
Deferred income taxes25,89912,440
Shareholders' equity:
Common stock303292
Additional paid-in capital98,91564,644
Retained earnings304,537 286,735
Total shareholders' equity403,755 351,671
Total liabilities and shareholders' equity$468,192 $399,187
(a) Taken from audited financial statements, which are not presented in their entirety.
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Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
Three months ended

June 30,

June 30,

Operating activities:
Net income$13,831$14,167
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization5,9715,394
Share-based compensation1,5361,517
Gain on disposal of property and equipment(368)(29)
Provision for (recovery) loss on receivables(11)1
Provision for revenue adjustments627500
Deferred income tax2,0862,241
Excess tax benefit for stock options exercised(632)(2)
Changes in operating assets and liabilities
Accounts receivable1,185(2,682)
Prepaid expenses and other current assets(1,360)(2,203)
Accounts payable and accrued expenses(6,219)(12,939)
Net cash provided by operating activities16,6465,965
Investing activities:
Proceeds from disposal of property and equipment884531
Purchases of property and equipment