Forward Air Corporation Reports Third Quarter 2009 Results

  Forward Air Corporation Reports Third Quarter 2009 Results

Business Wire

GREENEVILLE, Tenn. -- October 21, 2009

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, 2009.

Operating revenue for the quarter ended September 30, 2009 decreased 15.1% to
$103.1 million from $121.5 million for the same quarter in 2008. Income from
operations was $6.7 million, compared with $19.3 million in the prior-year
quarter. As a percent of operating revenue, income from operations decreased
to 6.5% from 15.9% for the same quarter last year. Net income during the
period was $3.8 million compared to $12.1 million in the prior-year quarter.
Income per diluted share from operations for the third quarter of 2009 was
$0.13 compared with $0.42 in the prior-year quarter.

Operating revenue for the nine months ended September 30, 2009 decreased 14.7%
to $299.4 million from $351.0 million for the same period in 2008. Income from
operations, which includes a first quarter non-cash, pre-tax charge of $7.2
million primarily for goodwill impairment related to the Company’s Forward Air
Solutions segment, was $6.5 million, compared with $56.2 million in the
prior-year period. Including the impact of the goodwill impairment, the
Company’s net income for the nine months ended September 30, 2009, was $3.5
million, compared with $34.2 million in the prior-year period. Net income per
diluted share for the first nine months of 2009 was $0.12 compared with $1.18
in the prior-year period.

“It came as no surprise that our results continued to be negatively impacted
in the third quarter as a result of the global economic recession,” said Bruce
A. Campbell, Chairman, President and CEO. “The pricing environment, which
began to deteriorate late in the first quarter, has remained extremely
challenging but has shown signs of stabilization. In key areas of our Forward
Air, Inc. business segment we did have cause for some guarded optimism. The
final weeks of the quarter saw a sequential firming up of our
airport-to-airport network tonnage that has continued thus far into October.
Within airport-to-airport our Forward Air Complete pick-up and delivery
offering continued to gain traction. During the quarter an average of 14.4% of
our linehaul shipments had a pick-up and or delivery attached compared to 9.4%
in the third quarter of 2008. Lastly, our TLX truckload brokerage group which
saw revenue declines in the second quarter appears to have curtailed that
slide with September revenues coming in flat compared to last year.”

Commenting further, Mr. Campbell said, “The third quarter proved to be more
challenging than originally anticipated for our Solutions business segment.
After a tremendous amount of work getting the right cost structure as well as
achieving new business wins, the peak retail season did not occur in September
as forecasted by our customers. However, in the first weeks of October volumes
would indicate the beginning of a somewhat normalized fourth quarter. Again we
will monitor this trend with cautious optimism.”

Continuing, Mr. Campbell said, “Every day it seems some expert declares the
recovery has begun. We see signs that are encouraging and we do feel the worst
is over, but now is not the time to let down our guard. Our people will
continue to vigilantly control costs ensuring our rapid return to the margins
and returns that our shareholders have historically come to expect of Forward
Air.”

In closing, Mr. Campbell said, “We are pleased to report that for a second
consecutive year and for 10 of the past 11 years Forward Air has been named by
Forbes magazine as one of the “200 Best Small Companies” in America.
Congratulations and thank you to all of the Forward Air employees and
independent contractors who made this honor possible.”

Commenting further on the quarter, Rodney L. Bell, Senior Vice President and
CFO, said, “Cash flow from operations was $9.3 million for the quarter and
$30.7 million year-to-date compared to $20.9 and $38.0 respectively for last
year. We ended the period with just over $27 million in cash and $39.5 million
available on our line of credit. With the completion of our Dallas facility in
July we have no meaningful capital expenditure needs for the balance of 2009
and anticipate 2010 capital expenditures to be approximately $10 million
providing ample free cash flow and flexibility.”

Commenting further, Mr. Bell said, “Assuming current trends remain stable, for
the fourth quarter of 2009, we anticipate a year-over-year decline in revenue
in the range of 10 to 15% and expect income per diluted share to be between
$0.15 and $0.21 per share.”

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2009 results
on Thursday, October 22, 2009 at 10:00 a.m. EDT. The Company’s conference call
will be available online at www.forwardair.com or by dialing 800-841-9385. A
replay of the conference call will be available at www.forwardair.com
beginning shortly after 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 84
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 19 terminals within the
mid-Atlantic, Southeast, Midwest and Southwestern United States.

Forward Air Corporation
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
                                                             
                         Three months ended          Nine months ended
                         September     September     September     September
                         30,           30,           30,           30,
                         2009          2008          2009          2008
Operating revenue:
Forward Air
   Airport-to-airport    $ 66,667      $ 85,901      $ 194,908     $ 257,147
   Logistics               13,172        15,597        38,645        42,688
   Other                   5,596         6,487         16,975        18,464
Forward Air Solutions
   Pool distribution      17,644       13,499       48,864       32,685
Total operating            103,079       121,484       299,392       350,984
revenue
                                                                             
Operating expenses:
Purchased
transportation
Forward Air
   Airport-to-airport      28,025        33,388        82,008        98,432
   Logistics               10,329        11,227        30,127        31,224
   Other                   1,387         1,764         3,681         4,941
Forward Air Solutions
   Pool distribution      3,747        2,505        9,774        5,743
Total purchased            43,488        48,884        125,590       140,340
transportation
Salaries, wages and        28,591        28,504        86,834        84,355
employee benefits
Operating leases           6,631         6,183         20,440        16,918
Depreciation and           5,006         4,134         14,687        11,830
amortization
Insurance and claims       2,045         1,816         6,984         5,690
Fuel expense               1,880         3,052         5,199         8,466
Other operating            8,767         9,583         25,983        27,146
expenses
Impairment of goodwill
and other intangible      --           --           7,157        --
assets
Total operating           96,408       102,156      292,874      294,745
expenses
Income from operations     6,671         19,328        6,518         56,239
                                                                             
Other (expense)
income:
   Interest expense        (177    )     (210    )     (469    )     (839    )
   Other, net             51           115          50           325
Total other expense       (126    )    (95     )    (419    )    (514    )
Income before income       6,545         19,233        6,099         55,725
taxes
Income taxes              2,766        7,136        2,581        21,519
Net income               $ 3,779       $ 12,097      $ 3,518       $ 34,206
                                                                             
Net income per share:
Basic                    $ 0.13        $ 0.42        $ 0.12        $ 1.19
Diluted                  $ 0.13        $ 0.42        $ 0.12        $ 1.18
Weighted average
shares outstanding:
Basic                      28,942        28,871        28,924        28,782
Diluted                    29,026        29,139        28,978        29,067
                                                                             
Dividends per share:     $ 0.07        $ 0.07        $ 0.21        $ 0.21

Forward Air Corporation
Condensed Consolidated Balance Sheets
(Dollars in thousands)
(Unaudited)
                                                              
                                                  September 30,   December 31,
                                                  2009            2008 (a)
Assets
Current assets:
        Cash                                      $   27,230      $  22,093
        Accounts receivable, net                      52,993         57,206
        Other current assets                         14,145        12,290  
Total current assets                                  94,368         91,589
                                                                     
Property and equipment                                203,383        186,377
Less accumulated depreciation and amortization       72,976        63,401  
Total property and equipment, net                     130,407        122,976
Goodwill and other acquired intangibles:
        Goodwill                                      43,332         50,230
        Other acquired intangibles, net              36,997        40,708  
Total goodwill and other acquired intangibles         80,329         90,938
Other assets                                         1,582         2,024   
Total assets                                      $   306,686     $  307,527 
                                                                     
Liabilities and Shareholders’ Equity
Current liabilities:
        Accounts payable                          $   8,509       $  11,633
        Accrued expenses                              16,057         12,927
        Current portion of debt and capital          1,072         1,602   
        lease obligations
Total current liabilities                             25,638         26,162
                                                                     
Long-term debt and capital lease obligations,         52,404         53,035
less current portion
Other long-term liabilities                           3,749          3,055
Deferred income taxes                                 6,136          8,841
                                                                     
Shareholders’ equity:
        Common stock                                  289            289
        Additional paid-in capital                    15,139         10,249
        Retained earnings                            203,331       205,896 
Total shareholders’ equity                           218,759       216,434 
Total liabilities and shareholders’ equity        $   306,686     $  307,527 
                                                                     
(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,     September 30,
                                               2009              2008
Operating activities:
Net income                                     $    3,779        $  12,097
Adjustments to reconcile net income to net
cash provided by operating activities
     Depreciation and amortization                  5,006           4,134
     Share-based compensation                       1,607           1,451
     (Gain) loss on sale or disposal of             (1       )      15
     property and equipment
     Provision for loss on receivables              217             131
     Provision for revenue adjustments              548             1,369
     Deferred income taxes                          (466     )      (793     )
     Tax benefit for stock options exercised        (1       )      (69      )
     Changes in operating assets and
     liabilities:
               Accounts receivable                  (3,721   )      2,209
               Prepaid expenses and other           382             439
               current assets
               Accounts payable and accrued        1,962          (116     )
               expenses
Net cash provided by operating activities           9,312           20,867
                                                                             
Investing activities:
Proceeds from disposal of property and              14              13
equipment
Purchases of property and equipment                 (3,803   )      (7,325   )
Acquisition of businesses                           --              (10,653  )
Other                                              49             (74      )
Net cash used in investing activities               (3,740   )      (18,039  )
                                                                             
Financing activities:
Payments of debt and capital lease                  (390     )      (302     )
obligations
Borrowings on line of credit                        --              15,000
Payments on line of credit                          --              --
Proceeds from exercise of stock options             8               947
Payments of cash dividends                          (2,028   )      (2,026   )
Common stock issued under employee stock            --              --
purchase plan
Cash settlement of share-based awards for           (5       )      (7       )
minimum tax withholdings
Tax benefit for stock options exercised            1              69
Net cash (used in) provided by financing           (2,414   )     13,681
activities
Net increase in cash                                3,158           16,509
Cash at beginning of period                        24,072         1,082
Cash at end of period                          $    27,230       $  17,591

Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                            
                                               Nine months ended
                                               September 30,     September 30,
                                               2009              2008
Operating activities:
Net income                                     $   3,518         $  34,206
Adjustments to reconcile net income to net
cash provided by operating activities
     Depreciation and amortization                 14,687           11,830
     Impairment of goodwill and other              7,157            --
     intangible assets
     Share-based compensation                      5,022            4,571
     (Gain) loss on sale or disposal of            (13       )      36
     property and equipment
     Provision for (recovery) loss on              (74       )      245
     receivables
     Provision for revenue adjustments             1,916            3,273
     Deferred income taxes                         (3,009    )      635
     Tax benefit for stock options exercised       (1        )      (1,148   )
     Changes in operating assets and
     liabilities:
               Accounts receivable                 2,370            (16,092  )
               Prepaid expenses and other          (1,567    )      (1,932   )
               current assets
               Accounts payable and accrued       701             2,398
               expenses
Net cash provided by operating activities          30,707           38,022
                                                                             
Investing activities:
Proceeds from disposal of property and             231              46
equipment
Purchases of property and equipment                (18,828   )      (12,680  )
Acquisition of businesses                          --               (29,299  )
Other                                             405             (167     )
Net cash used in investing activities              (18,192   )      (42,100  )
                                                                             
Financing activities:
Payments of debt and capital lease                 (1,163    )      (1,172   )
obligations
Borrowings on line of credit                       --               45,000
Payments on line of credit                         --               (25,000  )
Proceeds from exercise of stock options            8                3,085
Payments of cash dividends                         (6,081    )      (6,062   )
Common stock issued under employee stock           99               145
purchase plan
Repurchase of common stock                         (242      )      --
Cash settlement of share-based awards for          --               (384     )
minimum tax withholdings
Tax benefit for stock options exercised           1               1,148
Net cash (used in) provided by financing          (7,378    )     16,760
activities
Net increase in cash                               5,137            12,682
Cash at beginning of period                       22,093          4,909
Cash at end of period                          $   27,230        $  17,591

Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
                                                                  
                 Three months ended
                 September   Percent   September   Percent               Percent
                 30,         of        30,         of
                 2009        Revenue   2008        Revenue   Change      Change
Operating
revenue
Forward Air      $ 85.7      83.1  %   $ 108.6     89.4  %   $ (22.9 )   (21.1  ) %
FASI               17.8      17.3        13.6      11.2        4.2       30.9
Intercompany      (0.4  )   (0.4  )    (0.7  )   (0.6  )    0.3       (42.9  )
Eliminations
Total             103.1     100.0      121.5     100.0      (18.4 )   (15.1  )
                                                                                  
Purchased
transportation
Forward Air        39.8      46.4        46.5      42.8        (6.7  )   (14.4  )
FASI               4.0       22.5        3.1       22.8        0.9       29.0
Intercompany      (0.3  )   75.0       (0.7  )   100.0      0.4       (57.1  )
Eliminations
Total             43.5      42.2       48.9      40.2       (5.4  )   (11.0  )
                                                                                  
Salaries,
wages and
employee
benefits
Forward Air        20.6      24.0        23.0      21.2        (2.4  )   (10.4  )
FASI              8.0       44.9       5.5       40.5       2.5       45.5
Total             28.6      27.7       28.5      23.5       0.1       0.4
                                                                                  
Operating
leases
Forward Air        4.6       5.4         4.7       4.3         (0.1  )   (2.1   )
FASI              2.0       11.2       1.5       11.0       0.5       33.3
Total             6.6       6.4        6.2       5.1        0.4       6.5
                                                                                  
Depreciation
and
amortization
Forward Air        4.1       4.8         3.6       3.3         0.5       13.9
FASI              0.9       5.1        0.5       3.7        0.4       80.0
Total             5.0       4.9        4.1       3.4        0.9       22.0
                                                                                  
Insurance and
claims
Forward Air        1.6       1.9         1.7       1.6         (0.1  )   (5.9   )
FASI              0.4       2.2        0.1       0.7        0.3       300.0
Total             2.0       1.9        1.8       1.5        0.2       11.1
                                                                                  
Fuel expense
Forward Air        0.8       0.9         1.6       1.5         (0.8  )   (50.0  )
FASI              1.1       6.2        1.5       11.0       (0.4  )   (26.7  )
Total             1.9       1.8        3.1       2.5        (1.2  )   (38.7  )
                                                                                  
Other
operating
expenses
Forward Air        7.0       8.2         8.2       7.5         (1.2  )   (14.6  )
FASI               1.9       10.7        1.4       10.3        0.5       35.7
Intercompany      (0.1  )   25.0       --        --         (0.1  )   (100.0 )
Eliminations
Total             8.8       8.6        9.6       7.9        (0.8  )   (8.3   )
                                                                                  
Income (loss)
from
operations
Forward Air        7.2       8.4         19.3      17.8        (12.1 )   (62.7  )
FASI              (0.5  )   (2.8  )    --        --         (0.5  )   (100.0 )
Total            $ 6.7       6.5   %   $ 19.3      15.9  %   $ (12.6 )   (65.3  ) %

Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
                                                                  
                 Nine months ended
                 September   Percent   September   Percent               Percent
                 30,         of        30,         of
                 2009        Revenue   2008        Revenue   Change      Change
Operating
revenue
Forward Air      $ 251.2     83.9  %   $ 319.8     91.1  %   $ (68.6 )   (21.5   ) %
FASI               49.2      16.4        32.8      9.4         16.4      50.0
Intercompany      (1.0  )   (0.3  )    (1.6  )   (0.5  )    0.6       (37.5   )
Eliminations
Total             299.4     100.0      351.0     100.0      (51.6 )   (14.7   )
                                                                                   
Purchased
transportation
Forward Air        116.1     46.2        134.6     42.1        (18.5 )   (13.7   )
FASI               10.4      21.1        7.3       22.3        3.1       42.5
Intercompany      (0.9  )   90.0       (1.6  )   100.0      0.7       (43.8   )
Eliminations
Total             125.6     42.0       140.3     40.0       (14.7 )   (10.5   )
                                                                                   
Salaries,
wages and
employee
benefits
Forward Air        63.1      25.1        70.3      22.0        (7.2  )   (10.2   )
FASI              23.7      48.2       14.1      43.0       9.6       68.1
Total             86.8      29.0       84.4      24.1       2.4       2.8
                                                                                   
Operating
leases
Forward Air        14.1      5.6         13.6      4.2         0.5       3.7
FASI              6.3       12.8       3.3       10.0       3.0       90.9
Total             20.4      6.8        16.9      4.8        3.5       20.7
                                                                                   
Depreciation
and
amortization
Forward Air        12.0      4.8         10.6      3.3         1.4       13.2
FASI              2.7       5.5        1.2       3.6        1.5       125.0
Total             14.7      4.9        11.8      3.4        2.9       24.6
                                                                                   
Insurance and
claims
Forward Air        5.6       2.2         5.1       1.6         0.5       9.8
FASI              1.4       2.8        0.6       1.8        0.8       133.3
Total             7.0       2.3        5.7       1.6        1.3       22.8
                                                                                   
Fuel expense
Forward Air        2.3       0.9         4.8       1.5         (2.5  )   (52.1   )
FASI              2.9       5.9        3.7       11.3       (0.8  )   (21.6   )
Total             5.2       1.7        8.5       2.4        (3.3  )   (38.8   )
                                                                                   
Other
operating
expenses
Forward Air        21.0      8.4         23.7      7.4         (2.7  )   (11.4   )
FASI               5.1       10.4        3.5       10.7        1.6       45.7
Intercompany      (0.1  )   10.0       --        --         (0.1  )   (100.0  )
Eliminations
Total             26.0      8.7        27.2      7.7        (1.2  )   (4.4    )
                                                                                   
Impairment of
goodwill and
other
intangible
assets
Forward Air        0.2       0.1         --        --          0.2       100.0
FASI              7.0       14.2       --        --         7.0       100.0
Total             7.2       2.4        --        --         7.2       100.0
                                                                                   
Income (loss)
from
operations
Forward Air        16.8      6.7         57.1      17.9        (40.3 )   (70.6   )
FASI              (10.3 )   (20.9 )    (0.9  )   (2.7  )    (9.4  )   1,044.4
Total            $ 6.5       2.2   %   $ 56.2      16.0  %   $ (49.7 )   (88.4   ) %

Forward Air Corporation
Forward Air Inc. Operating Statistics
                                                                                       
                                                                                                      
                      Three months ended                      Nine months ended
                      September     September     Percent     September 30,   September 30,   Percent
                      30,           30,
                      2009          2008          Change      2009            2008            Change
                                                                                                      
Operating ratio         91.6    %     82.2    %   (11.4 ) %     93.3      %     82.1      %   (13.6 ) %
                                                                                                      
Business days           64.0          64.0        --            191.0           192.0         (0.5  )
Business weeks          12.8          12.8        --            38.2            38.4          (0.5  )
                                                                                                      
                                                                                                      
Airport-to-airport:
Tonnage
Total pounds¹           357,768       441,269     (18.9 )       1,054,048       1,336,801     (21.2 )
Average weekly          27,951        34,474      (18.9 )       27,593          34,813        (20.7 )
pounds¹
                                                                                                      
Linehaul shipments
Total linehaul          511,959       568,031     (9.9  )       1,529,233       1,746,828     (12.5 )
Average weekly          39,997        44,377      (9.9  )       40,032          45,490        (12.0 )
                                                                                                      
Forward Air             73,696        53,161      38.6          194,694         145,452       33.9
Complete shipments
As a percentage of      14.4    %     9.4     %   53.8          12.7      %     8.3       %   53.0
linehaul shipments
                                                                                                      
Average linehaul        699           777         (10.0 )       689             765           (9.9  )
shipment size
                                                                                                      
Revenue per pound²
Linehaul yield          15.91         16.39       (2.4  )       16.14           16.56         (2.2  )
Fuel surcharge          0.93          2.15        (6.2  )       0.79            1.81          (5.3  )
impact
Forward Air             1.83          1.17        3.3           1.60            0.95          3.4
Complete impact
Total
airport-to-airport      18.67         19.71       (5.3  )       18.53           19.32         (4.1  )
yield
                                                                                                      
                                                                                                      
Logistics:
Miles
Owner operator¹         6,111         4,812       27.0          17,916          13,432        33.4
Third party¹            2,288         3,618       (36.8 )       6,709           11,055        (39.3 )
Total Miles             8,399         8,430       (0.4  )       24,625          24,487        0.6
                                                                                                      
Revenue per mile      $ 1.58        $ 1.80        (12.2 )     $ 1.58          $ 1.74          (9.2  )
                                                                                                      
Cost per mile         $ 1.23        $ 1.33        (7.5  ) %   $ 1.22          $ 1.25          (2.4  ) %
                                                                                                      
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
Section27A of the Securities Act of 1933, as amended, and Section21E 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.

Contact:

Forward Air Corporation
Rodney L. Bell, 423-636-7000
rbell@forwardair.com
 
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