Forward Air Corporation Reports Third Quarter 2012 Results

  Forward Air Corporation Reports Third Quarter 2012 Results

Business Wire

GREENEVILLE, Tenn. -- October 18, 2012

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 September30, 2012.

Operating revenue for the quarter ended September30, 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 September30, 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,   September      September     September
                      2012           30,            30,           30,
                                      2011           2012          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       143,514         135,749        428,921       388,143
revenue
                                                                   
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       63,102          56,089         187,543       160,621
transportation
Salaries, wages and   31,698          33,402         97,408        95,336
employee benefits
Operating leases      6,895           6,672          20,826        20,083
Depreciation and      5,425           5,429          15,940        15,734
amortization
Insurance and         3,098           2,120          8,132         6,140
claims
Fuel expense          2,318           2,406          7,271         7,357
Other operating       11,352         9,311         32,303       29,390    
expenses
Total operating       123,888        115,429       369,423      334,661   
expenses
Income from           19,626          20,320         59,498        53,482
operations
                                                                   
Other income
(expense):
Interest expense      (111       )    (131       )   (241      )   (468      )
Other, net            (21        )    10            (6        )   57        
Total other expense   (132       )    (121       )   (247      )   (411      )
Income before         19,494          20,199         59,251        53,071
income taxes
Income taxes          7,227          7,287         22,544       20,321    
Net income and
comprehensive         $  12,267      $  12,912     $ 36,707     $ 32,750  
income
                                                                   
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         $  0.10        $  0.07       $ 0.24       $ 0.21    
share:
                                                                             


Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                 September 30,  December 31,
                                                  2012            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    23,225         26,668
amortization
Total net goodwill and other acquired             66,557          70,000
intangibles
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         386            552
obligations
Total current liabilities                         29,757          33,930
                                                                  
Debt and capital lease obligations, less          88              333
current portion
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,   September 30,
                                                 2012            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          92              (76        )
equipment
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           131             330
equipment
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           —               (24,294    )
program)
Tax benefit for stock options exercised          148            13         
Net cash provided by (used in) financing         4,367          (26,417    )
activities
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,   September 30,
                                                 2012            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          259             (76        )
equipment
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           867             997
equipment
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           —               (24,294    )
program)
Common stock issued under employee stock         119             128
purchase plan
Cash settlement of share-based awards for        (386       )    —
minimum tax withholdings
Tax benefit for stock options exercised          354            232        
Net cash provided by (used in) financing         8,407          (22,888    )
activities
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  Percent  September  Percent            Percent
                 30,         of        30,         of
                 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     (0.5    )   (0.4  )   (0.4    )   (0.3  )   (0.1   )   25.0   
eliminations
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     (0.4    )   80.0     (0.4    )   100.0    —         —      
eliminations
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     (0.1    )   20.0     —          —        (0.1   )   NM     
eliminations
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  Percent  September  Percent            Percent
                 30,         of        30,         of
                 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     (1.5    )   (0.4  )   (0.9    )   (0.2  )   (0.6   )   66.7  
eliminations
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     (1.3    )   86.7     (0.8    )   88.9     (0.5   )   62.5  
eliminations
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     (0.2    )   13.3     (0.1    )   11.1     (0.1   )   100.0 
eliminations
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          25.6        %    16.2       %    58.0
shipments
                                                                      
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          24.7         %   15.3        %   61.4
shipments
                                                                      
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
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