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Forward Air Corporation Reports Fourth Quarter and Fiscal 2012 Results and Announces Quarterly Cash Dividend



  Forward Air Corporation Reports Fourth Quarter and Fiscal 2012 Results and
  Announces Quarterly Cash Dividend

Business Wire

GREENEVILLE, Tenn. -- February 11, 2013

Forward Air Corporation (NASDAQ:FWRD) today reported results for the fourth
quarter and year ended December 31, 2012.

Operating revenue for the quarter ended December 31, 2012 increased 4.9% to
$155.5 million from $148.2 million for the same quarter in 2011. Income from
operations was $24.0 million, compared with $23.6 million for the fourth
quarter of 2011, an increase of 1.7%. Net income per diluted share for the
fourth quarter of 2012 was $0.54 compared with $0.50 in the same quarter of
2011, an increase of 8.0%.

Operating revenue for the year ended December 31, 2012 increased 8.9% to
$584.4 million from $536.4 million for the year ended December 31, 2011.
Income from operations was $83.5 million, compared with $77.1 million in 2011.
Net income per diluted share for the year ended December 31, 2012 was $1.78
compared with $1.60 in 2011.

Bruce A. Campbell, Chairman, President and CEO, said, “Overall, we achieved
the fourth quarter Forward Air, Inc. operating segment results that we
anticipated.” Commenting on the Forward Air Solutions business segment, Mr.
Campbell said, “Over the course of 2012, we made good progress within our
Solutions service offering. In the fourth quarter, we grew revenue 12.5%
primarily on revenues from newly-won business. While the profitability from
our new business wins is initially offset by the start-up costs associated
with any new business launch, we are encouraged by how robust our new business
pipeline looks for the first quarter.”

In closing, Mr. Campbell said, “As always, I would like to acknowledge our
employees and independent contractors. Their contributions were critical to
our delivering another solid year for Forward Air and continued value to our
shareholders.”

In commenting on the Company’s guidance for the first quarter, Rodney L. Bell,
Senior Vice President and CFO said, “We anticipate our first quarter 2013
revenues will increase in the range of 5% to 8% over the comparable 2012
period, and we expect income per diluted share to be between $0.36 and $0.40
per share. This compares to $0.35 per share in the first quarter of 2012.”

On February 8, 2013, our Board of Directors declared a quarterly cash dividend
of $0.10 per share of common stock. The dividend is payable to shareholders of
record at the close of business on March 8, 2013, and is expected to be paid
on March 22, 2013.

This quarterly dividend is pursuant to a cash dividend policy approved by the
Board of Directors, which anticipates a total annual dividend of $0.40 per
share of common stock, payable in quarterly increments of $0.10 per share of
common stock. The actual declaration of future cash dividends, and the
establishment of record and payment dates, is subject to final determination
by the Board of Directors each quarter after its review of the Company’s
financial performance.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter and year end
2012 results on Tuesday, February 12, 2013 at 9:00 a.m. EST. The Company’s
conference call will be available online at www.forwardair.com or by dialing
800-230-1059. 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 87 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 19 cities within the Mid-Atlantic, Southeast, Midwest and
Southwestern United States.

 
Forward Air Corporation
Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
                                                     
                       Three months ended             Year ended
                       December        December       December        December
                       31,             31,            31,             31,
                       2012            2011           2012            2011
Operating revenue:
Forward Air
Airport-to-airport     $ 100,691       $ 95,024       $ 390,697       $ 361,630
Logistics              20,473          21,485         83,787          74,394
Other                  6,639           7,116          26,137          27,640
Forward Air
Solutions
Pool distribution      27,722          24,634         83,825          72,738     
Total operating        155,525         148,259        584,446         536,402
revenue
                                                                       
Operating
expenses:
Purchased
transportation
Forward Air
Airport-to-airport     40,519          38,294         160,065         142,705
Logistics              15,447          16,045         63,203          56,259
Other                  1,989           1,752          7,241           6,681
Forward Air
Solutions
Pool distribution      7,221           6,288          22,211          17,355     
Total purchased        65,176          62,379         252,720         223,000
transportation
Salaries, wages
and employee           37,597          35,315         135,006         130,651
benefits
Operating leases       7,164           7,039          27,989          27,122
Depreciation and       5,081           5,259          21,021          20,993
amortization
Insurance and          3,177           2,658          11,309          8,798
claims
Fuel expense           2,767           2,683          10,038          10,041
Other operating        10,529          9,297          42,831          38,687     
expenses
Total operating        131,491         124,630        500,914         459,292    
expenses
Income from            24,034          23,629         83,532          77,110
operations
                                                                       
Other income
(expense):
Interest expense       (150      )     (151     )     (391      )     (619      )
Other, net             20              16             14              74         
Total other            (130      )     (135     )     (377      )     (545      )
expense
Income before          23,904          23,494         83,155          76,565
income taxes
Income taxes           7,944           9,045          30,487          29,366     
Net income             $ 15,960        $ 14,449       $ 52,668        $ 47,199   
                                                                       
Net income per
share:
Basic                  $ 0.55          $ 0.51         $ 1.82          $ 1.62     
Diluted                $ 0.54          $ 0.50         $ 1.78          $ 1.60     
Weighted average
shares
outstanding:
Basic                  29,190          28,502         28,967          29,052
Diluted                29,716          28,968         29,536          29,435
                                                                       
Dividends per          $ 0.10          $ 0.07         $ 0.34          $ 0.28     
share:
                                                                                 

 
Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
                                                 December 31,     December 31,
                                                 2012            
                                                                  2011 (a)
Assets
Current assets:
Cash and cash equivalents                        $  112,182       $   58,801
Accounts receivable, net                         75,262           70,922
Other current assets                             10,952           9,994
Total current assets                             198,396          139,717
                                                                   
Property and equipment                           239,138          223,135
Less accumulated depreciation and                105,581          93,267
amortization
Net property and equipment                       133,557          129,868
Goodwill and other acquired intangibles:
Goodwill                                         43,332           43,332
Other acquired intangibles, net of               22,102           26,668
accumulated amortization
Total net goodwill and other acquired            65,434           70,000
intangibles
Other assets                                     1,800            1,566
Total assets                                     $  399,187       $   341,151
                                                                   
                                                                   
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable                                 $  11,168        $   12,392
Accrued expenses                                 16,476           20,986
Current portion of debt and capital lease        276              552
obligations
Total current liabilities                        27,920           33,930
                                                                   
Debt and capital lease obligations, less         58               333
current portion
Other long-term liabilities                      7,098            8,860
Deferred income taxes                            12,440           11,126
Commitments and contingencies
Shareholders’ equity:
Common stock                                     292              285
Additional paid-in capital                       64,644           42,212
Retained earnings                                286,735          244,405
Total shareholders’ equity                       351,671          286,902
Total liabilities and shareholders’ equity       $  399,187       $   341,151
                                                                   
(a) Taken from audited financial statements, which are not presented in their
entirety.
 

Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                                 
                                                 Three months ended
                                                 December 31,     December 31,
                                                 2012             2011
Operating activities:
Net income                                       $  15,960        $  14,449
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization                    5,081            5,259
Share-based compensation                         1,500            1,514
Loss (gain) on disposal of property and          59               (6         )
equipment
Provision for recovery on receivables            (27        )     (234       )
Provision for revenue adjustments                586              471
Deferred income taxes                            (417       )     (931       )
Tax benefit for stock options exercised          (31        )     (515       )
Changes in operating assets and liabilities
Accounts receivable                              (943       )     (1,585     )
Prepaid expenses and other current assets        298              71
Accounts payable and accrued expenses            841              3,636       
Net cash provided by operating activities        22,907           22,129
                                                                   
Investing activities:
Proceeds from disposal of property and           44               270
equipment
Purchases of property and equipment              (854       )     (924       )
Other                                            4                (38        )
Net cash used in investing activities            (806       )     (692       )
                                                                   
Financing activities:
Payments of debt and capital lease               (140       )     (149       )
obligations
Payments on line of credit                       —                (50,000    )
Proceeds from exercise of stock options          —                3,225
Payments of cash dividends                       (2,938     )     (2,007     )
Repurchase of common stock (repurchase           —                (1,807     )
program)
Common stock issued under employee stock         140              120
purchase plan
Tax benefit for stock options exercised          31               515         
Net cash used in financing activities            (2,907     )     (50,103    )
Net increase (decrease) in cash                  19,194           (28,666    )
Cash at beginning of period                      92,988           87,467      
Cash at end of period                            $  112,182       $  58,801   
                                                                              

 
Forward Air Corporation
Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                 Year ended
                                                 December 31,     December 31,
                                                 2012             2011
Operating activities:
Net income                                       $  52,668        $  47,199
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization                    21,021           20,993
Share-based compensation                         6,050            5,971
Loss (gain) on disposal of property and          318              (82        )
equipment
Provision for loss (recovery) on receivables     199              (217       )
Provision for revenue adjustments                2,003            1,951
Deferred income taxes                            2,043            5,148
Tax benefit for stock options exercised          (385       )     (747       )
Changes in operating assets and liabilities
Accounts receivable                              (6,542     )     (9,893     )
Prepaid expenses and other current assets        (1,331     )     (1,757     )
Accounts payable and accrued expenses            (7,458     )     8,393       
Net cash provided by operating activities        68,586           76,959
                                                                   
Investing activities:
Proceeds from disposal of property and           911              1,267
equipment
Purchases of property and equipment              (21,353    )     (21,216    )
Other                                            (263       )     278         
Net cash used in investing activities            (20,705    )     (19,671    )
                                                                   
Financing activities:
Payments of debt and capital lease               (551       )     (637       )
obligations
Payments on line of credit                       —                (50,000    )
Proceeds from exercise of stock options          15,740           10,946
Payments of cash dividends                       (9,947     )     (8,194     )
Repurchase of common stock (repurchase           —                (26,101    )
program)
Common stock issued under employee stock         259              248
purchase plan
Cash settlement of share-based awards for        (386       )     —
minimum tax withholdings
Tax benefit for stock options exercised          385              747         
Net cash provided by (used in) financing         5,500            (72,991    )
activities
Net increase (decrease) in cash                  53,381           (15,703    )
Cash at beginning of year                        58,801           74,504      
Cash at end of year                              $  112,182       $  58,801   
                                                                              

 
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
                  
                   Three months ended
                   December      Percent     December      Percent                 Percent
                   31,           of          31,           of
                   2012          Revenue     2011          Revenue     Change      Change
Operating
revenue
Forward Air        $ 128.4       82.6  %     $ 123.9       83.6  %     $ 4.5       3.6   %
FASI               27.9          17.9        24.8          16.7        3.1         12.5
Intercompany       (0.8    )     (0.5  )     (0.5    )     (0.3  )     (0.3  )     60.0   
eliminations
Total              155.5         100.0       148.2         100.0       7.3         4.9    
                                                                                    
Purchased
transportation
Forward Air        58.1          45.3        56.3          45.4        1.8         3.2
FASI               7.8           27.9        6.5           26.2        1.3         20.0
Intercompany       (0.7    )     87.5        (0.4    )     80.0        (0.3  )     75.0   
eliminations
Total              65.2          41.9        62.4          42.1        2.8         4.5    
                                                                                    
Salaries,
wages and
employee
benefits
Forward Air        27.7          21.6        26.2          21.1        1.5         5.7
FASI               9.9           35.5        9.1           36.7        0.8         8.8    
Total              37.6          24.2        35.3          23.8        2.3         6.5    
                                                                                    
Operating
leases
Forward Air        5.2           4.1         4.9           4.0         0.3         6.1
FASI               2.0           7.2         2.1           8.5         (0.1  )     (4.8  )
Total              7.2           4.6         7.0           4.7         0.2         2.9    
                                                                                    
Depreciation
and
amortization
Forward Air        3.9           3.0         4.2           3.4         (0.3  )     (7.1  )
FASI               1.2           4.3         1.1           4.4         0.1         9.1    
Total              5.1           3.3         5.3           3.6         (0.2  )     (3.8  )
                                                                                    
Insurance and
claims
Forward Air        2.5           1.9         2.3           1.9         0.2         8.7
FASI               0.7           2.5         0.3           1.2         0.4         133.3  
Total              3.2           2.1         2.6           1.8         0.6         23.1   
                                                                                    
Fuel expense
Forward Air        1.0           0.8         1.1           0.9         (0.1  )     (9.1  )
FASI               1.7           6.1         1.6           6.4         0.1         6.3    
Total              2.7           1.7         2.7           1.8         —           —      
                                                                                    
Other
operating
expenses
Forward Air        8.4           6.5         7.7           6.2         0.7         9.1
FASI               2.2           7.9         1.7           6.9         0.5         29.4
Intercompany       (0.1    )     12.5        (0.1    )     20.0        —           —      
eliminations
Total              10.5          6.8         9.3           6.3         1.2         12.9   
                                                                                    
Income from
operations
Forward Air        21.6          16.8        21.2          17.1        0.4         1.9
FASI               2.4           8.6         2.4           9.7         —           —      
Total              $ 24.0        15.4  %     $ 23.6        15.9  %     $ 0.4       1.7   %
                                                                                          

 
Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
                  
                   Year ended
                   December      Percent     December      Percent                  Percent
                   31,           of          31,           of
                   2012          Revenue     2011          Revenue     Change       Change
Operating
revenue
Forward Air        $ 501.7       85.9  %     $ 464.5       86.6  %     $ 37.2       8.0   %
FASI               85.0          14.5        73.2          13.6        11.8         16.1
Intercompany       (2.3    )     (0.4  )     (1.3    )     (0.2  )     (1.0   )     76.9   
eliminations
Total              584.4         100.0       536.4         100.0       48.0         8.9    
                                                                                     
Purchased
transportation
Forward Air        231.4         46.1        206.0         44.4        25.4         12.3
FASI               23.3          27.4        18.2          24.9        5.1          28.0
Intercompany       (2.0    )     87.0        (1.2    )     92.3        (0.8   )     66.7   
eliminations
Total              252.7         43.3        223.0         41.6        29.7         13.3   
                                                                                     
Salaries,
wages and
employee
benefits
Forward Air        103.1         20.6        101.3         21.8        1.8          1.8
FASI               31.9          37.5        29.4          40.2        2.5          8.5    
Total              135.0         23.1        130.7         24.4        4.3          3.3    
                                                                                     
Operating
leases
Forward Air        20.4          4.1         19.7          4.2         0.7          3.6
FASI               7.6           9.0         7.4           10.1        0.2          2.7    
Total              28.0          4.8         27.1          5.0         0.9          3.3    
                                                                                     
Depreciation
and
amortization
Forward Air        16.4          3.3         16.8          3.6         (0.4   )     (2.4  )
FASI               4.7           5.5         4.2           5.7         0.5          11.9   
Total              21.1          3.6         21.0          3.9         0.1          0.5    
                                                                                     
Insurance and
claims
Forward Air        8.9           1.8         7.2           1.6         1.7          23.6
FASI               2.4           2.8         1.6           2.2         0.8          50.0   
Total              11.3          1.9         8.8           1.6         2.5          28.4   
                                                                                     
Fuel expense
Forward Air        4.2           0.8         4.4           0.9         (0.2   )     (4.5  )
FASI               5.8           6.8         5.6           7.6         0.2          3.6    
Total              10.0          1.7         10.0          1.9         —            —      
                                                                                     
Other
operating
expenses
Forward Air        35.8          7.1         32.6          7.0         3.2          9.8
FASI               7.3           8.6         6.2           8.5         1.1          17.7
Intercompany       (0.3    )     13.0        (0.1    )     7.7         (0.2   )     200.0  
eliminations
Total              42.8          7.3         38.7          7.2         4.1          10.6   
                                                                                     
Income from
operations
Forward Air        81.5          16.2        76.5          16.5        5.0          6.5
FASI               2.0           2.4         0.6           0.8         1.4          233.3  
Total              $ 83.5        14.3  %     $ 77.1        14.4  %     $ 6.4        8.3   %
                                                                                           

 
Forward Air Corporation
Forward Air Inc. Operating Statistics
                                                                     
                                    Three months ended
                                    December 31,     December 31,     Percent
                                    2012             2011             Change
                                                                       
Operating ratio                     83.2      %      82.9      %      0.4   %
                                                                       
Business days                       64.0             63.0             1.6
Business weeks                      12.8             12.6             1.6
                                                                       
                                                                       
Airport-to-airport:
Tonnage
Total pounds ¹                      456,007          458,773          (0.6  )
Average weekly pounds ¹             35,626           36,411           (2.2  )
                                                                       
Linehaul shipments
Total linehaul                      727,274          649,152          12.0
Average weekly                      56,818           51,520           10.3
                                                                       
Forward Air Complete shipments      135,680          104,143          30.3
As a percentage of linehaul         18.7      %      16.0      %      16.9
shipments
                                                                       
Average linehaul shipment size      627              707              (11.3 )
                                                                       
Revenue per pound ²
Linehaul yield                      $  17.41         $  16.83         2.8
Fuel surcharge impact               1.95             1.67             1.3
Forward Air Complete impact         2.74             2.25             2.4    
Total airport-to-airport yield      $  22.10         $  20.75         6.5
                                                                       
                                                                       
Logistics:
Miles
Owner operator ¹                    8,501            8,472            0.3
Third party ¹                       4,152            4,093            1.4    
Total Miles                         12,653           12,565           0.7
                                                                       
Revenue per mile                    $  1.65          $  1.71          (3.5  )
                                                                       
Cost per mile                       $  1.22          $  1.28          (4.7  )%
                                                                       
                                                                       
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
                                                                     
                                    Year ended
                                    December 31,     December 31,     Percent
                                    2012             2011             Change
                                                                       
Operating ratio                     83.8       %     83.5       %     0.4   %
                                                                       
Business days                       255.0            255.0            —
Business weeks                      51.0             51.0             —
                                                                       
                                                                       
Airport-to-airport:
Tonnage
Total pounds ¹                      1,778,397        1,735,409        2.5
Average weekly pounds ¹             34,871           34,028           2.5
                                                                       
Linehaul shipments
Total linehaul                      2,791,597        2,419,350        15.4
Average weekly                      54,737           47,438           15.4
                                                                       
Forward Air Complete shipments      645,207          374,116          72.5
As a percentage of linehaul         23.1       %     15.5       %     49.0
shipments
                                                                       
Average linehaul shipment size      637              717              (11.2 )
                                                                       
Revenue per pound ²
Linehaul yield                      $   17.13        $   16.80        1.6
Fuel surcharge impact               1.90             1.80             0.5
Forward Air Complete impact         2.97             2.27             3.3    
Total airport-to-airport yield      $   22.00        $   20.87        5.4
                                                                       
                                                                       
Logistics:
Miles
Owner operator ¹                    35,091           30,885           13.6
Third party ¹                       16,162           13,798           17.1   
Total Miles                         51,253           44,683           14.7
                                                                       
Revenue per mile                    $   1.64         $   1.67         (1.8  )
                                                                       
Cost per mile                       $   1.24         $   1.26         (1.6  )%
                                                                       
                                                                       
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.

Contact:

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