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Forward Air Corporation Reports First Quarter 2013 Results

  Forward Air Corporation Reports First Quarter 2013 Results

Business Wire

GREENEVILLE, Tenn. -- April 18, 2013

Forward Air Corporation (NASDAQ:FWRD) today reported revenue, operating
income, net income and diluted earnings per share for the three months ended
March31, 2013.

Operating revenue for the three months ended March31, 2013 increased 3.3% to
$141.6 million from $137.1 million for the same quarter in 2012. Income from
operations was $15.8 million, compared with $16.8 million in the prior-year
quarter. As a percent of operating revenue, income from operations was 11.2%,
compared with 12.3% in the same quarter last year. Net income during the
period increased to $10.9 million from $10.3 million in the prior-year
quarter. Income per diluted share for the first quarter of 2013 was $0.36
compared with $0.35 in the prior-year quarter.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the first
quarter said, “The first quarter proved to be a more challenging operating
environment than we originally expected. Airport-to-airport volumes, which
were up slightly at the beginning of the period, did not show their typical
end-of-quarter strength. Beyond a continued weakness in the overall
macroeconomic environment, we were challenged by consistently harsh weather
throughout the quarter as well as increased irrational pricing from our
competition.”

Turning to the Forward Air Solutions business segment, Mr. Campbell said, “We
had another good quarter of new business wins. With the associated early
quarter start-up costs behind us, Solutions made money in March. We will have
additional new business come on line in the second quarter. Overall, we
anticipate Solutions to be profitable in the second quarter and for the
balance of the year.”

Commenting on the March 4, 2013 acquisition of Total Quality, Inc. (TQI), Mr.
Campbell said, “Since the successful close of TQI in early March, our team has
been busy with its integration. While we will be quick to take advantage of
obvious cost reduction opportunities, the real benefit will come once we have
completed implementation of a new operating system. Without regard to the
approximately $0.02 per share in transaction costs included in Forward Air,
Inc.'s operating results, we were pleased to see TQI post a small profit for
the abbreviated March period.”

In closing, Mr. Campbell said, “As always, I would like to thank the Forward
Air team of employees and independent contractors for their dedication and
hard work. Without them, these results would have not been possible.”

Commenting on the Company's guidance for the second quarter, Rodney L. Bell,
Senior Vice President and CFO said, “We anticipate that our second quarter
2013 revenues will increase in the range of 12% to 18% over the comparable
2012 period. We estimate that approximately 9% of that growth will result from
the TQI acquisition. We expect income per diluted share to be between $0.51
and $0.55 per share. This compares to $0.48 per share in the second quarter of
2012.”

Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2013 results
on Friday, April 19, 2013 at 9:00 a.m. EDT. The Company's conference call will
be available online at www.forwardair.com or by dialing 800-553-5275. 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 three business segments, Forward Air, Inc.,
Forward Air Solutions, Inc. and Total Quality, Inc.

Forward Air, Inc. is a high-service-level contractor to the air cargo industry
providing time-definite ground transportation services through a network of 88
terminals located on or near major airports in the United States and Canada.
It provides these services as a cost-effective alternative to air
transportation of cargo that must be delivered at a specific time but is
relatively less time-sensitive than traditional air freight or when air
transportation is not economical.

Forward Air Solutions, Inc. is a provider of pool distribution services. Pool
distribution involves the consolidation and shipment of several smaller
less-than-truckload shipments to a common area or region. Once at the regional
destination, the loads are deconsolidated, then grouped with other shipments
with common delivery points, and delivered in a very precise, time-sensitive
manner. Our pool distribution network consists of 24 terminals within the
mid-Atlantic, Southeast, Midwest and Southwestern United States.

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


Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)
                                       
                                          Three months ended
                                          March 31,    March 31,
                                          2013           2012
Operating revenue:
Airport-to-airport                        $ 90,376       $ 90,627
Logistics                                 22,972         21,313
Other                                     6,142          6,202
Pool distribution                         22,070        18,939   
Total operating revenue                   141,560        137,081
                                                         
Operating expenses:
Purchased transportation
Airport-to-airport                        36,559         36,758
Logistics                                 16,309         15,716
Other                                     1,735          1,598
Pool distribution                         6,396         5,126    
Total purchased transportation            60,999         59,198
Salaries, wages and employee benefits     33,952         33,174
Operating leases                          7,044          7,106
Depreciation and amortization             5,186          5,121
Insurance and claims                      2,660          2,798
Fuel expense                              3,008          2,541
Other operating expenses                  12,921        10,354   
Total operating expenses                  125,770       120,292  
Income from operations                    15,790         16,789
                                                         
Other income (expense):
Interest expense                          (128     )     (51      )
Other, net                                32            17       
Total other expense                       (96      )     (34      )
Income before income taxes                15,694         16,755
Income taxes                              4,839         6,482    
Net income and comprehensive income       $ 10,855      $ 10,273 
                                                         
Net income per share:
Basic                                     $ 0.37        $ 0.36   
Diluted                                   $ 0.36        $ 0.35   
Weighted average shares outstanding:
Basic                                     29,511         28,692
Diluted                                   30,264         29,363
                                                         
Dividends per share:                      $ 0.10        $ 0.07   


Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                March 31,     December 31,
                                                  2013            2012 (a)
Assets
Current assets:
Cash and cash equivalents                         $ 71,630        $   112,182
Accounts receivable, net                          78,092          75,262
Other current assets                              14,796         10,952
Total current assets                              164,518         198,396
                                                                  
Property and equipment                            254,066         239,138
Less accumulated depreciation and                 107,439        105,581
amortization
Net property and equipment                        146,627         133,557
Goodwill and other acquired intangibles:
Goodwill                                          87,860          43,332
Other acquired intangibles, net of                44,651         22,102
accumulated amortization
Total net goodwill and other acquired             132,511         65,434
intangibles
Other assets                                      2,550          1,800
Total assets                                      $ 446,206      $   399,187
                                                                  
                                                                  
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable                                  $ 14,285        $   11,168
Accrued expenses                                  18,131          16,476
Current portion of debt and capital lease         182            276
obligations
Total current liabilities                         32,598          27,920
                                                                  
Debt and capital lease obligations, less          37              58
current portion
Other long-term liabilities                       9,138           7,098
Deferred income taxes                             23,986          12,440
                                                                  
Shareholders’ equity:
Common stock                                      300             292
Additional paid-in capital                        86,393          64,644
Retained earnings                                 293,754        286,735
Total shareholders’ equity                        380,447        351,671
Total liabilities and shareholders’ equity        $ 446,206      $   399,187
                                                                  
(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
                                                     March 31,      March 31,
                                                     2013           2012
Operating activities:
Net income                                           $ 10,855       $ 10,273
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization                        5,186          5,121
Share-based compensation                             1,557          1,606
Loss on disposal of property and equipment           85             196
Provision for loss on receivables                    301            110
Provision for revenue adjustments                    499            427
Deferred income tax (benefit)                        850            (804     )
Tax benefit for stock options exercised              (2,238   )     (204     )
Changes in operating assets and liabilities
Accounts receivable                                  2,011          (2,491   )
Prepaid expenses and other current assets            (730     )     (925     )
Accounts payable and accrued expenses                2,228         4,646    
Net cash provided by operating activities            20,604         17,955
                                                                    
Investing activities:
Proceeds from disposal of property and equipment     164            205
Purchases of property and equipment                  (12,182  )     (13,098  )
Acquisition of business, net of cash acquired        (45,219  )     —
Other                                                (56      )     (306     )
Net cash used in investing activities                (57,293  )     (13,199  )
                                                                    
Financing activities:
Payments of debt and capital lease obligations       (20,228  )     (136     )
Proceeds from exercise of stock options              17,960         8,192
Payments of cash dividends                           (2,967   )     (2,034   )
Cash settlement of share-based awards for            (866     )     (386     )
minimum tax withholdings
Tax benefit for stock options exercised              2,238         204      
Net cash (used in) provided by financing             (3,863   )     5,840    
activities
Net (decrease) increase in cash                      (40,552  )     10,596
Cash at beginning of period                          112,182       58,801   
Cash at end of period                                $ 71,630      $ 69,397 


Forward Air Corporation
Segment Information
(In millions)
(Unaudited)
                 Three months ended
                   March 31,   Percent   March 31,   Percent              Percent
                                 of                        of
                   2013          Revenue     2012          Revenue     Change       Change
Operating
revenue
Forward Air        $ 116.1       82.0  %     $ 118.4       86.4  %     $ (2.3 )     (1.9  )%
FASI               22.3          15.7        19.2          14.0         3.1        16.1
TQI                3.9           2.8         —             —           3.9          100.0
Intercompany       (0.7    )     (0.5  )     (0.5    )     (0.4  )     (0.2   )     40.0  
eliminations
Total              141.6        100.0      137.1        100.0      4.5         3.3   
                                                                                    
Purchased
transportation
Forward Air        52.6          45.3        54.3          45.9        (1.7   )     (3.1  )
FASI               6.8           30.5        5.3           27.6        1.5          28.3
TQI                2.2           56.4        —             —           2.2          100.0
Intercompany       (0.6    )     85.7       (0.4    )     80.0       (0.2   )     50.0  
eliminations
Total              61.0         43.1       59.2         43.2       1.8         3.0   
                                                                                    
Salaries,
wages and
employee
benefits
Forward Air        25.1          21.6        25.7          21.7        (0.6   )     (2.3  )
FASI               8.2           36.8        7.5           39.1        0.7          9.3
TQI                0.6          15.4       —            —          0.6         100.0 
Total              33.9         23.9       33.2         24.2       0.7         2.1   
                                                                                    
Operating
leases
Forward Air        5.1           4.4         5.1           4.3         —            —
FASI               2.0           9.0         2.0           10.4        —            —
TQI                —            —          —            —          —           —     
Total              7.1          5.0        7.1          5.2        —           —     
                                                                                    
Depreciation
and
amortization
Forward Air        3.8           3.3         4.0           3.4         (0.2   )     (5.0  )
FASI               1.2           5.4         1.1           5.7         0.1          9.1
TQI                0.2          5.1        —            —          0.2         100.0 
Total              5.2          3.7        5.1          3.7        0.1         2.0   
                                                                                    
Insurance and
claims
Forward Air        1.9           1.6         2.1           1.8         (0.2   )     (9.5  )
FASI               0.7           3.1         0.7           3.6         —            —
TQI                0.1          2.6        —            —          0.1         100.0 
Total              2.7          1.9        2.8          2.0        (0.1   )     (3.6  )
                                                                                    
Fuel expense
Forward Air        1.0           0.9         1.1           0.9         (0.1   )     (9.1  )
FASI               1.6           7.2         1.4           7.3         0.2          14.3
TQI                0.4          10.3       —            —          0.4         100.0 
Total              3.0          2.1        2.5          1.8        0.5         20.0  
                                                                                    
Other
operating
expenses
Forward Air        10.2          8.8         8.7           7.3         1.5          17.2
FASI               2.6           11.6        1.8           9.4         0.8          44.4
TQI                0.2           5.1         —             —           0.2          100.0
Intercompany       (0.1    )     14.3       (0.1    )     20.0       —           —     
eliminations
Total              12.9         9.1        10.4         7.6        2.5         24.0  
                                                                                    
Income (loss)
from
operations
Forward Air        16.4          14.1        17.4          14.7        (1.0   )     (5.7  )
FASI               (0.8    )     (3.6  )     (0.6    )     (3.1  )     (0.2   )     33.3
TQI                0.2          5.1        —            —          0.2         100.0 
Total              $ 15.8       11.2  %     $ 16.8       12.3  %     $ (1.0 )     (6.0  )%

                                                                            
Forward Air Corporation
Forward Air Inc. Operating Statistics
                                                                
                                        Three months ended
                                        March 31,        March 31,     Percent
                                        2013             2012          Change
                                                                       
Operating ratio                         85.9      %      85.3    %     0.7  %
                                                                       
Business days                           63.0             64.0          (1.6 )
Business weeks                          12.6             12.8          (1.6 )
                                                                       
                                                                       
Airport-to-airport:
Tonnage
Total pounds ¹                          405,914          422,139       (3.8 )
Average weekly pounds ¹                 32,215           32,980        (2.3 )
                                                                       
Linehaul shipments
Total linehaul                          635,665          637,438       (0.3 )
Average weekly                          50,450           49,800        1.3
                                                                       
Forward Air Complete shipments          114,085          123,366       (7.5 )
As a percentage of linehaul             17.9      %      19.4    %     (7.7 )
shipments
                                                                       
Average linehaul shipment size          639              662           (3.5 )
                                                                       
Revenue per pound ²
Linehaul yield                          $  17.33         $ 16.89       2.0
Fuel surcharge impact                   2.05             1.91          0.7
Forward Air Complete impact             2.94            2.70         1.1  
Total airport-to-airport yield          $  22.32         $ 21.50       3.8
                                                                       
                                                                       
Logistics:
Miles
Owner operator ¹                        8,337            8,920         (6.5 )
Third party ¹                           3,520           3,687        (4.5 )
Total Miles                             11,857           12,607        (5.9 )
                                                                       
Revenue per mile                        $  1.62          $ 1.69        (4.1 )
                                                                       
Cost per mile                           $  1.19          $ 1.25        (4.8 )%
                                                                       
                                                                       
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