Forward Air Corporation Reports Third Quarter 2013 Results

  Forward Air Corporation Reports Third Quarter 2013 Results

Business Wire

GREENEVILLE, Tenn. -- October 21, 2013

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, 2013.

Operating revenue for the quarter ended September30, 2013 increased 18.5% to
$170.0 million from $143.5 million for the same quarter in 2012. Income from
operations was $22.9 million, compared with $19.6 million in the prior-year
quarter. As a percent of operating revenue, income from operations was 13.5%,
compared with 13.7% in the same quarter last year. Net income during the
period was $14.2 million compared to $12.3 million in the prior-year quarter.
Income per diluted share for the third quarter of 2013 was $0.46 compared with
$0.41 in the prior-year quarter.

Operating revenue for the nine months ended September30, 2013 increased 9.9%
to $471.4 million from $428.9 million for the same period in 2012. Income from
operations was $61.1 million, compared with $59.5 million in the prior-year
period. As a percent of operating revenue, income from operations was 13.0%
for the first nine months of 2013 compared to 13.9% for the same period in
2012. Net income during the period was $38.9 million compared to $36.7 million
in the prior-year period. Income per diluted share from operations for the
first nine months of 2013 was $1.27 compared with $1.24 in the prior-year
period.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the third
quarter said, “After a tough second quarter, we saw a very encouraging trend
in our airport-to-airport network volumes that improved throughout the third
quarter. Our sense is the improved tonnage is driven by a slightly better
macro environment as well as share gains resulting from our superior service
offering. We are pleased to report that thus far into the fourth quarter this
trend has continued.”

Turning to the Forward Air Solutions (FASI) business segment, Mr. Campbell
said, “With the integration of new business wins behind us, FASI had a solid
performance in the third quarter improving its operating ratio 320 basis
points for its best third quarter ever.”

Commenting on Total Quality, Inc. (TQI) business segment, Mr. Campbell said,
“While we are pleased with the positive strides made in the integration of
TQI, we are anxious to get our new operating system on line. This new system
will enable us to glean additional operating efficiencies as well as make the
most of new business wins. We anticipate that this new system will be fully
operational before the end of 2013.”

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.”

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
2013 revenues will increase in the range of 17% to 21% 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 $0.53
and $0.57 per share. This compares to $0.54 per share in the fourth quarter of
2012.”

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2013 results
on Tuesday, October 22, 2013 at 9:00 a.m. EDT. 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 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             Nine months ended
                      September 30,   September      September     September
                      2013           30,            30,           30,
                                      2012           2013          2012
Operating revenue:
Airport-to-airport    $  100,960      $  96,914      $ 288,457     $ 290,006
Logistics             32,562          20,878         87,474        63,315
Other                 6,862           6,528          19,624        19,498
Pool distribution     29,649         19,194        75,841       56,102    
Total operating       170,033         143,514        471,396       428,921
revenue
                                                                   
Operating expenses:
Purchased
transportation
Airport-to-airport    42,407          40,150         118,605       119,546
Logistics             22,152          15,954         59,696        47,756
Other                 2,039           1,822          5,707         5,252
Pool distribution     8,613          5,176         22,454       14,989    
Total purchased       75,211          63,102         206,462       187,543
transportation
Salaries, wages and   39,165          31,698         109,149       97,408
employee benefits
Operating leases      6,991           6,895          20,923        20,826
Depreciation and      6,220           5,425          17,377        15,940
amortization
Insurance and         3,290           3,098          9,164         8,132
claims
Fuel expense          3,871           2,318          10,535        7,271
Other operating       12,428         11,352        36,634       32,303    
expenses
Total operating       147,176        123,888       410,244      369,423   
expenses
Income from           22,857          19,626         61,152        59,498
operations
                                                                   
Other income
(expense):
Interest expense      (145        )   (111       )   (401      )   (241      )
Other, net            27             (21        )   72           (6        )
Total other expense   (118        )   (132       )   (329      )   (247      )
Income before         22,739          19,494         60,823        59,251
income taxes
Income taxes          8,542          7,227         21,941       22,544    
Net income and
comprehensive         $  14,197      $  12,267     $ 38,882     $ 36,707  
income
                                                                   
Net income per
share:
Basic                 $  0.47        $  0.42       $ 1.30       $ 1.27    
Diluted               $  0.46        $  0.41       $ 1.27       $ 1.24    
Weighted average
shares outstanding:
Basic                 30,374          29,088         30,017        28,895
Diluted               30,986          29,660         30,677        29,484
                                                                   
Dividends per         $  0.10        $  0.10       $ 0.30       $ 0.24    
share:







Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
                                                  September 30,   December 31,
                                                 2013          
                                                                  2012
Assets
Current assets:
Cash and cash equivalents                         $  98,551       $   112,182
Accounts receivable, net                          83,224          75,262
Other current assets                              18,849         10,952
Total current assets                              200,624         198,396
                                                                  
Property and equipment                            270,113         239,138
Less accumulated depreciation and amortization    112,514        105,581
Net property and equipment                        157,599         133,557
Goodwill and other acquired intangibles:
Goodwill                                          88,404          43,332
Other acquired intangibles, net of accumulated    41,624         22,102
amortization
Total net goodwill and other acquired             130,028         65,434
intangibles
Other assets                                      2,551          1,800
Total assets                                      $  490,802     $   399,187
                                                                  
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable                                  $  17,067       $   11,168
Accrued expenses                                  19,490          16,476
Current portion of debt and capital lease         92             276
obligations
Total current liabilities                         36,649          27,920
                                                                  
Debt and capital lease obligations, less          4               58
current portion
Other long-term liabilities                       9,129           7,098
Deferred income taxes                             26,576          12,440
                                                                  
Shareholders’ equity:
Common stock                                      304             292
Additional paid-in capital                        102,465         64,644
Retained earnings                                 315,675        286,735
Total shareholders’ equity                        418,444        351,671
Total liabilities and shareholders’ equity        $  490,802     $   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
                                                 September 30,   September 30,
                                                 2013          
                                                                 2012
Operating activities:
Net income                                       $  14,197       $  12,267
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization                       6,220           5,425
Share-based compensation                            1,525           1,427
Gain on disposal of property and equipment          (185    )       92
Provision for (recovery) loss on receivables        (56     )       115
Provision for revenue adjustments                   579             490
Deferred income tax                                 1,722           1,023
Excess tax benefit for stock options exercised      (337    )       (148    )
Changes in operating assets and liabilities
Accounts receivable                                 (7,458  )       (426    )
Prepaid expenses and other current assets           515             1,499
Accounts payable and accrued expenses              6,515         (5      )
Net cash provided by operating activities           23,237          21,759
                                                                 
Investing activities:
Proceeds from disposal of property and              617             131
equipment
Purchases of property and equipment                 (5,272  )       (2,181  )
Other                                              (51     )      80      
Net cash used in investing activities               (4,706  )       (1,970  )
                                                                 
Financing activities:
Payments of debt and capital lease obligations      (48     )       (139    )
Proceeds from exercise of stock options             1,687           7,295
Payments of cash dividends                          (3,057  )       (2,937  )
Excess tax benefit for stock options exercised     337           148     
Net cash (used in) provided by financing           (1,081  )      4,367   
activities
Net increase in cash                                17,450          24,156
Cash at beginning of period                        81,101        68,832  
Cash at end of period                            $  98,551      $  92,988  







Forward Air Corporation
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
                                                              
                                                 Nine months ended
                                                 September 30,   September 30,
                                                 2013            2012
Operating activities:
Net income                                       $  38,882       $  36,707
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization                    17,377          15,940
Share-based compensation                         4,619           4,550
(Gain) loss on disposal of property and          (468       )    259
equipment
Provision for loss on receivables                234             226
Provision for revenue adjustments                1,705           1,417
Deferred income tax                              4,658           2,460
Excess tax benefit for stock options exercised   (3,207     )    (354       )
Changes in operating assets and liabilities
Accounts receivable                              (4,262     )    (5,599     )
Prepaid expenses and other current assets        (1,575     )    (1,629     )
Accounts payable and accrued expenses            2,525          (8,298     )
Net cash provided by operating activities        60,488          45,679
                                                                 
Investing activities:
Proceeds from disposal of property and           1,665           867
equipment
Purchases of property and equipment              (33,266    )    (20,499    )
Acquisition of businesses, net of cash           (45,329    )    —
acquired
Other                                            (111       )    (267       )
Net cash used in investing activities            (77,041    )    (19,899    )
                                                                 
Financing activities:
Payments of debt and capital lease obligations   (20,351    )    (411       )
Proceeds from exercise of stock options          29,866          15,740
Payments of cash dividends                       (9,071     )    (7,009     )
Common stock issued under employee stock         137             119
purchase plan
Cash settlement of share-based awards for        (866       )    (386       )
minimum tax withholdings
Excess tax benefit for stock options exercised   3,207          354        
Net cash provided by financing activities        2,922          8,407      
Net (decrease) increase in cash                  (13,631    )    34,187
Cash at beginning of period                      112,182        58,801     
Cash at end of period                            $  98,551      $  92,988  







Forward Air Corporation
Segment Information
(In millions)
(Unaudited)

                Three months ended
                 September  Percent  September  Percent           Percent
                 30,         of        30,         of
                 2013        Revenue   2012        Revenue   Change    Change
Operating
revenue
Forward Air      $ 128.8     75.8  %   $ 124.5     86.8  %   $ 4.3     3.5   %
FASI             29.8        17.5      19.5        13.6      10.3      52.8
TQI              12.4        7.3       —           —         12.4      100.0
Intercompany     (1.0    )   (0.6  )   (0.5    )   (0.4  )   (0.5  )   100.0 
eliminations
Total            170.0      100.0    143.5      100.0    26.5     18.5  
                                                                       
Purchased
transportation
Forward Air      59.9        46.5      58.1        46.7      1.8       3.1
FASI             9.1         30.5      5.4         27.7      3.7       68.5
TQI              6.9         55.6      —           —         6.9       100.0
Intercompany     (0.7    )   70.0     (0.4    )   80.0     (0.3  )   75.0  
eliminations
Total            75.2       44.2     63.1       44.0     12.1     19.2  
                                                                       
Salaries,
wages and
employee
benefits
Forward Air      27.3        21.2      24.3        19.5      3.0       12.3
FASI             10.0        33.6      7.4         37.9      2.6       35.1
TQI              1.8        14.5     —          —        1.8      100.0 
Total            39.1       23.0     31.7       22.1     7.4      23.3  
                                                                       
Operating
leases
Forward Air      4.9         3.8       5.2         4.2       (0.3  )   (5.8  )
FASI             2.1         7.0       1.7         8.7       0.4       23.5
TQI              —          —        —          —        —        —     
Total            7.0        4.1      6.9        4.8      0.1      1.4   
                                                                       
Depreciation
and
amortization
Forward Air      4.2         3.3       4.3         3.4       (0.1  )   (2.3  )
FASI             1.3         4.4       1.2         6.2       0.1       8.3
TQI              0.7        5.7      —          —        0.7      100.0 
Total            6.2        3.7      5.5        3.8      0.7      12.7  
                                                                       
Insurance and
claims
Forward Air      2.3         1.8       2.6         2.1       (0.3  )   (11.5 )
FASI             0.8         2.7       0.5         2.6       0.3       60.0
TQI              0.2        1.6      —          —        0.2      100.0 
Total            3.3        1.9      3.1        2.1      0.2      6.5   
                                                                       
Fuel expense
Forward Air      0.9         0.7       1.0         0.8       (0.1  )   (10.0 )
FASI             1.7         5.7       1.3         6.7       0.4       30.8
TQI              1.3        10.5     —          —        1.3      100.0 
Total            3.9        2.3      2.3        1.6      1.6      69.6  
                                                                       
Other
operating
expenses
Forward Air      8.7         6.7       9.7         7.8       (1.0  )   (10.3 )
FASI             3.4         11.4      1.7         8.7       1.7       100.0
TQI              0.6         4.8       —           —         0.6       100.0
Intercompany     (0.3    )   30.0     (0.1    )   20.0     (0.2  )   200.0 
eliminations
Total            12.4       7.3      11.3       7.9      1.1      9.7   
                                                                       
Income from
operations
Forward Air      20.6        16.0      19.3        15.5      1.3       6.7
FASI             1.4         4.7       0.3         1.5       1.1       366.7
TQI              0.9        7.3      —          —        0.9      100.0 
Total            $ 22.9     13.5  %   $ 19.6     13.7  %   $ 3.3    16.8  %







Forward Air Corporation
Segment Information
(In millions)
(Unaudited)

                Nine months ended
                 September  Percent  September  Percent            Percent
                 30,         of        30,         of
                 2013        Revenue   2012        Revenue   Change     Change
Operating
revenue
Forward Air      $ 369.0     78.3  %   $ 373.4     87.1  %   $ (4.4 )   (1.2   )%
FASI             76.4        16.2      57.0        13.3      19.4       34.0
TQI              28.5        6.0       —           —         28.5       100.0
Intercompany     (2.5    )   (0.5  )   (1.5    )   (0.4  )   (1.0   )   66.7   
eliminations
Total            471.4      100.0    428.9      100.0    42.5      9.9    
                                                                        
Purchased
transportation
Forward Air      168.9       45.8      173.3       46.4      (4.4   )   (2.5   )
FASI             23.6        30.9      15.5        27.2      8.1        52.3
TQI              15.9        55.8      —           —         15.9       100.0
Intercompany     (1.9    )   76.0     (1.3    )   86.7     (0.6   )   46.2   
eliminations
Total            206.5      43.8     187.5      43.7     19.0      10.1   
                                                                        
Salaries,
wages and
employee
benefits
Forward Air      78.0        21.1      75.4        20.2      2.6        3.4
FASI             26.8        35.1      22.0        38.6      4.8        21.8
TQI              4.4        15.4     —          —        4.4       100.0  
Total            109.2      23.2     97.4       22.7     11.8      12.1   
                                                                        
Operating
leases
Forward Air      14.9        4.0       15.3        4.1       (0.4   )   (2.6   )
FASI             5.9         7.7       5.5         9.7       0.4        7.3
TQI              0.1        0.4      —          —        0.1       100.0  
Total            20.9       4.4      20.8       4.9      0.1       0.5    
                                                                        
Depreciation
and
amortization
Forward Air      12.1        3.3       12.5        3.4       (0.4   )   (3.2   )
FASI             3.6         4.7       3.5         6.1       0.1        2.9
TQI              1.7        6.0      —          —        1.7       100.0  
Total            17.4       3.7      16.0       3.7      1.4       8.8    
                                                                        
Insurance and
claims
Forward Air      6.5         1.8       6.4         1.7       0.1        1.6
FASI             2.3         3.0       1.7         3.0       0.6        35.3
TQI              0.4        1.4      —          —        0.4       100.0  
Total            9.2        1.9      8.1        1.9      1.1       13.6   
                                                                        
Fuel expense
Forward Air      2.9         0.8       3.2         0.9       (0.3   )   (9.4   )
FASI             4.8         6.3       4.1         7.2       0.7        17.1
TQI              2.8        9.8      —          —        2.8       100.0  
Total            10.5       2.2      7.3        1.7      3.2       43.8   
                                                                        
Other
operating
expenses
Forward Air      26.9        7.3       27.4        7.3       (0.5   )   (1.8   )
FASI             9.0         11.8      5.1         8.9       3.9        76.5
TQI              1.3         4.5       —           —         1.3        100.0
Intercompany     (0.6    )   24.0     (0.2    )   13.3     (0.4   )   200.0  
eliminations
Total            36.6       7.8      32.3       7.5      4.3       13.3   
                                                                        
Income (loss)
from
operations
Forward Air      58.8        15.9      59.9        16.0      (1.1   )   (1.8   )
FASI             0.4         0.5       (0.4    )   (0.7  )   0.8        (200.0 )
TQI              1.9        6.7      —          —        1.9       100.0  
Total            $ 61.1     13.0  %   $ 59.5     13.9  %   $ 1.6     2.7    %







Forward Air Corporation
Forward Air Inc. Operating Statistics
                                                                  
                                     Three months ended
                                     September 30,    September 30,   Percent
                                     2013             2012            Change
                                                                      
Operating ratio                      84.0        %    84.5       %    (0.6  )%
                                                                      
Business days                        64.0             63.0            1.6
Business weeks                       12.8             12.6            1.6
                                                                      
                                                                      
Airport-to-airport:
Tonnage
Total pounds ^1                      462,297          438,265         5.5
Average weekly pounds ^1             36,117           34,783          3.8
                                                                      
Linehaul shipments
Total linehaul                       688,257          691,228         (0.4  )
Average weekly                       53,770           54,859          (2.0  )
                                                                      
Forward Air Complete shipments       124,184          177,216         (29.9 )
As a percentage of linehaul          18.0        %    25.6       %    (29.7 )
shipments
                                                                      
Average linehaul shipment size       672              634             6.0
                                                                      
Revenue per pound ^2
Linehaul yield                       $   16.97        $   17.14       (0.8  )
Fuel surcharge impact                1.85             1.80            0.2
Forward Air Complete impact          3.08            3.20           (0.5  )
Total airport-to-airport yield       $   21.90        $   22.14       (1.1  )
                                                                      
                                                                      
Logistics:
Miles
Owner operator ^1                    8,915            8,485           5.1
Third party ^1                       3,815           4,500          (15.2 )
Total Miles                          12,730           12,985          (2.0  )
                                                                      
Revenue per mile                     $   1.60         $   1.61        (0.6  )
                                                                      
Cost per mile                        $   1.20         $   1.23        (2.4  )%
                                                                      
                                                                      
^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      Percent
                                                       30,
                                      2013             2012           Change
                                                                      
Operating ratio                       84.1         %   84.0       %   0.1   %
                                                                      
Business days                         191.0            191.0          —
Business weeks                        38.2             38.2           —
                                                                      
                                                                      
Airport-to-airport:
Tonnage
Total pounds ^1                       1,320,382        1,322,390      (0.2  )
Average weekly pounds ^1              34,565           34,618         (0.2  )
                                                                      
Linehaul shipments
Total linehaul                        2,038,599        2,064,323      (1.2  )
Average weekly                        53,366           54,040         (1.2  )
                                                                      
Forward Air Complete shipments        353,270          509,527        (30.7 )
As a percentage of linehaul           17.3         %   24.7       %   (30.0 )
shipments
                                                                      
Average linehaul shipment size        648              641            1.1
                                                                      
Revenue per pound ^2
Linehaul yield                        $    17.08       $   17.04      0.2
Fuel surcharge impact                 1.92             1.88           0.2
Forward Air Complete impact           2.90            3.04          (0.7  )
Total airport-to-airport yield        $    21.90       $   21.96      (0.3  )
                                                                      
                                                                      
Logistics:
Miles
Owner operator ^1                     26,399           26,590         (0.7  )
Third party ^1                        10,663          12,010        (11.2 )
Total Miles                           37,062           38,600         (4.0  )
                                                                      
Revenue per mile                      $    1.61        $   1.64       (1.8  )
                                                                      
Cost per mile                         $    1.19        $   1.24       (4.0  )%
                                                                      
                                                                      
^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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