Forward Air Corporation Reports First Quarter 2014 Results

  Forward Air Corporation Reports First Quarter 2014 Results

Business Wire

GREENEVILLE, Tenn. -- April 21, 2014

Forward Air Corporation (NASDAQ:FWRD) today reported operating revenue,
operating income, net income and diluted earnings per share for the three
months ended March31, 2014.

Operating revenue for the quarter ended March31, 2014 increased 21.2% to
$171.6 million from $141.6 million for the same quarter in 2013. Income from
operations was $16.3 million, compared with $15.8 million in the prior-year
quarter. As a percent of operating revenue, income from operations was 9.5%,
compared with 11.2% in the same quarter last year. Net income during the
period was $10.2 million compared to $10.9 million in the prior-year quarter.
Income per diluted share for the first quarter of 2014 was $0.33 compared with
$0.36 in the prior-year quarter.

Bruce A. Campbell, Chairman, President, and CEO, commenting on the first
quarter said, “In spite of the higher operating costs that resulted from the
unprecedented winter weather we experienced most of the first quarter, we
performed relatively well. With winter now behind us, we feel very positive
about how we have positioned each of our operating segments for the balance of
the year.”

Starting with our Forward Air, Inc. (FAI) business segment, Mr. Campbell said,
“Our core airport-to-airport business has continued to see good volume growth
and, with the impact of our March general rate increase, our improved yield
should be a positive contributor going forward. Our FAI results also include
the results of Central States Trucking Company (CST) which we acquired in
early February. CST had approximately $0.9 million of operating income for the
quarter which was essentially offset by deal related costs resulting in a
neutral impact on its profitability for the quarter.”

Commenting on the Forward Air Solutions (“Solutions”) segment, Mr. Campbell
said, “On the strength of a first quarter general rate increase, higher
year-over-year volumes and better overall operating discipline, Solutions
turned a $0.8 million loss in first quarter of 2013 into a break-even this
year. We anticipate that Solutions will be profitable for the second quarter
as well as balance of the year.”

Moving to the Total Quality, Inc. (TQI) business segment, Mr. Campbell said,
“The benefits from the recently implemented new operating system were
partially muted by weather-related difficulties. We were encouraged by the 90%
operating ratio that TQI delivered in March and believe that it is more
indicative of our expected results for the balance of 2014.”

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. Given the adversities presented by inclement weather, they all did
a fantastic job providing safe and reliable service.”

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
2014 revenues will increase in the range of 22% to 27% over the comparable
2013 period. Included in that range of revenue growth is the approximately 12%
growth that is a result of the purchase of CST. We expect income per diluted
share to be between $0.53 and $0.57 per share. This compares to $0.45 per
share in the second quarter of 2013.”

Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2014 results
on Tuesday, April 22, 2014 at 9:00 a.m. EDT. The Company's conference call
will be available online at www.forwardair.com or by dialing (800) 230-1085. 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 leading provider of time-definite surface
transportation and related logistics services to the North American expedited
ground freight market. We offer our customers local pick-up and delivery
(Forward Air Complete™) and scheduled surface transportation of cargo as a
cost-effective, reliable alternative to air transportation. We transport 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. We also offer our customers an array of logistics and other
services including: expedited full truckload (“TLX”); intermodal/drayage
(Central States Trucking, Inc.); dedicated fleets; warehousing; customs
brokerage; and shipment consolidation, deconsolidation and handling.

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 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,
                                          2014          2013
Operating revenue                         $ 171,569     $ 141,560
                                                        
Operating expenses:
Purchased transportation                  73,551        60,999
Salaries, wages and employee benefits     41,422        33,952
Operating leases                          8,351         7,044
Depreciation and amortization             7,013         5,186
Insurance and claims                      4,127         2,660
Fuel expense                              4,806         3,008
Other operating expenses                  16,028       12,921    
Total operating expenses                  155,298      125,770   
Income from operations                    16,271        15,790
                                                        
Other income (expense):
Interest expense                          (82       )   (128      )
Other, net                                86           32        
Total other expense                       4            (96       )
Income before income taxes                16,275        15,694
Income taxes                              6,073        4,839     
Net income and comprehensive income       $ 10,202     $ 10,855  
                                                        
Net income per share:
Basic                                     $ 0.33       $ 0.37    
Diluted                                   $ 0.33       $ 0.36    
Weighted average shares outstanding:
Basic                                     30,732        29,511
Diluted                                   31,314        30,264
                                                        
Dividends per share:                      $ 0.12       $ 0.10    







Forward Air Corporation
Components of Consolidated Revenue and Purchased Transportation
(In thousands)
(Unaudited)
                                                                            
                       Three Months Ended
                       March 31,     Percent   March 31,     Percent                Percent
                                     of                      of
                       2014         Revenue  2013         Revenue  Change      Change
Operating revenue
Forward Air
Airport-to-airport     $ 97,735      72.8  %   $ 90,588      78.0  %   $ 7,147      7.9   %
Logistics services
Expedited full         17,461        13.0      17,500        15.1      (39      )   (0.2  )
truckload - TLX
Intermodal/drayage     9,397         7.0       1,457         1.3       7,940        545.0
Other logistics        110         0.1     282         0.2     (172     )  (61.0 )
Total Logistics        26,968        20.1      19,239        16.6      7,729        40.2
services
Other Forward Air      9,483       7.1     6,281       5.4     3,202      51.0  
services
Forward Air -          134,186     78.2    116,108     82.0    18,078     15.6  
Total revenue
TQI -
Pharmaceutical         11,061        6.5       3,918         2.8       7,143        182.3
services
Forward Air
Solutions - Pool       27,322        15.9      22,254        15.7      5,068        22.8
distribution
Intersegment           (1,000    )  (0.6  )  (720      )  (0.5  )  (280     )  38.9  
eliminations
Consolidated           $ 171,569   100.0 %  $ 141,560   100.0 %  $ 30,009   21.2  %
operating revenue
                                                                                    
                                                                                    
                       Three Months Ended
                       March 31,     Percent   March 31,     Percent                Percent
                                     of                      of
                       2014         Revenue  2013         Revenue  Change      Change
Purchased
transportation
Forward Air
Airport-to-airport     $ 40,749      41.7  %   $ 36,685      40.5  %   $ 4,064      11.1  %
Logistics services
Expedited full         13,675        78.3      13,218        75.5      457          3.5
truckload - TLX
Intermodal/drayage     3,820         40.7      841           57.7      2,979        354.2
Other logistics        44          40.0    76          27.0    (32      )  (42.1 )
Total Logistics        17,539        65.0      14,135        73.5      3,404        24.1
services
Other Forward Air      2,495       26.3    1,740       27.7    755        43.4  
services
Forward Air -
Total purchased        60,783      45.3    52,560      45.3    8,223      15.6  
transportation
TQI -
Pharmaceutical         5,450         49.3      2,225         56.8      3,225        144.9
services
Forward Air
Solutions - Pool       8,124         29.7      6,787         30.5      1,337        19.7
distribution
Intersegment           (806      )  80.6    (573      )  79.6    (233     )  40.7  
eliminations
Consolidated
purchased              $ 73,551    42.9  %  $ 60,999    43.1  %  $ 12,552   20.6  %
transportation







Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)

                                                    March 31,     December 31,
                                                             
                                                    2014          2013(a)
Assets
Current assets:
Cash and cash equivalents                           $ 41,044      $   127,367
Accounts receivable, net                            93,651        76,500
Other current assets                                10,430        16,493
Total current assets                                145,125       220,360
                                                                  
Property and equipment                              292,364       271,050
Less accumulated depreciation and amortization      121,135       116,287
Net property and equipment                          171,229       154,763
Goodwill and other acquired intangibles:
Goodwill                                            131,217       88,496
Other acquired intangibles, net of accumulated      84,456        40,110
amortization
Total net goodwill and other acquired               215,673       128,606
intangibles
Other assets                                        2,540         2,540
Total assets                                        $ 534,567     $   506,269
                                                                  
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable                                    $ 22,164      $   16,267
Accrued expenses                                    21,529        18,275
Current portion of debt and capital lease           318           69
obligations
Total current liabilities                           44,011        34,611
                                                                  
Debt and capital lease obligations, less            1,477         3
current portion
Other long-term liabilities                         8,292         8,940
Deferred income taxes                               27,405        26,850
                                                                  
Shareholders’ equity:
Common stock                                        310           305
Additional paid-in capital                          119,852       107,726
Retained earnings                                   333,220       327,834
Total shareholders’ equity                          453,382       435,865
Total liabilities and shareholders’ equity          $ 534,567     $   506,269
                                                                  
(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,
                                                                  
                                                       2014         2013
Operating activities:
Net income                                             $ 10,202     $ 10,855
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization                          7,013        5,186
Share-based compensation                               1,652        1,557
Gain on disposal of property and equipment             16           85
Provision for loss on receivables                      42           301
Provision for revenue adjustments                      641          499
Deferred income tax                                    132          850
Excess tax benefit for stock options exercised         (637     )   (2,238   )
Changes in operating assets and liabilities
Accounts receivable                                    (8,493   )   2,011
Prepaid expenses and other current assets              7,048        (730     )
Accounts payable and accrued expenses                  2,416       2,228    
Net cash provided by operating activities              20,032       20,604
                                                                    
Investing activities:
Proceeds from disposal of property and equipment       79           164
Purchases of property and equipment                    (19,548  )   (12,182  )
Acquisition of business, net of cash acquired          (82,998  )   (45,219  )
Other                                                  (60      )   (56      )
Net cash used in investing activities                  (102,527 )   (57,293  )
                                                                    
Financing activities:
Payments of debt and capital lease obligations         (9,491   )   (20,228  )
Proceeds from exercise of stock options                9,840        17,960
Payments of cash dividends                             (3,733   )   (2,967   )
Cash settlement of share-based awards for minimum      (1,081   )   (866     )
tax withholdings
Excess tax benefit for stock options exercised         637         2,238    
Net cash used in financing activities                  (3,828   )   (3,863   )
Net decrease in cash                                   (86,323  )   (40,552  )
Cash at beginning of period                            127,367     112,182  
Cash at end of period                                  $ 41,044    $ 71,630 







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

                 Three months ended
                   March 31,  Percent  March 31,  Percent            Percent
                               of                    of
                   2014        Revenue   2013        Revenue   Change     Change
Operating
revenue
Forward Air        $ 134.2     78.2  %   $ 116.1     82.0  %   $ 18.1     15.6   %
FASI               27.3        15.9      22.3        15.7      5.0        22.4
TQI                11.1        6.5       3.9         2.8       7.2        184.6
Intercompany       (1.0    )   (0.6  )   (0.7    )   (0.5  )   (0.3   )   42.9   
eliminations
Total              171.6      100.0    141.6      100.0    30.0      21.2   
                                                                          
Purchased
transportation
Forward Air        60.8        45.3      52.6        45.3      8.2        15.6
FASI               8.1         29.7      6.8         30.5      1.3        19.1
TQI                5.5         49.6      2.2         56.4      3.3        150.0
Intercompany       (0.8    )   80.0     (0.6    )   85.7     (0.2   )   33.3   
eliminations
Total              73.6       42.9     61.0       43.1     12.6      20.7   
                                                                          
Salaries,
wages and
employee
benefits
Forward Air        30.2        22.5      25.1        21.6      5.1        20.3
FASI               9.3         34.1      8.2         36.8      1.1        13.4
TQI                1.9        17.1     0.6        15.4     1.3       216.7  
Total              41.4       24.1     33.9       23.9     7.5       22.1   
                                                                          
Operating
leases
Forward Air        5.8         4.3       5.1         4.4       0.7        13.7
FASI               2.5         9.1       2.0         9.0       0.5        25.0
TQI                —          —        —          —        —         —      
Total              8.3        4.8      7.1        5.0      1.2       16.9   
                                                                          
Depreciation
and
amortization
Forward Air        4.9         3.7       3.8         3.3       1.1        28.9
FASI               1.3         4.8       1.2         5.4       0.1        8.3
TQI                0.8        7.2      0.2        5.1      0.6       300.0  
Total              7.0        4.1      5.2        3.7      1.8       34.6   
                                                                          
Insurance and
claims
Forward Air        3.1         2.3       1.9         1.6       1.2        63.2
FASI               0.8         2.9       0.7         3.1       0.1        14.3
TQI                0.2        1.8      0.1        2.6      0.1       100.0  
Total              4.1        2.4      2.7        1.9      1.4       51.9   
                                                                          
Fuel expense
Forward Air        1.9         1.4       1.0         0.9       0.9        90.0
FASI               1.7         6.2       1.6         7.2       0.1        6.3
TQI                1.2        10.8     0.4        10.3     0.8       200.0  
Total              4.8        2.8      3.0        2.1      1.8       60.0   
                                                                          
Other
operating
expenses
Forward Air        12.1        9.0       10.2        8.8       1.9        18.6
FASI               3.6         13.2      2.6         11.6      1.0        38.5
TQI                0.6         5.4       0.2         5.1       0.4        200.0
Intercompany       (0.2    )   20.0     (0.1    )   14.3     (0.1   )   100.0  
eliminations
Total              16.1       9.4      12.9       9.1      3.2       24.8   
                                                                          
Income from
operations
Forward Air        15.4        11.5      16.4        14.1      (1.0   )   (6.1   )
FASI               —           —         (0.8    )   (3.6  )   0.8        (100.0 )
TQI                0.9        8.1      0.2        5.1      0.7       350.0  
Total              $ 16.3     9.5   %   $ 15.8     11.2  %   $ 0.5     3.2    %







Forward Air Corporation
Forward Air Inc. Operating Statistics
                                                                  
                                        Three months ended
                                        March 31,       March 31,      Percent
                                        2014            2013           Change
                                                                       
Operating ratio                         88.5      %     85.9      %    3.0   %
                                                                       
Business days                           63.0            63.0           —
Business weeks                          12.6            12.6           —
                                                                       
                                                                       
Airport-to-airport:
Tonnage
Total pounds ¹                          441,715         405,914        8.8
Average weekly pounds ¹                 35,057          32,215         8.8
                                                                       
Linehaul shipments
Total linehaul                          662,480         635,665        4.2
Average weekly                          52,578          50,450         4.2
                                                                       
Forward Air Complete shipments          107,574         114,085        (5.7  )
As a percentage of linehaul             16.2      %     17.9      %    (9.5  )
shipments
                                                                       
Average linehaul shipment size          667             639            4.4
                                                                       
Revenue per pound ²
Linehaul yield                          $  17.31        $  17.33       (0.1  )
Fuel surcharge impact                   2.03            2.05           (0.1  )
Forward Air Complete impact             2.79           2.94          (0.7  )
Total airport-to-airport yield          $  22.13        $  22.32       (0.9  )
                                                                       
                                                                       
Expedited full truckload - TLX:
Miles
Owner operator ¹                        6,968           8,337          (16.4 )
Third party ¹                           4,082          3,520         16.0  
Total Miles                             11,050          11,857         (6.8  )
                                                                       
Revenue per mile                        $  1.58         $  1.48        6.8
                                                                       
Cost per mile                           $  1.24         $  1.11        11.7  %
                                                                       
                                                                       
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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