Forward Air's Q4 earnings rose 10.5% from a year ago to US$16M as operating revenue climbed 4.9% to US$155.5M; for 2012, earnings rose 11.6% to US$52.7M, operating revenue increased 8.9% to US$584.4M

Cindy Allen

Cindy Allen

Feb 12, 2013 – Business Wire

GREENEVILLE, Tennessee , February 12, 2013 (press release) – Forward Air Corporation (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 31,
2012
   
December 31,
2011
   
December 31,
2012
   
December 31,
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 revenue     155,525       148,259       584,446       536,402  
                         
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 transportation     65,176       62,379       252,720       223,000  
Salaries, wages and employee benefits     37,597       35,315       135,006       130,651  
Operating leases     7,164       7,039       27,989       27,122  
Depreciation and amortization     5,081       5,259       21,021       20,993  
Insurance and claims     3,177       2,658       11,309       8,798  
Fuel expense     2,767       2,683       10,038       10,041  
Other operating expenses     10,529       9,297       42,831       38,687  
Total operating expenses     131,491       124,630       500,914       459,292  
Income from operations     24,034       23,629       83,532       77,110  
                         
Other income (expense):                        
Interest expense     (150 )     (151 )     (391 )     (619 )
Other, net     20       16       14       74  
Total other expense     (130 )     (135 )     (377 )     (545 )
Income before income taxes     23,904       23,494       83,155       76,565  
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 share:     $ 0.10       $ 0.07       $ 0.34       $ 0.28  
                                         
 
Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
 
      December 31,
2012
    December 31,
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 amortization     105,581       93,267
Net property and equipment     133,557       129,868
Goodwill and other acquired intangibles:            
Goodwill     43,332       43,332
Other acquired intangibles, net of accumulated amortization     22,102       26,668
Total net goodwill and other acquired intangibles     65,434       70,000
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 obligations     276       552
Total current liabilities     27,920       33,930
             
Debt and capital lease obligations, less current portion     58       333
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,
2012
   
December 31,
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 equipment     59       (6 )
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 equipment     44       270  
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 obligations     (140 )     (149 )
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 program)           (1,807 )
Common stock issued under employee stock purchase plan     140       120  
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,
2012
   
December 31,
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 equipment     318       (82 )
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 equipment     911       1,267  
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 obligations     (551 )     (637 )
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 program)           (26,101 )
Common stock issued under employee stock purchase plan     259       248  
Cash settlement of share-based awards for minimum tax withholdings     (386 )      
Tax benefit for stock options exercised     385       747  
Net cash provided by (used in) financing activities     5,500       (72,991 )
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 31,
2012
   
Percent of
   
December 31,
2011
    Percent of           Percent
          Revenue         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 eliminations     (0.8 )     (0.5 )     (0.5 )     (0.3 )     (0.3 )     60.0  
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 eliminations     (0.7 )     87.5       (0.4 )     80.0       (0.3 )     75.0  
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 eliminations     (0.1 )     12.5       (0.1 )     20.0              
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 31,
2012
    Percent of    
December 31,
2011
    Percent of           Percent
          Revenue         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 eliminations     (2.3 )     (0.4 )     (1.3 )     (0.2 )     (1.0 )     76.9  
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 eliminations     (2.0 )     87.0       (1.2 )     92.3       (0.8 )     66.7  
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 eliminations     (0.3 )     13.0       (0.1 )     7.7       (0.2 )     200.0  
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 shipments     18.7 %     16.0 %     16.9  
                   
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 shipments     23.1 %     15.5 %     49.0  
                   
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.

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