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Forward Air Corporation Reports First Quarter 2022 Results

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·17-min read
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All-time record quarterly reported revenue, income from operations and net income per diluted share

Guides record second quarter revenue and net income per diluted share

GREENEVILLE, Tenn., April 27, 2022--(BUSINESS WIRE)--Forward Air Corporation (NASDAQ:FWRD) (the "Company", "we", "our", or "us") today reported financial results for the three months ended March 31, 2022 as presented in the tables below on a continuing operations basis.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20220427006050/en/

Forward Air Corporation Reports First Quarter 2022 Results (Photo: Business Wire)

Tom Schmitt, Chairman, President and CEO, commenting on first quarter results from continuing operations said, "Strong financial performance resulted in all-time quarterly records set for our first quarter reported revenue, net income and net income per diluted share. Our commitment to precision execution combined with a positive economy drove strong demand for our services. Higher quality freight in our network contributed to a record revenue per shipment for the first quarter for our less-than-truckload line of business. First quarter revenue growth of 29% came in above the high end of our guidance range of 18% to 22% and our reported net income per diluted share of $1.57 exceeded the high end of our $1.15 to $1.19 guidance range."

Mr. Schmitt continued, "In the first weeks of the second quarter, we have seen continued strength, and believe we will see similar strong performance in the second quarter. Momentum is expected to continue as more and more cruise lines, conferences and trade shows come back. At this point, we are optimistic that we can achieve our previously announced 2023 net income per diluted share of $6.30 in 2022, and are now targeting $6.70 net income per diluted share in 2023 without any major acquisitions."

In closing, Mr. Schmitt said, "In the first quarter, we achieved unparalleled reported revenue, income from operations and net income per diluted share quarterly financial results. I appreciate the outstanding efforts of our teammates and independent contractors as we could not have reached this monumental achievement without their hard work and valuable contributions."

Regarding the Company’s second quarter 2022 continuing operations guidance, Rebecca J. Garbrick, CFO, said, "We expect our year-over-year revenue growth will be 18% to 22% and net income per diluted share to be between $1.59 to $1.63, compared to reported net income per diluted share of $1.11 and adjusted net income per diluted share of $1.10 in the second quarter of 2021."

Continuing Operations

Three Months Ended

(in thousands, except per share data)

March 31, 2022

March 31, 2021

Change

Percent Change

Operating revenue

$

466,961

$

362,202

$

104,759

28.9

%

Income from operations

$

57,351

$

22,724

$

34,627

152.4

%

Operating margin

12.3

%

6.3

%

600 bps

Net income

$

42,686

$

16,714

$

25,972

155.4

%

Net income per diluted share

$

1.57

$

0.60

$

0.97

161.7

%

Cash provided by operating activities

$

62,486

16,913

$

45,573

269.5

%

Non-GAAP Financial Measures: 1

Adjusted income from operations

$

57,351

$

29,679

$

27,672

93.2

%

Adjusted net income

$

42,686

$

22,104

$

20,582

93.1

%

Adjusted net income per diluted share

$

1.57

$

0.80

$

0.77

96.3

%

EBITDA

$

68,481

$

31,961

$

36,520

114.3

%

Free cash flow

$

53,089

$

14,883

$

38,206

256.7

%

1 Reconciliation of these non-GAAP financial measures are provided below the financial tables.

On April 25, 2022, our Board of Directors declared a quarterly cash dividend of $0.24 per share of common stock. The dividend is payable to shareholders of record at the close of business on May 26, 2022 and is expected to be paid on June 14, 2022. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.96 for the full year 2022, payable in quarterly increments of $0.24 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 and position.

The Board approved a strategy to divest the Pool Distribution business ("Pool") on April 23, 2020, and the sale of Pool was completed on February 12, 2021. Accordingly, the results of operations and cash flows for Pool have been presented as a discontinued operation and have been excluded from continuing operations in this release for all periods presented.

Review of Financial Results

Forward Air will hold a conference call to discuss first quarter 2022 results on Thursday, April 28, 2022 at 9:00 a.m. EDT. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, or by dialing (844) 721-7237, Access Code: 7291478.

A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investors Relations portion of the Company’s website to easily find or navigate to current and pertinent information about us.

About Forward Air Corporation

Forward Air is a leading asset-light freight and logistics company that provides services across the United States and Canada. We provide expedited less-than-truckload ("LTL") services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer final mile services, including delivery of heavy-bulky freight, truckload brokerage services, including dedicated fleet services; and intermodal, first-and last-mile, high-value drayage services, both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services. For more information, visit our website at www.forwardaircorp.com.

Forward Air Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, in thousands, except per share data)

Three Months Ended

March 31,

2022

March 31,

2021

Operating revenue:

Expedited Freight

$

376,591

$

304,186

Intermodal

90,440

58,514

Eliminations and other operations

(70

)

(498

)

Operating revenues

466,961

362,202

Operating expenses:

Purchased transportation

224,832

184,608

Salaries, wages and employee benefits

86,081

74,897

Operating leases

22,673

19,167

Depreciation and amortization

11,130

9,237

Insurance and claims

11,968

9,741

Fuel expense

5,865

3,702

Other operating expenses

47,061

38,126

Total operating expenses

409,610

339,478

Income (loss) from continuing operations:

Expedited Freight

47,680

24,530

Intermodal

11,146

4,509

Other Operations

(1,475

)

(6,315

)

Income from continuing operations

57,351

22,724

Other expense:

Interest expense

(784

)

(1,165

)

Total other expense

(784

)

(1,165

)

Income before income taxes

56,567

21,559

Income tax expense

13,881

4,845

Net income from continuing operations

42,686

16,714

Loss from discontinued operation, net of tax

(5,533

)

Net income and comprehensive income

$

42,686

$

11,181

Net income per share:

Basic net income (loss) per share

Continuing operations

$

1.57

$

0.61

Discontinued operation

(0.20

)

Net income per basic share1

$

1.57

$

0.40

Diluted net income (loss) per share

Continuing operations

$

1.57

$

0.60

Discontinued operation

(0.20

)

Net income per diluted share

$

1.57

$

0.40

Dividends per share

$

0.24

$

0.21

1 Rounding may impact summation of amounts.

Expedited Freight Segment Information

(In thousands)

(Unaudited)

Three Months Ended

March 31,

2022

Percent of

Revenue

March 31,

2021

Percent of

Revenue

Change

Percent

Change

Operating revenue:

Network 1

$

243,414

64.6

%

$

178,627

58.7

%

$

64,787

36.3

%

Truckload

55,908

14.8

52,380

17.2

$

3,528

6.7

Final Mile

65,758

17.5

62,256

20.5

$

3,502

5.6

Other

11,511

3.1

10,923

3.6

$

588

5.4

Total operating revenue

376,591

100.0

304,186

100.0

$

72,405

23.8

Operating expenses:

Purchased transportation

200,034

53.1

164,364

54.0

$

35,670

21.7

Salaries, wages and employee benefits

68,220

18.1

61,687

20.3

$

6,533

10.6

Operating leases

15,731

4.2

14,218

4.7

$

1,513

10.6

Depreciation and amortization

7,481

2.0

6,798

2.2

$

683

10.0

Insurance and claims

8,751

2.3

7,611

2.5

$

1,140

15.0

Fuel expense

2,650

0.7

1,993

0.7

$

657

33.0

Other operating expenses

26,044

6.9

22,985

7.6

$

3,059

13.3

Total operating expenses

328,911

87.3

279,656

91.9

$

49,255

17.6

Income from operations

$

47,680

12.7

%

$

24,530

8.1

%

$

23,150

94.4

%

1Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

Expedited Freight Operating Statistics

Three Months Ended

March 31,

2022

March 31,

2021

Percent Change

Business days

64

63

1.6

%

Tonnage 1,2

Total pounds

717,611

651,339

10.2

Pounds per day

11,213

10,339

8.5

Shipments 1,2

Total shipments

892

1,026

(13.1

)

Shipments per day

13.9

16.3

(14.7

)

Weight per shipment

804

635

26.6

Revenue per hundredweight 3

$

32.67

$

27.56

18.5

Revenue per hundredweight, ex fuel 3

$

26.74

$

23.86

12.1

Revenue per shipment 3

$

265.23

$

174.30

52.2

Revenue per shipment, ex fuel 3

$

217.53

$

150.82

44.2

Network revenue from door-to-door shipments as a percentage of network revenue 3,4

45.2

%

48.4

%

(6.6

)

1 In thousands

2 Excludes accessorial, Truckload and Final Mile products

3 Includes intercompany revenue between the Network and Truckload revenue streams

4 Door-to-door shipments include all shipments with a pickup and/or delivery

Intermodal Segment Information

(In thousands)

(Unaudited)

Three Months Ended

March 31,

2022

Percent of

Revenue

March 31,

2021

Percent of

Revenue

Change

Percent

Change

Operating revenue

$

90,440

100.0

%

58,514

100.0

%

31,926

54.6

%

Operating expenses:

Purchased transportation

24,868

27.5

20,603

35.2

4,265

20.7

Salaries, wages and employee benefits

17,935

19.8

14,063

24.0

3,872

27.5

Operating leases

6,941

7.7

4,837

8.3

2,104

43.5

Depreciation and amortization

3,610

4.0

2,436

4.2

1,174

48.2

Insurance and claims

2,060

2.3

2,402

4.1

(342

)

(14.2

)

Fuel expense

3,215

3.6

1,710

2.9

1,505

88.0

Other operating expenses

20,665

22.8

7,954

13.6

12,711

159.8

Total operating expenses

79,294

87.7

54,005

92.3

25,289

46.8

Income from operations

11,146

12.3

%

4,509

7.7

%

6,637

147.2

%

Intermodal Operating Statistics

Three Months Ended

March 31,

2022

March 31,

2021

Percent Change

Drayage shipments

88,312

89,909

(1.8

) %

Drayage revenue per shipment

890

553

60.9

%

Number of locations

29

27

7.4

%

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

March 31,

2022

December 31,

2021

Assets

Current assets:

Cash and cash equivalents

$

61,630

$

37,316

Accounts receivable, net

236,666

208,085

Other receivables

4,488

8,097

Other current assets

22,468

29,309

Total current assets

325,252

282,807

Property and equipment, net

224,060

219,095

Operating lease right-of-use assets

153,337

148,198

Goodwill

265,639

266,752

Other acquired intangibles, net

150,638

154,717

Other assets

47,880

46,254

Total assets

$

1,166,806

$

1,117,823

Liabilities and Shareholders’ Equity

Current liabilities:

Accounts payable

$

54,430

$

44,837

Accrued expenses

66,467

61,621

Other current liabilities

12,479

4,614

Current portion of debt and finance lease obligations

6,069

6,088

Current portion of operating lease liabilities

48,499

47,532

Total current liabilities

187,944

164,692

Finance lease obligations, less current portion

8,767

9,571

Long-term debt, less current portion and debt issuance costs

155,125

155,466

Operating lease liabilities, less current portion

105,773

101,409

Other long-term liabilities

52,376

49,624

Deferred income taxes

45,050

43,407

Shareholders’ equity:

Preferred stock

Common stock

269

270

Additional paid-in capital

261,444

258,474

Retained earnings

350,058

334,910

Total shareholders’ equity

611,771

593,654

Total liabilities and shareholders’ equity

$

1,166,806

$

1,117,823

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

March 31,

2022

March 31,

2021

Operating activities:

Net income from continuing operations

$

42,686

$

16,714

Adjustments to reconcile net income of continuing operations to net cash provided by operating activities of continuing operations

Depreciation and amortization

11,130

9,237

Change in fair value of earn-out liability

(294

)

(48

)

Share-based compensation expense

2,761

2,597

Provision for revenue adjustments

1,304

1,777

Deferred income tax expense (benefit)

1,643

(505

)

Other

132

92

Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses:

Accounts receivable

(30,278

)

(28,023

)

Other receivables

3,609

(13,339

)

Other current and noncurrent assets

13,818

7,085

Accounts payable and accrued expenses

15,975

21,326

Net cash provided by operating activities of continuing operations

62,486

16,913

Investing activities:

Proceeds from sale of property and equipment

511

665

Purchases of property and equipment

(9,908

)

(2,695

)

Purchases of a business, net of cash acquired

(15,000

)

Net cash used in investing activities of continuing operations

(9,397

)

(17,030

)

Financing activities:

Repayments of finance lease obligations

(1,070

)

(467

)

Payments on credit facility

(375

)

Proceeds from issuance of common stock upon stock option exercises

206

2,147

Payments of dividends to shareholders

(6,502

)

(5,797

)

Repurchases and retirement of common stock

(17,780

)

(9,998

)

Payment of minimum tax withholdings on share-based awards

(3,254

)

(2,744

)

Contributions from subsidiary held for sale

1,118

Net cash used in financing activities from continuing operations

(28,775

)

(15,741

)

Net increase (decrease) in cash and cash equivalents of continuing operations

24,314

(15,858

)

Cash from discontinued operation:

Net cash used in operating activities of discontinued operation

(6,902

)

Net cash provided by investing activities of discontinued operation

8,020

Net cash used in financing activities of discontinued operation

(1,118

)

Net increase (decrease) in cash and cash equivalents

24,314

(15,858

)

Cash and cash equivalents at beginning of period of continuing operations

37,316

40,254

Cash at beginning of period of discontinued operation

Net increase (decrease) in cash and cash equivalents

24,314

(15,858

)

Less: cash at end of period of discontinued operation

Cash and cash equivalents at end of period of continuing operations

$

61,630

$

24,396

Forward Air Corporation Reconciliation of Non-GAAP Financial Measures

In this press release, the Company uses non-GAAP financial measures that are derived on the basis of methodologies other than in accordance with GAAP. The Company believes that meaningful analysis of its financial performance requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions as well as evaluating the Company’s performance.

For the three months ended March 31, 2022 and 2021, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization ("EBITDA"), free cash flow, and adjusted income from continuing operations, adjusted net income, and adjusted net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.

The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization) and tax impacts. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance shareholder value. The Company believes providing adjusted income from operations, net income and net income per share allows investors to compare Company performance consistently over various periods without regard to the impact of unusual, nonrecurring or nonoperational items.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s financial results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the Company has included, for the periods indicated, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure.

The following is a reconciliation of net income to EBITDA for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended

Continuing Operations

March 31, 2022

March 31, 2021

Net income

$

42,686

$

16,714

Interest expense

784

1,165

Income tax expense

13,881

4,845

Depreciation and amortization

11,130

9,237

EBITDA

$

68,481

$

31,961

The following is a reconciliation of net cash provided by operating activities to free cash flow for the three months ended March 31, 2022 and 2021 (in thousands):

Three Months Ended

Continuing Operations

March 31, 2022

March 31, 2021

Net cash provided by operating activities

$

62,486

$

16,913

Proceeds from sale of property and equipment

511

665

Purchases of property and equipment

(9,908

)

(2,695

)

Free cash flow

$

53,089

$

14,883

The following is a reconciliation of reported income from operations, net income, and net income per diluted share to adjusted income from operations, net income, and net income per diluted share for the three months ended March 31, 2022 and 2021 (in thousands, except net income per diluted share):

Three Months Ended March 31, 2022

Three Months Ended March 31, 2021

Continuing Operations

Income From

Operations

Net

Income1

Net Income

Per Diluted

Share1

Income From

Operations

Net

Income1

Net Income

Per Diluted

Share1

As Reported

$

57,351

$

42,686

$

1.57

$

22,724

$

16,714

$

0.60

Professional fees for cybersecurity and shareholder engagement activities

6,955

5,390

0.20

As Adjusted

$

57,351

$

42,686

$

1.57

$

29,679

$

22,104

$

0.80

1 Net income and net income per diluted share amounts are after tax

The following is a reconciliation of reported net income per diluted share to adjusted net income per diluted share for the three months ended June 30, 2021:

Continuing Operations

Net Income Per Diluted

Share1

As reported

$

1.11

Change in the fair value of the earn-out liability

(0.01

)

As adjusted

$

1.10

1 Net income per diluted share is after tax.

The following information is provided to supplement this press release.

Actual - Continuing Operations

Three Months Ended

March 31, 2022

Net income from continuing operations

42,686

Income allocated to participating securities

(248

)

Numerator for diluted net income per share - net income

$

42,438

Weighted-average common shares and common share equivalent outstanding - diluted

27,100

Diluted net income per share

$

1.57

Projected

Full year 2022

Projected tax rate - continuing operations

25.9

%

Projected purchases of property and equipment, net of proceeds from sale of property and equipment

$

40,000

Projected

December 31, 2022

Projected weighted-average common shares and common share equivalent outstanding - diluted

26,900

Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Forward-looking statements included in this press release relate to expected second quarter 2022 revenue, revenue growth, net income per diluted share, adjusted net income per diluted share and volume, expectations regarding continued momentum in our business into 2022 and 2023, expectations regarding expansion of operating margins, and the future of declaration of dividends.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these 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, changes in fuel prices and/or fuel taxes, a decrease in demand for transportation services, pricing pressure, changes in freight volume, the COVID-19 pandemic, our ability to manage our growth and ability to grow, in part, through acquisitions, while being able to successfully integrate such acquisitions, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, loss of a major customer, increasing competition,, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2021.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220427006050/en/

Contacts

Forward Air Corporation
Brandon Hammer, 423-636-7173
bhammer@forwardair.com

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