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Forward Air Corporation Reports Third Quarter 2021 Results

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·11-min read
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Achieves highest ever monthly net income for the month of September

Reports record quarterly income from operations and net income per diluted share

Guides record full year 2021 revenue and net income per diluted share

GREENEVILLE, Tenn., October 27, 2021--(BUSINESS WIRE)--Forward Air Corporation (NASDAQ:FWRD) (the "Company", "we", "our", or "us") today reported financial results for the three and nine months ended September 30, 2021 as presented in the tables below on a continuing operations basis (Pool Distribution was previously reported as a discontinued operation).

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20211027006187/en/

Forward Air Corporation Reports Third Quarter 2021 Results (Photo: Business Wire)

Tom Schmitt, Chairman, President and CEO, commenting on third quarter results from continuing operations said, "During the months of July and August, we completed a process of cleansing our inefficient freight and replacing with higher quality freight. Our surgical collaboration with customers on selecting, handling, and pricing freight led to the highest ever monthly net income for the month of September with our less-than-truckload line of business reporting record levels in weight per shipment and revenue per shipment. Business momentum combined with the completion of our cleanse process culminated in record quarterly reported income from operations of $42.5 million and adjusted income from operations of $43.4 million. Our record reported net income per diluted share of $1.12 and adjusted net income per diluted share of $1.14 exceeded the high end of our $1.03 to $1.07 guidance range. Our third quarter revenue growth of 26% was slightly below the low end of our guidance range of 28% to 32%."

Mr. Schmitt continued, "I am very encouraged by the results in the month of September, in particular the strong operating margin expansion in the Expedited Freight segment. We expect volumes in the fourth quarter 2021 to exceed volumes for the same period of 2020. Through October, our volumes were strong year-over-year. Our guidance reflects a record full year 2021 revenue and net income per diluted share. We fully expect our momentum to continue into 2022 and 2023. As we continue to execute upon our strategic priorities, our full year 2023 targets include revenue of $2.0 billion to $2.6 billion and net income per diluted share of $6.30 to $6.70."

In closing, Mr. Schmitt said, "In the third quarter, we achieved the highest income from operations and net income per diluted share for a quarter in the history of the Company. I would like to thank all of our teammates and independent contractors for their hard work in helping to achieve this important milestone."

Regarding the Company’s fourth quarter 2021 continuing operations guidance, Rebecca J. Garbrick, CFO, said, "We expect our year-over-year revenue growth will be 23% to 27% and net income per diluted share to be between $1.25 to $1.29, compared to reported net income per diluted share of $0.55 and adjusted net income per diluted share of $0.62 in the fourth quarter of 2020. Our full year 2021 net income per diluted share is expected to be between $4.08 to $4.12 and adjusted net income per diluted share to be between $4.30 to $4.34, compared to reported net income per diluted share of $1.89 and adjusted net income per diluted share of $1.99 in 2020."

Continuing Operations

Three Months Ended

(in thousands, except per share data)

September 30, 2021

September 30, 2020

Change

Percent Change

Operating revenue

$

419,625

$

331,997

$

87,628

26.4

%

Income from operations

$

42,476

$

23,510

$

18,966

80.7

%

Operating margin

10.1

%

7.1

%

300 bps

Net income

$

30,503

$

16,992

$

13,511

79.5

%

Net income per diluted share

$

1.12

$

0.61

$

0.51

83.6

%

Cash provided by operating activities

$

42,581

$

20,564

$

22,017

107.1

%

Non-GAAP Financial Measures: 1

Adjusted income from operations

$

43,445

$

25,810

$

17,635

68.3

%

Adjusted net income

$

31,215

$

18,752

$

12,463

66.5

%

Adjusted net income per diluted share

$

1.14

$

0.67

$

0.47

70.1

%

EBITDA

$

51,892

$

32,682

$

19,210

58.8

%

Free cash flow

$

29,166

$

18,766

$

10,400

55.4

%

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

Continuing Operations

Nine Months Ended

(in thousands, except per share data)

September 30, 2021

September 30, 2020

Change

Percent Change

Operating revenue

$

1,202,498

$

919,232

$

283,266

30.8

%

Income from operations

$

107,324

$

53,198

$

54,126

101.7

%

Operating margin

8.9

%

5.8

%

310 bps

Net income

$

77,894

$

37,634

$

40,260

107.0

%

Net income per diluted share

$

2.83

$

1.35

$

1.48

109.6

%

Cash provided by operating activities

$

82,242

$

80,493

$

1,749

2.2

%

Non-GAAP Financial Measures: 1

Adjusted income from operations

$

115,248

$

54,343

$

60,905

112.1

%

Adjusted net income

$

83,837

$

38,498

$

45,339

117.8

%

Adjusted net income per diluted share

$

3.05

$

1.38

$

1.67

121.0

%

EBITDA

$

135,391

$

81,117

$

54,274

66.9

%

Free cash flow

$

61,566

$

65,469

$

(3,903

)

(6.0

)%

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

On October 26, 2021, our Board of Directors declared a quarterly cash dividend of $0.21 per share of common stock. The dividend is payable to shareholders of record at the close of business on November 24, 2021 and is expected to be paid on December 9, 2021. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.84 for the full year 2021, payable in quarterly increments of $0.21 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. In addition, Pool assets and liabilities were reflected as "held for sale" on the Condensed Consolidated Balance Sheets in this press release for the prior period.

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2021 results on Thursday, October 28, 2021 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 (877) 226-8189, Access Code: 2220892.

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

Nine Months Ended

September 30,
2021

September 30,
2020

September 30,
2021

September 30,
2020

Operating revenue:

Expedited Freight

$

341,557

$

283,514

$

997,478

$

772,801

Intermodal

78,173

48,948

205,820

147,836

Eliminations and other operations

(105

)

(465

)

(800

)

(1,405

)

Operating revenues

419,625

331,997

1,202,498

919,232

Operating expenses:

Purchased transportation

205,474

173,054

605,299

465,721

Salaries, wages and employee benefits

84,410

66,927

243,948

200,258

Operating leases

20,536

17,327

60,073

52,598

Depreciation and amortization

9,416

9,172

28,067

27,919

Insurance and claims

9,984

8,671

30,616

26,437

Fuel expense

4,457

2,715

12,218

9,247

Other operating expenses

42,872

30,621

114,953

83,854

Total operating expenses

377,149

308,487

1,095,174

866,034

Income (loss) from continuing operations:

Expedited Freight

34,636

23,461

93,854

50,394

Intermodal

8,712

4,837

21,607

12,963

Other Operations

(872

)

(4,788

)

(8,137

)

(10,159

)

Income from continuing operations

42,476

23,510

107,324

53,198

Other expense:

Interest expense

(973

)

(1,304

)

(3,461

)

(3,355

)

Total other expense

(973

)

(1,304

)

(3,461

)

(3,355

)

Income before income taxes

41,503

22,206

103,863

49,843

Income tax (benefit) expense

11,000

5,214

25,969

12,209

Net income from continuing operations

30,503

16,992

77,894

37,634

Loss from discontinued operation, net of tax

(6,967

)

(345

)

(12,500

)

(9,458

)

Net income and comprehensive income

$

23,536

$

16,647

$

65,394

$

28,176

Net income per share:

Basic net income (loss) per share

Continuing operations

$

1.12

$

0.61

$

2.84

$

1.35

Discontinued operation

(0.26

)

(0.01

)

(0.46

)

(0.34

)

Net income per basic share1

$

0.86

$

0.60

$

2.39

$

1.01

Diluted net income (loss) per share

Continuing operations

$

1.12

$

0.61

$

2.83

$

1.35

Discontinued operation

(0.26

)

(0.01

)

(0.46

)

(0.34

)

Net income per diluted share

$

0.86

$

0.60

$

2.37

$

1.01

Dividends per share

$

0.21

$

0.18

$

0.63

$

0.54

1 Rounding may impact summation of amounts.

Expedited Freight Segment Information

(In thousands)

(Unaudited)

Three Months Ended

September 30,
2021

Percent of
Revenue

September 30,
2020

Percent of
Revenue

Change

Percent
Change

Operating revenue:

Network 1

$

207,656

60.8

%

$

169,300

59.7

%

$

38,356

22.7

%

Truckload

53,651

15.7

49,836

17.6

3,815

7.7

Final Mile

71,355

20.9

56,994

20.1

14,361

25.2

Other

8,895

2.6

7,384

2.6

1,511

20.5

Total operating revenue

341,557

100.0

283,514

100.0

58,043

20.5

Operating expenses:

Purchased transportation

182,596

53.5

156,078

55.1

26,518

17.0

Salaries, wages and employee benefits

65,898

19.3

54,091

19.1

11,807

21.8

Operating leases

14,687

4.3

13,438

4.7

1,249

9.3

Depreciation and amortization

6,784

2.0

6,757

2.4

27

0.4

Insurance and claims

8,074

2.4

5,765

2.0

2,309

40.1

Fuel expense

2,225

0.7

1,544

0.5

681

44.1

Other operating expenses

26,657

7.8

22,380

7.9

4,277

19.1

Total operating expenses

306,921

89.9

260,053

91.7

46,868

18.0

Income from operations

$

34,636

10.1

%

$

23,461

8.3

%

$

11,175

47.6

%

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

September 30,
2021

September 30,
2020

Percent Change

Business days

64

64

%

Tonnage 1,2

Total pounds

687,816

636,194

8.1

Pounds per day

10,747

9,941

8.1

Shipments 1,2

Total shipments

845

1,018

(17.0

)

Shipments per day

13.2

15.9

(17.0

)

Weight per shipment

814

625

30.2

Revenue per hundredweight 3

$

29.01

$

26.84

8.1

Revenue per hundredweight, ex fuel 3

$

24.73

$

23.41

5.6

Revenue per shipment 3

$

240.27

$

166.09

44.7

Revenue per shipment, ex fuel 3

$

205.42

$

144.66

42.0

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

46.7

%

51.3

%

(9.0

)

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

September 30,
2021

Percent of Revenue

September 30,
2020

Percent of Revenue

Change

Percent Change

Operating revenue

$

78,173

100.0

%

$

48,948

100.0

%

$

29,225

59.7

%

Operating expenses:

Purchased transportation

22,984

29.4

17,270

35.3

5,714

33.1

Salaries, wages and employee benefits

17,596

22.5

11,637

23.8

5,959

51.2

Operating leases

5,856

7.5

3,932

8.0

1,924

48.9

Depreciation and amortization

2,616

3.3

4.8

260

11.0

Insurance and claims

2,708

3.5

2,058

4.2

650

31.6

Fuel expense

2,231

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