*DJ Forward Air 4Q Net $24.2M >FWRD

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February 06, 2020 16:05 ET (21:05 GMT)

Press Release: Forward Air Corporation Reports Fourth Quarter 2019 Results

Forward Air Corporation Reports Fourth Quarter 2019 Results

Reports record fourth quarter and full year revenue, cash flow from operations and free cash flow

Creates new Expedited Freight segment to reflect continued integration of the Company's Expedited LTL, Truckload and Final Mile operations

GREENEVILLE, Tenn.--(BUSINESS WIRE)--February 06, 2020--

Forward Air Corporation (NASDAQ:FWRD) today reported financial results for the three and twelve months ended December 31, 2019.

Revenue for the three months ended December 31, 2019 increased 7.0% to $381.5 million from $356.6 million for the same period of 2018. Income from operations was $32.9 million compared to $35.0 million in the prior year period. Net income during the three months ended December 31, 2019 was $24.2 million compared to $27.7 million in the same period of 2018. Net income per diluted share for the three months ended December 31, 2019 was $0.85 compared to $0.95 in the same period of 2018.

Revenue for the year ended December 31, 2019 increased 6.8% to $1,410.4 million from $1,320.9 million for the same period in 2018. Income from operations was $118.8 million compared to $122.0 million in the prior year. Net income during the period was $87.1 million compared to $92.1 million in the same period of 2018. Net income per diluted share was $3.04 for the year ended December 31, 2019 compared to $3.12 in the same period of 2018.

For the three months ended December 31, 2019, the Company generated $43.7 million of cash flow from operations compared to $38.7 million for the same period of 2018. For the year ended December 31, 2019, the Company generated $161.5 million of cash flow from operations compared to $152.6 million for the same period of 2018.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $42.9 million for the three months ended December 31, 2019 compared to $45.9 million for the same period of 2018. Free cash flow was $41.4 million for the three months ended December 31, 2019 compared to $31.8 million for the same period of 2018.

EBITDA was $160.9 million for the year ended December 31, 2019 compared to $164.2 million for the same period of 2018. Free cash flow was $134.1 million for the year ended December 31, 2019 compared to $117.3 million in the same period of 2018.

EBITDA and free cash flow are non-GAAP financial measures and reconciliations of these non-GAAP financial measures are provided in the attached financial tables.

Tom Schmitt, Chairman, President and CEO, commenting on fourth quarter results said, "Our growth strategies drove our record fourth quarter revenue. Macro headwinds amid a loose truckload market impacted our results. As we continue to on-board new revenue with precision execution we are well positioned for a pick-up in quality freight volumes."

In closing, Mr. Schmitt said, "As we end 2019, I would like to thank all of our employees and independent contractors who are helping us grow and strengthen our businesses and core support processes. The results of our efforts will show for many years to come."

Michael J. Morris, CFO, commenting on the new Expedited Freight segment said, "Our new Expedited Freight segment consolidates the previous Truckload Premium Services segment into the previous Expedited LTL segment, which included Final Mile. Since this consolidation results in a new segment with higher revenues and lower margins than the previous Expedited LTL segment, we have enhanced our Expedited Freight disclosures to provide revenue and gross margin data for the financial statement user."

Regarding the Company's fourth quarter 2019 results, Mr. Morris said, "While our business units generated good growth, our fourth quarter earnings per share fell short of our $0.90 to $0.94 guidance range, driven by a soft macro environment that impacted our entire portfolio."

Regarding the Company's first quarter 2020 guidance, Mr. Morris said, "We expect significant Final Mile revenue growth following the January 12th closing of our previously announced Linn Star acquisition, which we expect will drive consolidated first quarter year-on-year revenue growth of 13% to 17%. We expect net income per diluted share to be between $0.58 and $0.62 in the first quarter of 2020, reflecting continued headwinds from a soft macro environment as well as higher insurance-related costs. This compares to $0.64 in the first quarter of 2020."

On February 4, 2020, our Board of Directors declared a quarterly cash dividend of $0.18 per share of common stock. The dividend is payable to shareholders of record at the close of business on March 5, 2020 and is expected to be paid on March 20, 2020.

This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.72 for the full year 2020, payable in quarterly increments of $0.18 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 2019 results on Friday, February 7, 2020 at 9:00 a.m. EST. The Company's conference call will be available online on the Investor Relations portion of the Company's website at www.forwardaircorp.com, where investors can easily find or navigate to pertinent information about us, or by dialing (844) 767-5679, Access Code: 2062222. A replay of the conference call will be available on the Investor Relations portion of the Company's website at www.forwardaircorp.com beginning shortly after completion of the live call.

About Forward Air Corporation

Forward Air keeps your business moving forward by providing services within three business segments: Expedited Freight (provides expedited regional, inter-regional and national LTL services, including local pick-up and delivery, final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling); Intermodal (provides 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); and Pool Distribution (provides high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region). For more information, visit our website at www.forwardaircorp.com.

Forward Air Corporation
Consolidated Statements of Comprehensive Income
(In thousands, except per share data)
(Unaudited)

Three months ended Year ended
---------------------------- -------------------------------
December December 31, December 31, December 31,
31, 2019 2018 2019 2018
(As Adjusted) (As Adjusted)
--------- ----------------- ------------ -----------------
Operating revenue:
Expedited
Freight $262,292 $ 244,515 $ 988,757 $ 931,124
Intermodal 54,710 52,730 217,711 201,006
Pool
Distribution 65,436 60,861 207,389 194,117
Eliminations and
other
operations (934 ) (1,545 ) (3,462 ) (5,361 )
-------- ------------ ----------- -------------
Operating
revenue 381,504 356,561 1,410,395 1,320,886

Operating
expenses:
Purchased
transportation 176,263 162,804 639,007 613,636
Salaries, wages
and employee
benefits 91,264 82,548 335,163 300,230
Operating leases 21,988 21,036 82,010 75,677
Depreciation and
amortization 10,073 10,837 42,109 42,183
Insurance and
claims 11,909 8,738 45,440 35,180
Fuel expense 6,579 6,335 24,221 23,121
Other operating
expenses 30,576 29,216 123,622 108,828
-------- ------------ --- ----------- -------------
Total
operating
expenses 348,652 321,514 1,291,572 1,198,855
-------- ------------ --- ----------- -------------
Income (loss) from
operations
Expedited
Freight 26,597 27,069 101,065 101,440
Intermodal 5,354 6,933 23,679 23,266
Pool
Distribution 2,591 2,175 7,275 5,870
Other operations (1,690 ) (1,130 ) (13,196 ) (8,545 )
-------- ------------ ----------- -------------
Income from
operations 32,852 35,047 118,823 122,031

Other expense:
Interest expense (795 ) (457 ) (2,711 ) (1,783 )
Other, net (1 ) -- (1 ) (2 )
-------- ------------ --- ----------- -------------
Total other
expense (796 ) (457 ) (2,712 ) (1,785 )
-------- ------------ ----------- -------------
Income before
income taxes 32,056 34,590 116,111 120,246
Income tax expense 7,888 6,906 29,012 28,195
-------- ------------ --- ----------- -------------
Net income and
comprehensive
income $24,168 $ 27,684 $ 87,099 $ 92,051
------- -------- --- ------- --- --------

Net income per
share:
Basic $0.86 $ 0.95 $ 3.06 $ 3.14

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Press Release: Forward Air Corporation Reports -2-

Diluted $0.85 $ 0.95 $ 3.04 $ 3.12

Dividends per
share: $0.18 $ 0.18 $ 0.72 $ 0.63



Expedited Freight Segment Information
(In millions)
(Unaudited)

Three months ended
--------------------------------------------------------------------
December Percent Percent
31, of December 31, of Percent
2019 Revenue 2018 Revenue Change Change
(As Adjusted)
------ ----- --------------- ----- ---- ---------
Operating
revenue:
Network (1) $ 172.8 65.9 % $ 175.7 71.9 % $(2.9) (1.7 )%
Truckload 48.9 18.7 48.9 20.0 -- --
Final Mile 34.2 13.0 12.5 5.1 21.7 173.6
Other 6.4 2.4 7.4 3.0 (1.0 ) (13.5)
---------- ----- --------------- ----- ----- -----
Total operating
revenue 262.3 100.0 244.5 100.0 17.8 7.3

Operating
expenses:
Purchased
transportation 138.5 52.8 125.7 51.4 12.8 10.2
Salaries, wages
and employee
benefits 51.8 19.7 47.9 19.6 3.9 8.1
Operating leases 12.0 4.6 11.1 4.5 0.9 8.1
Depreciation and
amortization 6.2 2.4 7.4 3.0 (1.2 ) (16.2)
Insurance and
claims 6.5 2.5 5.0 2.0 1.5 30.0
Fuel expense 2.5 1.0 2.5 1.0 -- --
Other operating
expenses 18.2 6.9 17.8 7.3 0.4 2.2
---------- ----- --------------- ----- ----- -----
Total operating
expenses 235.7 89.9 217.4 88.9 18.3 8.4
---------- ----- --------------- ----- ----- -----
Income from
operations $ 26.6 10.1 % $ 27.1 11.1 % $(0.5) (1.8 )%
====== ===== ==== ========= ===== ==== =====

(1) Network 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: LTL Operating Statistics
------------------------------------------------------------------------

Three months ended
----------------------------------------------
December 31, December 31, Percent
2019 2018 Change
(As Adjusted)
---------------- ----------------- ---------

Business days 64 64 -- %

Tonnage (1,2)
Total pounds 642,092 648,423 (1.0 )
Pounds per day 10,033 10,132 (1.0 )

Shipments (1,2)
Total shipments 1,069 1,104 (3.2 )
Shipments per day 16.7 17.3 (3.5 )

Weight per shipment 601 587 2.4

Revenue per
hundredweight (3) $ 27.02 $ 26.81 0.8
Revenue per
hundredweight, ex fuel
(3) $ 22.72 $ 22.42 1.3

Revenue per shipment (3) $ 164 $ 160 2.5
Revenue per shipment, ex
fuel (3) $ 139 $ 134 3.7
Network revenue from
door-to-door shipments
as a percentage of
network revenue (3,4) 41.1 % 35.6 % 15.4
Network gross margin (5) 53.8 % 52.7 % 2.1 %

(1) In thousands
(2) Excludes accessorial, full 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
(5) Network revenue less network purchased transportation as a
percentage of network revenue



Intermodal Segment Information
(In millions)
(Unaudited)

Three months ended
---------------------------------------------------------------
December Percent December Percent
31, of 31, of Percent
2019 Revenue 2018 Revenue Change Change
---------- --------- ---------- --------- ------ ---------
Operating
revenue $ 54.7 100.0% $ 52.7 100.0% $2.0 3.8 %

Operating
expenses:
Purchased
transportation 19.3 35.3 19.7 37.4 (0.4 ) (2.0 )
Salaries, wages
and employee
benefits 13.6 24.9 12.2 23.1 1.4 11.5
Operating leases 4.2 7.7 4.0 7.6 0.2 5.0
Depreciation and
amortization 2.7 4.9 1.7 3.2 1.0 58.8
Insurance and
claims 1.7 3.1 1.5 2.8 0.2 13.3
Fuel expense 2.1 3.8 1.7 3.2 0.4 23.5
Other operating
expenses 5.8 10.6 5.0 9.5 0.8 16.0
---------- ----- ---------- ----- ----- -----
Total operating
expenses 49.4 90.3 45.8 86.9 3.6 7.9
---------- ----- ---------- ----- ----- -----
Income from
operations $ 5.3 9.7 % $ 6.9 13.1 % $(1.6) (23.2)%
====== ===== ====== ===== ==== =====



Intermodal Operating Statistics
--------------------------------------------------------------------

Three months ended
-----------------------------------------
December 31, December 31, Percent
2019 2018 Change
-------------- -------------- ---------

Drayage shipments 77,906 81,566 (4.5 )%
Drayage revenue per
shipment $ 603 $ 560 7.7
Number of locations 21 20 5.0 %



Pool Distribution Segment Information
(In millions)
(Unaudited)

Three months ended
-----------------------------------------------------------------
December Percent December Percent
31, of 31, of Percent
2019 Revenue 2018 Revenue Change Change
---------- --------- ---------- --------- -------- ---------
Operating
revenue $ 65.4 100.0% $ 60.9 100.0% $ 4.5 7.4 %

Operating
expenses:
Purchased
transportation 19.0 29.1 18.5 30.4 0.5 2.7
Salaries, wages
and employee
benefits 26.2 40.1 22.2 36.5 4.0 18.0
Operating leases 5.8 8.9 6.0 9.9 (0.2 ) (3.3 )
Depreciation and
amortization 1.3 2.0 1.7 2.8 (0.4 ) (23.5)
Insurance and
claims 2.2 3.4 1.4 2.3 0.8 57.1
Fuel expense 2.0 3.1 2.1 3.4 (0.1 ) (4.8 )
Other operating
expenses 6.3 9.6 6.8 11.2 (0.5 ) (7.4 )
---------- ----- ---------- ----- ------- -----
Total operating
expenses 62.8 96.0 58.7 96.4 4.1 7.0
---------- ----- ---------- ----- ------- -----
Income from
operations $ 2.6 4.0 % $ 2.2 3.6 % $ 0.4 18.2 %
====== ===== ====== ===== === =====



Pool Operating Statistics
---------------------------------------------------------------

Three months ended
-----------------------------------------
December 31, December 31, Percent
2019 2018 Change
-------------- -------------- ---------

Cartons (1) 33,563 30,435 10.3 %
Revenue per carton $ 1.95 $ 2.00 (2.5 )
Terminals 30 28 7.1 %

(1) In thousands



Forward Air Corporation
Consolidated Balance Sheets
(In thousands)
(Unaudited)
December 31, December 31,
2019 2018
-------------- ----------------
Assets
Current assets:
Cash and cash equivalents $ 64,749 $ 25,657
Accounts receivable, net 150,197 156,359
Other current assets 21,372 19,066
-------------- --------------
Total current assets 236,318 201,082

Property and equipment 426,737 413,900
Less accumulated depreciation and
amortization 213,706 204,005
-------------- --------------

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