Company Announcements

Forward Air Corporation Reports Third Quarter 2020 Results

Reports record third quarter revenue

Reports year over year increase in LTL tonnage

Announces 16.7% dividend increase

GREENEVILLE, Tenn.--(BUSINESS WIRE)--Oct. 29, 2020-- Forward Air Corporation (NASDAQ:FWRD) (the “Company,” “we,” “our,” or “us”) today reported financial results for the three and nine months ended September 30, 2020 as presented in the tables below on a continuing operations basis (Pool Distribution is being reported as a discontinued operation).

Tom Schmitt, Chairman, President and CEO, commenting on the Company's third quarter results said, “During the third quarter our teams did a great job of continuing to restore volumes in response to COVID-19. To support our efforts to grow our fleet and enhance our network capabilities, we implemented several pricing actions during the back half of the quarter which will drive continued improvements in our operational performance and shipment-level profitability.”

Continuing Operations

 

Three months ended

(in thousands, except per share data)

 

September 30, 2020 1

 

September 30, 2019

 

Change

 

Percent Change

Operating revenue

 

$

331,997

 

 

$

313,683

 

 

$

18,314

 

 

5.8

%

Income from operations

 

$

23,510

 

 

$

29,186

 

 

$

(5,676

)

 

(19.4

)%

Operating margin

 

7.1

%

 

9.3

%

 

(220) bps

 

 

Net income

 

$

16,992

 

 

$

21,054

 

 

$

(4,062

)

 

(19.3

)%

Net income per diluted share

 

$

0.61

 

 

$

0.74

 

 

$

(0.13

)

 

(17.6

)%

Cash provided by operating activities

 

$

20,564

 

 

$

43,553

 

 

$

(22,989

)

 

(52.8

)%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 2

 

 

 

 

 

 

 

 

EBITDA

 

$

32,682

 

 

$

38,203

 

 

$

(5,521

)

 

(14.5

)%

Free cash flow

 

$

18,766

 

 

$

35,213

 

 

$

(16,447

)

 

(46.7

)%

1 Results for the three months ended September 30, 2020 include a $2.3 million one-time charge related to a litigated contract dispute.

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

Commenting on the Company's third quarter results, Michael J. Morris, CFO, said, “Our third quarter earnings per share of $0.61 exceeded our guidance range, and reflected a $0.06 one-time charge related to a litigated contract dispute.” Regarding the Company's fourth quarter 2020 guidance, Mr. Morris said, “We expect fourth quarter year-on-year revenue growth to be 6% to 10% and net income per diluted share to be between $0.71 and $0.75 in the fourth quarter of 2020.”

On October 27, 2020, our Board of Directors approved a 16.7% increase to the Company’s quarterly dividend, raising it from $0.18 to $0.21 per share of common stock. The dividend is payable to shareholders of record at the close of business on November 25, 2020 and is expected to be paid on December 10, 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 $0.75 per share of common stock for 2020 and $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.

Commenting on the increased dividend payment, Mr. Morris said, “This increase reflects our confidence in the growth potential of our businesses, and the Company’s continued focus on returning a portion of its free cash flow back to shareholders. In the past five years, we have returned approximately $358 million to shareholders in the form of dividends and share repurchases.”

On April 23, 2020, the Board approved a strategy to divest the Pool Distribution business (“Pool”). Accordingly, the results of operations and cash flows for Pool have been presented as discontinued operations and have been excluded from continuing operations in this release for all periods presented. In addition, Pool assets and liabilities are reflected as “held for sale” on the Consolidated Balance Sheets in this release. For more information regarding Pool discontinued operations, please see the Company’s Form 10-Q for the quarter ended September 30, 2020 expected to be filed with the Securities and Exchange Commission (the “SEC”) on October 30, 2020.

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2020 results on Friday, October 30, 2020 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) 867-6169, Access Code: 7690610.

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; final mile services, including delivery of heavy-bulky freight; truckload brokerage services, including dedicated fleet services, high-security and temperature-controlled logistics services; 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; and pool distribution services, including 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

(Unaudited, in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

 

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

 

 

 

(As Adjusted)

 

 

 

(As Adjusted)

Operating revenue:

 

 

 

 

 

 

 

Expedited Freight

$

283,514

 

 

$

256,115

 

 

$

772,801

 

 

$

735,055

 

Intermodal

48,948

 

 

58,346

 

 

147,836

 

 

163,000

 

Eliminations and other operations

(465

)

 

(778

)

 

(1,405

)

 

(2,524

)

Operating revenue

331,997

 

 

313,683

 

 

919,232

 

 

895,531

 

Operating expenses:

 

 

 

 

 

 

 

Purchased transportation

173,054

 

 

150,296

 

 

465,721

 

 

426,283

 

Salaries, wages and employee benefits

66,927

 

 

68,532

 

 

200,258

 

 

192,330

 

Operating leases

17,327

 

 

15,860

 

 

52,598

 

 

46,861

 

Depreciation and amortization

9,172

 

 

9,016

 

 

27,919

 

 

27,531

 

Insurance and claims

8,671

 

 

9,532

 

 

26,437

 

 

29,276

 

Fuel expense

2,715

 

 

4,637

 

 

9,247

 

 

13,219

 

Other operating expenses

30,621

 

 

26,624

 

 

83,854

 

 

78,071

 

Total operating expenses

308,487

 

 

284,497

 

 

866,034

 

 

813,571

 

Income (loss) from continuing operations:

 

 

 

 

 

 

 

Expedited Freight

23,461

 

 

27,131

 

 

50,394

 

 

76,222

 

Intermodal

4,837

 

 

6,900

 

 

12,963

 

 

18,326

 

Other operations

(4,788

)

 

(4,845

)

 

(10,159

)

 

(12,588

)

Income from continuing operations

23,510

 

 

29,186

 

 

53,198

 

 

81,960

 

Other expense:

 

 

 

 

 

 

 

Interest expense

(1,304

)

 

(761

)

 

(3,355

)

 

(1,917

)

Other, net

 

 

1

 

 

 

 

(1

)

Total other expense

(1,304

)

 

(760

)

 

(3,355

)

 

(1,918

)

Income before income taxes

22,206

 

 

28,426

 

 

49,843

 

 

80,042

 

Income tax expense

5,214

 

 

7,372

 

 

12,209

 

 

20,055

 

Net income from continuing operations

16,992

 

 

21,054

 

 

37,634

 

 

59,987

 

(Loss) income from discontinued operations, net of tax

(345

)

 

1,141

 

 

(9,458

)

 

2,945

 

Net income and comprehensive income

$

16,647

 

 

$

22,195

 

 

$

28,176

 

 

$

62,932

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic net income (loss) per share:

 

 

 

 

 

 

 

Continuing operations

$

0.61

 

 

$

0.74

 

 

$

1.35

 

 

$

2.10

 

Discontinued operations

(0.01

)

 

0.04

 

 

(0.34

)

 

0.10

 

Net income per share

$

0.60

 

 

$

0.78

 

 

$

1.01

 

 

$

2.20

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share:

 

 

 

 

 

 

 

Continuing operations

$

0.61

 

 

$

0.74

 

 

$

1.35

 

 

$

2.09

 

Discontinued operations

(0.01

)

 

0.04

 

 

(0.34

)

 

0.10

 

Net income per share

$

0.60

 

 

$

0.78

 

 

$

1.01

 

 

$

2.19

 

Dividends per share:

$

0.18

 

 

$

0.18

 

 

$

0.54

 

 

$

0.54

 

Expedited Freight Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

Percent of

 

September 30,

 

Percent of

 

 

 

Percent

 

2020 1

 

Revenue

 

2019

 

Revenue

 

Change

 

Change

 

 

 

 

 

(As Adjusted)

 

 

 

 

 

 

Operating revenue:

 

 

 

 

 

 

 

 

 

 

 

Network 2

$

169.3

 

 

59.7

%

 

$

169.3

 

 

66.1

%

 

$

 

 

%

Truckload

49.8

 

 

17.6

 

 

48.1

 

 

18.8

 

 

1.7

 

 

3.5

 

Final Mile

57.0

 

 

20.1

 

 

31.6

 

 

12.3

 

 

25.4

 

 

80.4

 

Other

7.4

 

 

2.6

 

 

7.1

 

 

2.8

 

 

0.3

 

 

4.2

 

Total operating revenue

283.5

 

 

100.0

 

 

256.1

 

 

100.0

 

 

27.4

 

 

10.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

156.1

 

 

55.1

 

 

129.8

 

 

50.7

 

 

26.3

 

 

20.3

 

Salaries, wages and employee benefits

54.1

 

 

19.1

 

 

52.2

 

 

20.4

 

 

1.9

 

 

3.6

 

Operating leases

13.4

 

 

4.7

 

 

11.5

 

 

4.5

 

 

1.9

 

 

16.5

 

Depreciation and amortization

6.8

 

 

2.4

 

 

6.5

 

 

2.5

 

 

0.3

 

 

4.6

 

Insurance and claims

5.8

 

 

2.0

 

 

5.4

 

 

2.1

 

 

0.4

 

 

7.4

 

Fuel expense

1.4

 

 

0.5

 

 

2.5

 

 

1.0

 

 

(1.1

)

 

(44.0

)

Other operating expenses

22.4

 

 

7.9

 

 

21.1

 

 

8.2

 

 

1.3

 

 

6.2

 

Total operating expenses

260.0

 

 

91.7

 

 

229.0

 

 

89.4

 

 

31.0

 

 

13.5

 

Income from operations

$

23.5

 

 

8.3

%

 

$

27.1

 

 

10.6

%

 

$

(3.6

)

 

(13.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes revenues and operating expenses from the acquisition of Linn Star which was acquired in January 2020. Linn Star results are not included in the prior period.

2 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 Operating Statistics

 

 

 

Three months ended

 

September 30,

 

September 30,

 

Percent

 

2020

 

2019

 

Change

 

 

 

(As Adjusted)

 

 

 

 

 

 

 

 

Business days

64

 

 

64

 

 

%

 

 

 

 

 

 

Tonnage 1,2

 

 

 

 

 

Total pounds

636,194

 

 

613,812

 

 

3.6

 

Pounds per day

9,941

 

 

9,591

 

 

3.6

 

 

 

 

 

 

 

Shipments 1,2

 

 

 

 

 

Total shipments

1,018

 

 

977

 

 

4.2

 

Shipments per day

15.9

 

 

15.3

 

 

4.2

 

 

 

 

 

 

 

Weight per shipment

625

 

 

628

 

 

(0.5

)

 

 

 

 

 

 

Revenue per hundredweight 3

$

26.84

 

 

$

27.65

 

 

(2.9

)

Revenue per hundredweight, ex fuel 3

$

23.41

 

 

$

23.23

 

 

0.8

 

 

 

 

 

 

 

Revenue per shipment 3

$

166

 

 

$

176

 

 

(5.7

)

Revenue per shipment, ex fuel 3

$

145

 

 

$

148

 

 

(2.0

)

 

 

 

 

 

 

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

51.3

%

 

40.7

%

 

26.0

 

Network gross margin 5

49.7

%

 

55.6

%

 

(10.6

)%

 

 

 

 

 

 

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

5 Network revenue less Network purchased transportation as a percentage of Network revenue

Intermodal Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

September 30,

 

Percent of

 

September 30,

 

Percent of

 

 

 

Percent

 

2020 1

 

Revenue

 

2019

 

Revenue

 

Change

 

Change

Operating revenue

$

48.9

 

 

100.0

%

 

$

58.3

 

 

100.0

%

 

$

(9.4

)

 

(16.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

17.3

 

 

35.4

 

 

21.0

 

 

36.0

 

 

(3.7

)

 

(17.6

)

Salaries, wages and employee benefits

11.6

 

 

23.7

 

 

14.2

 

 

24.4

 

 

(2.6

)

 

(18.3

)

Operating leases

3.9

 

 

8.0

 

 

4.3

 

 

7.4

 

 

(0.4

)

 

(9.3

)

Depreciation and amortization

2.4

 

 

4.9

 

 

2.6

 

 

4.5

 

 

(0.2

)

 

(7.7

)

Insurance and claims

2.1

 

 

4.3

 

 

1.8

 

 

3.1

 

 

0.3

 

 

16.7

 

Fuel expense

1.2

 

 

2.5

 

 

2.2

 

 

3.8

 

 

(1.0

)

 

(45.5

)

Other operating expenses

5.6

 

 

11.5

 

 

5.3

 

 

9.1

 

 

0.3

 

 

5.7

 

Total operating expenses

44.1

 

 

90.2

 

 

51.4

 

 

88.2

 

 

(7.3

)

 

(14.2

)

Income from operations

$

4.8

 

 

9.8

%

 

$

6.9

 

 

11.8

%

 

$

(2.1

)

 

(30.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes revenues and operating expenses from the acquisition of OST, which was acquired in July 2019 (and is partially included in the prior period).

Intermodal Operating Statistics

 

 

 

Three months ended

 

September 30,

 

September 30,

 

Percent

 

2020

 

2019

 

Change

 

 

 

 

 

 

Drayage shipments

74,506

 

 

84,230

 

 

(11.5

)%

Drayage revenue per shipment

$

562

 

 

$

597

 

 

(5.9

)

Number of locations

24

 

 

21

 

 

14.3

%

 

Forward Air Corporation

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

September 30,
2020

 

December 31,
2019

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

42,990

 

 

$

64,749

 

Accounts receivable, net

153,070

 

 

136,214

 

Other current assets

22,062

 

 

20,403

 

Current assets held for sale

16,925

 

 

14,952

 

Total current assets

235,047

 

 

236,318

 

 

 

 

 

Property and equipment

379,306

 

 

373,571

 

Less accumulated depreciation and amortization

189,042

 

 

180,815

 

Total property and equipment, net

190,264

 

 

192,756

 

Operating lease right-of-use assets

115,551

 

 

105,170

 

Goodwill and other acquired intangibles:

 

 

 

Goodwill

240,933

 

 

215,699

 

Other acquired intangibles, net of accumulated amortization

145,086

 

 

124,857

 

Total goodwill and other acquired intangibles, net

386,019

 

 

340,556

 

Other assets

43,266

 

 

39,374

 

Noncurrent assets held for sale

78,063

 

 

76,704

 

Total assets

$

1,048,210

 

 

$

990,878

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

32,581

 

 

$

25,411

 

Accrued expenses

52,454

 

 

44,154

 

Other current liabilities

4,277

 

 

5,318

 

Current portion of debt and finance lease obligations

1,557

 

 

1,421

 

Current portion of operating lease obligations

40,258

 

 

35,886

 

Current liabilities held for sale

26,006

 

 

24,974

 

Total current liabilities

157,133

 

 

137,164

 

 

 

 

 

Debt and finance lease obligations, less current portion

116,583

 

 

72,249

 

Operating lease obligations, less current portion

76,003

 

 

69,678

 

Other long-term liabilities

61,536

 

 

56,448

 

Deferred income taxes

45,532

 

 

41,214

 

Noncurrent liabilities held for sale

39,227

 

 

36,943

 

 

 

 

 

Shareholders’ equity:

 

 

 

Common stock

273

 

 

279

 

Additional paid-in capital

237,497

 

 

226,869

 

Retained earnings

314,426

 

 

350,034

 

Total shareholders’ equity

552,196

 

 

577,182

 

Total liabilities and shareholders’ equity

$

1,048,210

 

 

$

990,878

 

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three months ended

 

September 30,
2020

 

September 30,
2019

Operating activities:

 

 

 

Net income from continuing operations

$

16,992

 

 

$

21,054

 

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

 

 

 

Depreciation and amortization

9,172

 

 

9,016

 

Change in fair value of earn-out liability

493

 

 

890

 

Share-based compensation

2,345

 

 

2,626

 

Loss on disposal of property and equipment, net

99

 

 

999

 

(Recovery of) provision for loss on receivables

(82

)

 

184

 

Provision for revenue adjustments

1,185

 

 

962

 

Deferred income tax (benefit) expense

(351

)

 

2,591

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

(23,415

)

 

144

 

Prepaid expenses and other current assets

(484

)

 

462

 

Income taxes

1,767

 

 

(375

)

Accounts payable and accrued expenses

12,843

 

 

5,000

 

Net cash provided by operating activities of continuing operations

20,564

 

 

43,553

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from disposal of property and equipment

427

 

 

685

 

Purchases of property and equipment

(2,225

)

 

(9,025

)

Acquisition of business, net of cash acquired

 

 

(12,000

)

Net cash used in investing activities of continuing operations

(1,798

)

 

(20,340

)

 

 

 

 

Financing activities:

 

 

 

Payments of finance lease obligations

147

 

 

(391

)

Proceeds from senior credit facility

 

 

10,000

 

Payments on senior credit facility

(20,000

)

 

 

Proceeds from exercise of stock options

1,901

 

 

785

 

Payments of cash dividends

(5,003

)

 

(5,088

)

Repurchase of common stock (repurchase program)

(29,989

)

 

(9,289

)

Cash settlement of share-based awards for tax withholdings

(158

)

 

(262

)

(Distributions to) contributions from subsidiary held for sale

(3,590

)

 

1,079

 

Net cash used in financing activities from continuing operations

(56,692

)

 

(3,166

)

Net (decrease) increase in cash of continuing operations

(37,926

)

 

20,047

 

 

 

 

 

Cash from discontinued operations:

 

 

 

Cash (used in) provided by operating activities of discontinued operations, net

(3,418

)

 

2,412

 

Cash used in investing activities of discontinued operations, net

(172

)

 

(1,334

)

Cash provided by (used in) financing activities of discontinued operations, net

3,590

 

 

(1,078

)

Net (decrease) increase in cash

(37,926

)

 

20,047

 

Cash at beginning of period of continuing operations

80,916

 

 

14,777

 

Cash at beginning of period of discontinued operations/held for sale

 

 

 

Net (decrease) increase in cash

(37,926

)

 

20,047

 

Less: cash at end of period of discontinued operations/held for sale

 

 

 

Cash at end of period of continuing operations

$

42,990

 

 

$

34,824

 

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Nine months ended

 

September 30,
2020

 

September 30,
2019

Operating activities:

 

 

 

Net income from continuing operations

$

37,634

 

 

$

59,987

 

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

 

 

 

Depreciation and amortization

27,919

 

 

27,531

 

Change in fair value of earn-out liability

(2,209

)

 

890

 

Share-based compensation

7,852

 

 

8,536

 

Loss on disposal of property and equipment, net

108

 

 

781

 

Provision for loss on receivables

606

 

 

819

 

Provision for revenue adjustments

2,972

 

 

2,239

 

Deferred income tax expense

4,317

 

 

5,881

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

(20,436

)

 

(3,778

)

Prepaid expenses and other current assets

(173

)

 

(4,380

)

Income taxes

1,426

 

 

(2,557

)

Accounts payable and accrued expenses

20,477

 

 

11,876

 

Net cash provided by operating activities of continuing operations

80,493

 

 

107,825

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from disposal of property and equipment

1,415

 

 

1,693

 

Purchases of property and equipment

(16,439

)

 

(23,240

)

Acquisition of business, net of cash acquired

(55,931

)

 

(39,000

)

Net cash used in investing activities of continuing operations

(70,955

)

 

(60,547

)

 

 

 

 

Financing activities:

 

 

 

Payments of finance lease obligations

(529

)

 

(528

)

Proceeds from senior credit facility

65,000

 

 

20,000

 

Payments on senior credit facility

(20,000

)

 

 

Payments on earn-out liability

(5,284

)

 

 

Proceeds from exercise of stock options

1,901

 

 

2,063

 

Payments of cash dividends

(15,090

)

 

(15,421

)

Repurchase of common stock (repurchase program)

(45,248

)

 

(47,906

)

Proceeds from common stock issued under employee stock purchase plan

294

 

 

261

 

Cash settlement of share-based awards for tax withholdings

(3,444

)

 

(3,032

)

(Distributions to) contributions from subsidiary held for sale

(8,897

)

 

6,452

 

Net cash used in financing activities from continuing operations

(31,297

)

 

(38,111

)

Net (decrease) increase in cash of continuing operations

(21,759

)

 

9,167

 

 

 

 

 

Cash from discontinued operations:

 

 

 

Cash (used in) provided by operating activities of discontinued operations, net

(8,090

)

 

9,906

 

Cash used in investing activities of discontinued operations, net

(807

)

 

(3,454

)

Cash provided by (used in) financing activities of discontinued operations, net

8,897

 

 

(6,452

)

Net (decrease) increase in cash

(21,759

)

 

9,167

 

Cash at beginning of period of continuing operations

64,749

 

 

25,657

 

Cash at beginning of period of discontinued operations/held for sale

 

 

 

Net (decrease) increase in cash

(21,759

)

 

9,167

 

Less: cash at end of period of discontinued operations/held for sale

 

 

 

Cash at end of period of continuing operations

$

42,990

 

 

$

34,824

 

Forward Air Corporation Reconciliation of U.S. GAAP and Non-GAAP Financial Measures

The Company reports its financial results in accordance with GAAP (also referred to herein as “reported”). However, the Company also uses “Non-GAAP financial measures” that are derived on the basis of methodologies other than in accordance with GAAP. Specifically, 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 and in evaluating the Company’s performance.

For the three and nine months ended September 30, 2020 and 2019, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow. All non-GAAP financial measures are presented on a continuing operations basis.

The Company believes that EBITDA from continuing operations 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 as set out in the below tables. The Company believes that free cash flow from continuing operations is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance stockholder value.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported 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 tables below present, for the periods indicated, a reconciliation of the Company's presented non-GAAP financial measures to the most directly comparable GAAP financial measures.

Forward Air Corporation

Reconciliation to U.S. GAAP

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

Continuing Operations

 

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Net income (GAAP)

 

$

16,992

 

 

$

21,054

 

 

$

37,634

 

 

$

59,987

 

Interest expense

 

1,304

 

 

761

 

 

3,355

 

 

1,917

 

Income tax expense

 

5,214

 

 

7,372

 

 

12,209

 

 

20,055

 

Depreciation and amortization

 

9,172

 

 

9,016

 

 

27,919

 

 

27,531

 

EBITDA (Non-GAAP)

 

$

32,682

 

 

$

38,203

 

 

$

81,117

 

 

$

109,490

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Nine months ended

Continuing Operations

 

September 30,
2020

 

September 30,
2019

 

September 30,
2020

 

September 30,
2019

Net cash provided by operating activities (GAAP)

 

$

20,564

 

 

$

43,553

 

 

$

80,493

 

 

$

107,825

 

Proceeds from disposal of property and equipment

 

427

 

 

685

 

 

1,415

 

 

1,693

 

Purchases of property and equipment

 

(2,225

)

 

(9,025

)

 

(16,439

)

 

(23,240

)

Free cash flow (Non-GAAP)

 

$

18,766

 

 

$

35,213

 

 

$

65,469

 

 

$

86,278

 

The following table summarizes supplemental guidance information that management believes to be useful.

Forward Air Corporation

Additional Guidance Data

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

Three months ended

Actual - Continuing Operations

 

September 30, 2020

Net income from continuing operations

 

$

16,992

 

Income allocated to participating securities

 

(150

)

Numerator for diluted income per share - net income

 

$

16,842

 

 

 

 

Fully diluted share count

 

27,606

 

Diluted earnings per share from continuing operations

 

$

0.61

 

 

 

 

Projected

 

Full year 2020

Projected continuing operations and consolidated tax rate

 

25.5

%

 

 

 

Projected capital expenditures, net

 

$

26,000

 

 

 

 

Projected

 

December 31, 2020

Projected year-end fully diluted share count

 

27,500

 

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 continued improvements in our operational performance and profitability, expected impact of COVID-19, fourth quarter 2020 revenue growth and net income per diluted share, full year 2020 projected tax rate, share count, capital expenditures and the 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: prolonged impact of COVID-19 and actions taken to mitigate those impacts, economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the creditworthiness of our customers and their ability to pay for services rendered, more limited liquidity than expected which limits our ability to make key investments, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, changes in fuel prices, 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, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials, the outcome and impact of the 2020 presidential election and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2019.

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.

Forward Air Corporation
Michael J. Morris, 404-362-8933
mmorris@forwardair.com

Source: Forward Air Corporation

Forward Air Corporation
Michael J. Morris, 404-362-8933
mmorris@forwardair.com