Forward Air Corporation
10/27/2021 | Press release | Distributed by Public on 10/27/2021 16:31
Forward Air Corporation Reports Third Quarter 2021 Results
Forward Air Corporation Reports Third Quarter 2021 Results
Download as PDFOctober 27, 2021
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.--(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).
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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, |
September 30, |
September 30, |
September 30, |
||||||||||||||||
|
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, |
Percent of |
September 30, |
Percent of |
Change |
Percent |
|||||||||||||||
|
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, |
September 30, |
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, |
Percent of Revenue |
September 30, |
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 |
2,356 |
4.8 |
260 |
11.0 |
||||||||||||||
|
Insurance and claims |
2,708 |
3.5 |
2,058 |
4.2 |
650 |
31.6 |
||||||||||||||
|
Fuel expense |
2,231 |
2.9 |
1,171 |
2.4 |
1,060 |
90.5 |
||||||||||||||
|
Other operating expenses |
15,470 |
19.8 |
5,687 |
11.6 |
9,783 |
172.0 |
||||||||||||||
|
Total operating expenses |
69,461 |
88.9 |
44,111 |
90.1 |
25,350 |
57.5 |
||||||||||||||
|
Income from operations |
$ |
8,712 |
11.1 |
% |
$ |
4,837 |
9.9 |
% |
$ |
3,875 |
80.1 |
% |
||||||||
|
Intermodal Operating Statistics |
||||||||||
|
Three Months Ended |
||||||||||
|
September 30, |
September 30, |
Percent Change |
||||||||
|
Drayage shipments |
91,774 |
74,506 |
23.2 |
% |
||||||
|
Drayage revenue per shipment |
$ |
723 |
$ |
562 |
28.6 |
% |
||||
|
Number of locations |
29 |
24 |
20.8 |
% |
||||||
|
Forward Air Corporation |
|||||||
|
Condensed Consolidated Balance Sheets |
|||||||
|
(In thousands) |
|||||||
|
(Unaudited) |
|||||||
|
September 30, |
December 31, |
||||||
|
Assets |
|||||||
|
Current assets: |
|||||||
|
Cash and cash equivalents |
$ |
51,930 |
$ |
40,254 |
|||
|
Accounts receivable, net |
205,165 |
156,490 |
|||||
|
Other receivables |
14,218 |
- |
|||||
|
Other current assets |
17,948 |
28,150 |
|||||
|
Current assets held for sale |
- |
21,002 |
|||||
|
Total current assets |
289,261 |
245,896 |
|||||
|
Property and equipment |
396,094 |
380,519 |
|||||
|
Less accumulated depreciation and amortization |
199,875 |
190,652 |
|||||
|
Total property and equipment, net |
196,219 |
189,867 |
|||||
|
Operating lease right-of-use assets |
142,623 |
123,338 |
|||||
|
Goodwill |
254,776 |
244,982 |
|||||
|
Other acquired intangibles, net of accumulated amortization |
142,196 |
145,032 |
|||||
|
Other assets |
45,433 |
45,181 |
|||||
|
Noncurrent assets held for sale |
- |
53,097 |
|||||
|
Total assets |
$ |
1,070,508 |
$ |
1,047,393 |
|||
|
Liabilities and Shareholders' Equity |
|||||||
|
Current liabilities: |
|||||||
|
Accounts payable |
$ |
42,885 |
$ |
38,371 |
|||
|
Accrued expenses |
67,732 |
51,264 |
|||||
|
Other current liabilities |
- |
10,580 |
|||||
|
Current portion of debt and finance lease obligations |
1,841 |
1,801 |
|||||
|
Current portion of operating lease liabilities |
46,008 |
43,680 |
|||||
|
Current liabilities held for sale |
- |
25,924 |
|||||
|
Total current liabilities |
158,466 |
171,620 |
|||||
|
Debt and finance lease obligations, less current portion |
161,312 |
117,408 |
|||||
|
Operating lease liabilities, less current portion |
97,181 |
80,346 |
|||||
|
Other long-term liabilities |
57,354 |
54,129 |
|||||
|
Deferred income taxes |
40,659 |
41,986 |
|||||
|
Noncurrent liabilities held for sale |
- |
34,575 |
|||||
|
Shareholders' equity: |
|||||||
|
Common stock |
270 |
273 |
|||||
|
Additional paid-in capital |
255,071 |
242,916 |
|||||
|
Retained earnings |
300,195 |
304,140 |
|||||
|
Total shareholders' equity |
555,536 |
547,329 |
|||||
|
Total liabilities and shareholders' equity |
$ |
1,070,508 |
$ |
1,047,393 |
|
Forward Air Corporation |
|||||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||||
|
(In thousands) |
|||||||||
|
(Unaudited) |
|||||||||
|
Three Months Ended |
|||||||||
|
September 30, |
September 30, |
||||||||
|
Operating activities: |
|||||||||
|
Net income from continuing operations |
$ |
30,503 |
$ |
16,992 |
|||||
|
Adjustments to reconcile net income of continuing operations to net cash provided by |
|||||||||
|
Depreciation and amortization |
9,416 |
9,172 |
|||||||
|
Change in fair value of earn-out liability |
- |
493 |
|||||||
|
Share-based compensation expense |
2,601 |
2,345 |
|||||||
|
Provision for revenue adjustments |
1,979 |
1,185 |
|||||||
|
Deferred income tax benefit |
(812 |
) |
(351 |
) |
|||||
|
Other |
217 |
17 |
|||||||
|
Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses: |
|||||||||
|
Accounts receivable |
1,655 |
(23,415 |
) |
||||||
|
Other receivables |
(727 |
) |
- |
||||||
|
Other current and noncurrent assets |
1,438 |
1,283 |
|||||||
|
Accounts payable and accrued expenses |
(3,689 |
) |
12,843 |
||||||
|
Net cash provided by operating activities of continuing operations |
42,581 |
20,564 |
|||||||
|
Investing activities: |
|||||||||
|
Proceeds from sale of property and equipment |
1,025 |
427 |
|||||||
|
Purchases of property and equipment |
(14,440 |
) |
(2,225 |
) |
|||||
|
Purchases of a business, net of cash acquired |
- |
- |
|||||||
|
Net cash used in investing activities of continuing operations |
(13,415 |
) |
(1,798 |
) |
|||||
|
Financing activities: |
|||||||||
|
Repayments of finance lease obligations |
(492 |
) |
147 |
||||||
|
Payments on revolving credit facility |
- |
(20,000 |
) |
||||||
|
Payment of debt issuance costs |
(119 |
) |
- |
||||||
|
Payment of earn-out liability |
(6,519 |
) |
- |
||||||
|
Proceeds from issuance of common stock upon stock option exercises |
- |
1,901 |
|||||||
|
Payments of dividends to shareholders |
(5,705 |
) |
(5,003 |
) |
|||||
|
Repurchases and retirement of common stock |
(14,997 |
) |
(29,989 |
) |
|||||
|
Proceeds from common stock issued under employee stock purchase plan |
- |
- |
|||||||
|
Payment of minimum tax withholdings on share-based awards |
(248 |
) |
(158 |
) |
|||||
|
Contributions from (distributions to) subsidiary held for sale |
- |
(3,590 |
) |
||||||
|
Net cash used in financing activities from continuing operations |
(28,080 |
) |
(56,692 |
) |
|||||
|
Net increase (decrease) in cash of continuing operations |
1,086 |
(37,926 |
) |
||||||
|
Cash from discontinued operation: |
|||||||||
|
Net cash used in operating activities of discontinued operation |
- |
(3,418 |
) |
||||||
|
Net cash used in investing activities of discontinued operation |
- |
(172 |
) |
||||||
|
Net cash provided by financing activities of discontinued operation |
- |
3,590 |
|||||||
|
Net increase (decrease) in cash and cash equivalents |
1,086 |
(37,926 |
) |
||||||
|
Cash and cash equivalents at beginning of period of continuing operations |
50,844 |
80,916 |
|||||||
|
Cash at beginning of period of discontinued operation |
- |
- |
|||||||
|
Net increase (decrease) in cash and cash equivalents |
1,086 |
(37,926 |
) |
||||||
|
Less: cash at end of period of discontinued operation |
- |
- |
|||||||
|
Cash and cash equivalents at end of period of continuing operations |
$ |
51,930 |
$ |
42,990 |
|
Forward Air Corporation |
|||||||
|
Condensed Consolidated Statements of Cash Flows |
|||||||
|
(In thousands) |
|||||||
|
(Unaudited) |
|||||||
|
Nine Months Ended |
|||||||
|
September 30, |
September 30, |
||||||
|
Operating activities: |
|||||||
|
Net income from continuing operations |
$ |
77,894 |
$ |
37,634 |
|||
|
Adjustments to reconcile net income of continuing operations to net cash provided by |
|||||||
|
Depreciation and amortization |
28,067 |
27,919 |
|||||
|
Change in fair value of earn-out liability |
(385 |
) |
(2,209 |
) |
|||
|
Share-based compensation expense |
8,179 |
7,852 |
|||||
|
Provision for revenue adjustments |
5,504 |
2,972 |
|||||
|
Deferred income tax (benefit) expense |
(1,384 |
) |
4,317 |
||||
|
Other |
406 |
714 |
|||||
|
Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses: |
|||||||
|
Accounts receivable |
(49,363 |
) |
(20,436 |
) |
|||
|
Other receivables |
(14,218 |
) |
- |
||||
|
Other current and noncurrent assets |
8,184 |
1,253 |
|||||
|
Accounts payable and accrued expenses |
19,358 |
20,477 |
|||||
|
Net cash provided by operating activities of continuing operations |
82,242 |
80,493 |
|||||
|
Investing activities: |
|||||||
|
Proceeds from sale of property and equipment |
2,339 |
1,415 |
|||||
|
Purchases of property and equipment |
(23,015 |
) |
(16,439 |
) |
|||
|
Purchase of a business, net of cash acquired |
(22,543 |
) |
(55,931 |
) |
|||
|
Net cash used in investing activities of continuing operations |
(43,219 |
) |
(70,955 |
) |
|||
|
Financing activities: |
|||||||
|
Repayments of finance lease obligations |
(1,445 |
) |
(529 |
) |
|||
|
Proceeds from revolving credit facility |
45,000 |
65,000 |
|||||
|
Payments on revolving credit facility |
- |
(20,000 |
) |
||||
|
Payment of debt issuance costs |
(119 |
) |
- |
||||
|
Payment of earn-out liability |
(6,519 |
) |
(5,284 |
) |
|||
|
Proceeds from issuance of common stock upon stock option exercises |
3,563 |
1,901 |
|||||
|
Payments of dividends to shareholders |
(17,270 |
) |
(15,090 |
) |
|||
|
Repurchases and retirement of common stock |
(48,989 |
) |
(45,248 |
) |
|||
|
Proceeds from common stock issued under employee stock purchase plan |
388 |
294 |
|||||
|
Payment of minimum tax withholdings on share-based awards |
(3,074 |
) |
(3,444 |
) |
|||
|
Contributions from (distributions to) subsidiary held for sale |
1,118 |
(8,897 |
) |
||||
|
Net cash used in financing activities from continuing operations |
(27,347 |
) |
(31,297 |
) |
|||
|
Net increase (decrease) in cash and cash equivalents of continuing operations |
11,676 |
(21,759 |
) |
||||
|
Cash from discontinued operation: |
|||||||
|
Net cash used in operating activities of discontinued operation |
(6,902 |
) |
(8,090 |
) |
|||
|
Net cash provided by (used in) investing activities of discontinued operation |
8,020 |
(807 |
) |
||||
|
Net cash (used in) provided by financing activities of discontinued operation |
(1,118 |
) |
8,897 |
||||
|
Net increase (decrease) in cash and cash equivalents |
11,676 |
(21,759 |
) |
||||
|
Cash and cash equivalents at beginning of period of continuing operations |
40,254 |
64,749 |
|||||
|
Cash at beginning of period of discontinued operation |
- |
- |
|||||
|
Net increase (decrease) in cash and cash equivalents |
11,676 |
(21,759 |
) |
||||
|
Less: cash at end of period of discontinued operation |
- |
- |
|||||
|
Cash and cash equivalents at end of period of continuing operations |
$ |
51,930 |
$ |
42,990 |
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 and nine months ended September 30, 2021 and 2020, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization ("EBITDA"), free cash flow, and reported income from continuing operations, net income, and net income per diluted share to adjusted income from continuing operations, net income, and net income per diluted share. 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. 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 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 these 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 from continuing operations to EBITDA from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
|
Three Months Ended |
Nine Months Ended |
||||||||||||||||
|
Continuing Operations |
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||||
|
Net income |
$ |
30,503 |
$ |
16,992 |
$ |
77,894 |
$ |
37,634 |
|||||||||
|
Interest expense |
973 |
1,304 |
3,461 |
3,355 |
|||||||||||||
|
Income tax expense |
11,000 |
5,214 |
25,969 |
12,209 |
|||||||||||||
|
Depreciation and amortization |
9,416 |
9,172 |
28,067 |
27,919 |
|||||||||||||
|
EBITDA |
$ |
51,892 |
$ |
32,682 |
$ |
135,391 |
$ |
81,117 |
|||||||||
The following is a reconciliation of net cash provided by operating activities of continuing operations to free cash flow from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):
|
Three Months Ended |
Nine Months Ended |
||||||||||||||
|
Continuing Operations |
September 30, |
September 30, |
September 30, |
September 30, |
|||||||||||
|
Net cash provided by operating activities |
$ |
42,581 |
$ |
20,564 |
$ |
82,242 |
$ |
80,493 |
|||||||
|
Proceeds from sale of property and equipment |
1,025 |
427 |
2,339 |
1,415 |
|||||||||||
|
Purchases of property and equipment |
(14,440 |
) |
(2,225 |
) |
(23,015 |
) |
(16,439 |
) |
|||||||
|
Free cash flow |
$ |
29,166 |
$ |
18,766 |
$ |
61,566 |
$ |
65,469 |
The following is a reconciliation of reported income from continuing operations, net income, and net income per diluted share from continuing operations to adjusted income from continuing operations, net income, and net income per diluted share from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands, except net income per diluted share):
|
Three Months Ended September 30, 2021 |
Three Months Ended September 30, 2020 |
|||||||||||||||||||||||
|
Continuing Operations |
Income From |
Net |
Net Income |
Income From |
Net |
Net Income |
||||||||||||||||||
|
As Reported |
$ |
42,476 |
$ |
30,503 |
$ |
1.12 |
$ |
23,510 |
$ |
16,992 |
$ |
0.61 |
||||||||||||
|
Professional fees for an operational improvement project |
969 |
712 |
0.03 |
- |
- |
- |
||||||||||||||||||
|
Reserve for a litigated contract dispute |
- |
- |
- |
2,300 |
1,760 |
0.06 |
||||||||||||||||||
|
As Adjusted |
$ |
43,445 |
$ |
31,215 |
$ |
1.14 |
$ |
25,810 |
$ |
18,752 |
$ |
0.67 |
||||||||||||
|
1 Net income and net income per diluted share amounts are after tax |
||||||||||||||||||||||||
|
2 Rounding may impact summation of amounts. |
||||||||||||||||||||||||
|
Nine Months Ended September 30, 2021 |
Nine Months Ended September 30, 2020 |
|||||||||||||||||||||||
|
Continuing Operations |
Income From |
Net |
Net Income |
Income From |
Net |
Net Income |
||||||||||||||||||
|
As Reported |
$ |
107,324 |
$ |
77,894 |
$ |
2.83 |
$ |
53,198 |
$ |
37,634 |
$ |
1.35 |
||||||||||||
|
Professional fees for an operational improvement project |
969 |
727 |
0.03 |
- |
- |
- |
||||||||||||||||||
|
Professional fees for cybersecurity and shareholder engagement activities |
6,955 |
5,216 |
0.19 |
- |
- |
- |
||||||||||||||||||
|
Reserve for a litigated contract dispute |
- |
- |
- |
2,300 |
1,736 |
0.06 |
||||||||||||||||||
|
Change in the fair value of the earn-out liability |
- |
- |
- |
(2,152 |
) |
(1,625 |
) |
(0.06 |
) |
|||||||||||||||
|
Severance expenses |
- |
- |
- |
997 |
753 |
0.03 |
||||||||||||||||||
|
As Adjusted |
$ |
115,248 |
$ |
83,837 |
$ |
3.05 |
$ |
54,343 |
$ |
38,498 |
$ |
1.38 |
||||||||||||
|
1 Net income and net income per diluted share amounts are after tax |
The following is a reconciliation of targeted net income per diluted share from continuing operations to adjusted targeted net income per diluted share from continuing operations for the year ended December 31, 2021:
|
Continuing Operations |
Net Income Per Diluted |
||
|
As targeted |
$ |
4.08 - 4.12 |
|
|
Professional fees for an operational improvement project2 |
0.03 |
||
|
Professional fees for cybersecurity and shareholder engagement activities2 |
0.19 |
||
|
As adjusted targeted |
$ |
4.30 - 4.34 |
|
1 |
Net income per diluted share is after tax. |
|
2 |
The above reconciliation reflects adjustments to full year 2021 targeted net income per diluted share from continuing operations based on expenses incurred during the nine months ended September 30, 2021. Full year expenses could differ based on future activity. |
The following is reconciliation of reported net income per diluted share from continuing operations to adjusted net income per diluted share from continuing operations for the three months and year ended December 31, 2020:
|
Net Income Per Diluted Share1 |
||||||||
|
Continuing Operations |
Three Months Ended |
Year Ended |
||||||
|
As reported |
$ |
0.55 |
$ |
1.89 |
||||
|
Reserve for a litigated contract dispute |
- |
0.06 |
||||||
|
Change in the fair value of the earn-out liability |
0.07 |
0.01 |
||||||
|
Severance expenses |
- |
0.03 |
||||||
|
As adjusted |
$ |
0.62 |
$ |
1.99 |
|
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 |
|||
|
Net income from continuing operations |
$ |
30,503 |
||
|
Income allocated to participating securities |
(235) |
|||
|
Numerator for diluted income per share - net income |
$ |
30,268 |
||
|
Weighted-average shares outstanding - diluted |
27,144 |
|||
|
Diluted net income per share |
$ |
1.12 |
||
|
Projected |
Full year 2021 |
|||
|
Projected tax rate - continuing operations |
25.2 |
% |
||
|
Projected purchases of property and equipment, net of proceeds from sale of property and equipment1 |
$ |
39,000 |
||
|
1 Includes $22,000 for the Columbus, Ohio hub expansion |
||||
|
Projected |
December 31, 2021 |
|||
|
Projected weighted-average shares outstanding - diluted |
27,300 |
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 fourth quarter 2021 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, 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, changes in fuel prices, loss of a major customer, increasing competition and pricing pressure, 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, 2020.
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/20211027006187/en/
Forward Air Corporation
Brandon Hammer, 423-636-7173
[email protected]
Source: Forward Air Corporation
Released October 27, 2021