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Forward Air Corporation Reports Third Quarter 2021 Results

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

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)

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

 

 

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,

2021

 

September 30,

2020

 

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,

2021

 

December 31,

2020

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,

2021

 

September 30,

2020

Operating activities:

 

 

 

Net income from continuing operations

$

30,503

 

 

 

$

16,992

 

 

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

operating activities of continuing operations

 

 

 

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,

2021

 

September 30,

2020

Operating activities:

 

 

 

Net income from continuing operations

$

77,894

 

 

$

37,634

 

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

operating activities of continuing operations

 

 

 

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,

2021

 

September 30,

2020

 

September 30,

2021

 

September 30,

2020

 

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,

2021

 

September 30,

2020

 

September 30,

2021

 

September 30,

2020

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

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1,2

 

Income From

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

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

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

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

Share1

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

December 31, 2020

 

Year Ended

December 31, 2020

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

September 30, 2021

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.

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