Net income per diluted share of $1.37
exceeds guidance range
Record level quality of freight positions
Forward well
Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”,
“our”, or “us”) today reported financial results for the three
months ended March 31, 2023 as presented in the tables below.
Tom Schmitt, Chairman, President and CEO, commenting on first
quarter results said, “Our reported net income per diluted share of
$1.37 exceeded the high end of our $1.30 to $1.34 guidance range.
Having said that, we would not have made guidance if not for a
one-time benefit of approximately $0.24 from the substantial
reversal of an accrual for an incentive plan established for
employees in 2021. The reversal was driven by the headwinds we
continue to experience from the weaker-than-expected freight
environment. The softer than anticipated demand throughout the
first quarter resulted in a 9% decline in revenue, below the low
end of our guidance range of minus 4% to plus 2%.”
Mr. Schmitt continued, “Looking ahead, we believe our revenue
growth strategies position the company to perform extremely well as
the freight recession abates. Our revenue quality continues to
improve notwithstanding a decline in revenue. Compared to our
performance in a robust freight environment in March 2022, our
revenue per ton mile excluding fuel increased 2.5% for
airport-to-airport and 4% for door-to-door. Similarly, our freight
quality remains at top levels. Our weight per shipment in March of
786 pounds is comparable to March of last year and roughly 140
pounds higher than it was in March 2021. Our linehaul network
continues to operate efficiently with our outside miles at 5% - in
record low territory. Still, we are not there yet. On a year over
year basis, we saw pounds per day down 12% in the first quarter and
that softness persisted in the first few weeks of April. However,
we may be seeing the beginnings of an improving freight
environment, as our tonnage per day edged up to minus 5% in the
most recent weeks. Even with some early signs of a recovery, we
believe the current freight environment will be more challenging
than anticipated leading to a revised target net income per diluted
share for 2023 that we now expect will be less than 2022. In light
of this, at this point, we are targeting net income per diluted
share of $6.20 to $6.60 for the full year 2023, which assumes that
the freight environment will significantly improve in the second
half of the year. These updated targets align with the updated
revenue growth and cost savings bridge that we reviewed on our
previous earnings call.”
In closing, Mr. Schmitt said, “In the first quarter, our
teammates and independent contractors went above and beyond to keep
our commitments to our customers. We are proud to be the best in
the LTL industry in damage-free, intact, on-time shipments - making
us the most compelling choice for customers with shipments of
consequence.”
Regarding the Company’s second quarter 2023 guidance, Rebecca J.
Garbrick, CFO, said, “We expect our year-over-year revenue to
decline 7% to 17% and net income per diluted share in the range of
$1.28 to $1.32, compared to reported net income per diluted share
of $2.04 in the second quarter of 2022.”
Three Months Ended
(in thousands, except per
share data)
March 31, 2023
March 31, 2022
Change
Percent Change
Operating revenue
$
427,066
$
466,961
$
(39,895
)
(8.5
)%
Income from operations
$
50,509
$
57,351
$
(6,842
)
(11.9
)%
Operating margin
11.8
%
12.3
%
(50) bps
Net income
$
36,368
$
42,686
$
(6,318
)
(14.8
)%
Net income per diluted share
$
1.37
$
1.57
$
(0.20
)
(12.7
)%
Cash provided by operating activities
$
65,993
62,486
$
3,507
5.6
%
Non-GAAP Financial Measures: 1
EBITDA
$
64,144
$
68,481
$
(4,337
)
(6.3
)%
Free cash flow
$
61,019
$
53,089
$
7,930
14.9
%
1 Reconciliation of these non-GAAP
financial measures are provided below the financial tables.
On April 28, 2023, our Board of Directors declared a quarterly
cash dividend of $0.24 per share of common stock. The dividend is
payable to shareholders of record at the close of business on May
25, 2023 and is expected to be paid on June 13, 2023. This
quarterly dividend is made pursuant to a cash dividend policy
approved by the Board of Directors, which anticipates a total
annual dividend of $0.96 for the full year 2023, payable in
quarterly increments of $0.24 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.
Review of Financial Results
Forward Air will hold a conference call to discuss first quarter
2023 results on Tuesday, May 2, 2023 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)
336-4435, Access Code: 2402511.
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 Investor 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 provider of transportation
services across the United States, Canada and Mexico. 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. We are
more than a transportation company. Forward is a single resource
for your shipping needs. 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
March 31, 2023
March 31, 2022
Operating revenue:
Expedited Freight
$
338,934
$
376,591
Intermodal
88,169
90,440
Eliminations and other operations
(37
)
(70
)
Operating revenues
427,066
466,961
Operating expenses:
Purchased transportation
185,217
224,832
Salaries, wages and employee benefits
79,520
86,081
Operating leases
27,248
22,673
Depreciation and amortization
13,635
11,130
Insurance and claims
13,782
11,968
Fuel expense
5,784
5,865
Other operating expenses
51,371
47,061
Total operating expenses
376,557
409,610
Income (loss) from operations:
Expedited Freight
32,998
47,680
Intermodal
11,203
11,146
Other Operations
6,308
(1,475
)
Income from operations
50,509
57,351
Other expense:
Interest expense
(2,355
)
(784
)
Total other expense
(2,355
)
(784
)
Income before income taxes
48,154
56,567
Income tax expense
11,786
13,881
Net income and comprehensive income
$
36,368
$
42,686
Net income per share:
Basic
$
1.37
$
1.57
Diluted
$
1.37
$
1.57
Dividends per share:
$
0.24
$
0.24
Expedited Freight Segment
Information
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2023
Percent of Revenue
March 31, 2022
Percent of Revenue
Change
Percent Change
Operating revenue:
Network 1
$
205,931
60.8
%
$
233,700
62.1
%
$
(27,769
)
(11.9
)%
Truckload
41,744
12.3
55,908
14.8
$
(14,164
)
(25.3
)
Final Mile
69,357
20.5
65,758
17.5
$
3,599
5.5
Other
21,902
6.5
21,225
5.6
$
677
3.2
Total operating revenue
338,934
100.0
376,591
100.0
$
(37,657
)
(10.0
)
Operating expenses:
Purchased transportation
165,240
48.8
200,034
53.1
$
(34,794
)
(17.4
)
Salaries, wages and employee benefits
68,791
20.3
68,220
18.1
$
571
0.8
Operating leases
18,913
5.6
15,731
4.2
$
3,182
20.2
Depreciation and amortization
8,889
2.6
7,481
2.0
$
1,408
18.8
Insurance and claims
9,743
2.9
8,751
2.3
$
992
11.3
Fuel expense
2,611
0.8
2,650
0.7
$
(39
)
(1.5
)
Other operating expenses
31,749
9.4
26,044
6.9
$
5,705
21.9
Total operating expenses
305,936
90.3
328,911
87.3
$
(22,975
)
(7.0
)
Income from operations
$
32,998
9.7
%
$
47,680
12.7
%
$
(14,682
)
(30.8
)%
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
March 31, 2023
March 31, 2022
Percent Change
Business days
64
64
—
%
Tonnage 1,2
Total pounds
629,080
717,611
(12.3
)
Pounds per day
9,829
11,213
(12.3
)
Shipments 1,2
Total shipments
817
892
(8.4
)
Shipments per day
12.8
13.9
(7.9
)
Weight per shipment
770
804
(4.2
)
Revenue per hundredweight 3
$
33.36
$
32.84
1.6
Revenue per hundredweight, ex fuel 3
$
25.75
$
25.92
(0.7
)
Revenue per shipment 3
$
256.89
$
264.17
(2.8
)
Revenue per shipment, ex fuel 3
$
198.30
$
208.55
(4.9
)
1 In thousands
2 Excludes accessorial, Truckload and
Final Mile products
3 Includes intercompany revenue between
the Network and Truckload revenue streams
Intermodal Segment
Information
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2023
Percent of Revenue
March 31, 2022
Percent of Revenue
Change
Percent Change
Operating revenue
$
88,169
100.0
%
90,440
100.0
%
(2,271
)
(2.5
) %
Operating expenses:
Purchased transportation
20,014
22.7
24,868
27.5
(4,854
)
(19.5
)
Salaries, wages and employee benefits
18,914
21.5
17,935
19.8
979
5.5
Operating leases
8,335
9.5
6,941
7.7
1,394
20.1
Depreciation and amortization
4,746
5.4
3,610
4.0
1,136
31.5
Insurance and claims
2,349
2.7
2,060
2.3
289
14.0
Fuel expense
3,173
3.6
3,215
3.6
(42
)
(1.3
)
Other operating expenses
19,435
22.0
20,665
22.8
(1,230
)
(6.0
)
Total operating expenses
76,966
87.3
79,294
87.7
(2,328
)
(2.9
)
Income from operations
11,203
12.7
%
11,146
12.3
%
57
0.5
%
Intermodal Operating
Statistics
Three Months Ended
March 31, 2023
March 31, 2022
Percent Change
Drayage shipments
72,465
88,312
(17.9)%
Drayage revenue per shipment
1,100
890
23.6%
Forward Air
Corporation
Condensed Consolidated Balance
Sheets
(In thousands)
(Unaudited)
March 31, 2023
December 31,
2022
Assets
Current assets:
Cash and cash equivalents
$
32,028
$
45,822
Accounts receivable, net
201,385
221,028
Other receivables, net
—
—
Other current assets
24,381
37,465
Total current assets
257,794
304,315
Property and equipment, net
252,932
249,080
Operating lease right-of-use assets
150,282
141,865
Goodwill
356,627
306,184
Other acquired intangibles, net
155,726
154,801
Other assets
53,205
51,831
Total assets
$
1,226,566
$
1,208,076
Liabilities and Shareholders’
Equity
Current liabilities:
Accounts payable
$
42,994
$
54,601
Accrued expenses
52,807
54,291
Other current liabilities
6,207
3,956
Current portion of debt and finance lease
obligations
11,619
9,444
Current portion of operating lease
liabilities
52,143
47,106
Total current liabilities
165,770
169,398
Finance lease obligations, less current
portion
18,328
15,844
Long-term debt, less current portion and
debt issuance costs
150,681
106,588
Operating lease liabilities, less current
portion
102,697
98,865
Other long-term liabilities
50,507
59,044
Deferred income taxes
52,950
51,093
Shareholders’ equity:
Preferred stock
—
—
Common stock
261
265
Additional paid-in capital
274,007
270,855
Retained earnings
411,365
436,124
Total shareholders’ equity
685,633
707,244
Total liabilities and shareholders’
equity
$
1,226,566
$
1,208,076
Forward Air
Corporation
Condensed Consolidated
Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31, 2023
March 31, 2022
Operating activities:
Net income from operations
$
36,368
$
42,686
Adjustments to reconcile net income of
operations to net cash provided by operating activities of
operations
Depreciation and amortization
13,635
11,130
Change in fair value of earn-out
liability
—
(294
)
Share-based compensation expense
3,149
2,761
Provision for revenue adjustments
2,157
1,304
Deferred income tax expense
1,857
1,643
Other
(300
)
132
Changes in operating assets and
liabilities, net of effects from the purchase of acquired
businesses:
Accounts receivable
16,669
(30,278
)
Other receivables
—
3,609
Other current and noncurrent assets
11,422
13,818
Accounts payable and accrued expenses
(18,964
)
15,975
Net cash provided by operating
activities
65,993
62,486
Investing activities:
Proceeds from sale of property and
equipment
1,815
511
Purchases of property and equipment
(6,789
)
(9,908
)
Purchases of a business, net of cash
acquired
(56,567
)
—
Net cash used in investing activities
(61,541
)
(9,397
)
Financing activities:
Repayments of finance lease
obligations
(2,118
)
(1,070
)
Proceeds from revolving credit
facility
45,000
—
Payments on credit facility
—
(375
)
Proceeds from issuance of common stock
upon stock option exercises
—
206
Payments of dividends to shareholders
(6,345
)
(6,502
)
Repurchases and retirement of common
stock
(50,491
)
(17,780
)
Payment of minimum tax withholdings on
share-based awards
(4,292
)
(3,254
)
Net cash used in financing activities
(18,246
)
(28,775
)
Net (decrease) increase in cash and cash
equivalents
(13,794
)
24,314
Cash and cash equivalents at beginning of
period
45,822
37,316
Cash and cash equivalents at end of
period
$
32,028
$
61,630
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 months ended March 31, 2023 and 2022, this press
release contains the following non-GAAP financial measures:
earnings before interest, taxes, depreciation and amortization
(“EBITDA”) and free cash flow.
The Company believes that EBITDA 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 is an important measure of its ability to repay maturing debt
or fund other uses of capital that it believes will enhance
shareholder value.
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 to EBITDA for
the three months ended March 31, 2023 and 2022 (in thousands):
Three Months Ended
March 31, 2023
March 31, 2022
Net income
$
36,368
$
42,686
Interest expense
2,355
784
Income tax expense
11,786
13,881
Depreciation and amortization
13,635
11,130
EBITDA
$
64,144
$
68,481
The following is a reconciliation of net cash provided by
operating activities to free cash flow for the three months ended
March 31, 2023 and 2022 (in thousands):
Three Months Ended
March 31, 2023
March 31, 2022
Net cash provided by operating
activities
$
65,993
$
62,486
Proceeds from sale of property and
equipment
1,815
511
Purchases of property and equipment
(6,789
)
(9,908
)
Free cash flow
$
61,019
$
53,089
The following information is provided to supplement this press
release.
Actual
Three Months Ended March 31,
2023
Net income
$
36,368
Income allocated to participating
securities
(185
)
Numerator for diluted net income per share
- net income
$
36,183
Weighted-average common shares and common
share equivalent outstanding - diluted
26,479
Diluted net income per share
$
1.37
Projected
Full year 2023
Projected tax rate
25.7
%
Projected purchases of property and
equipment, net of proceeds from sale of property and equipment
$
37,000
Projected
December 31, 2023
Projected weighted-average common shares
and common share equivalent outstanding - diluted
26,000
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 the expected
performance of the Company as the freight recession recovers,
freight environment, expectations regarding the Company's second
quarter 2023 guidance, including with respect to revenue and net
income per diluted share, the future declaration of dividends and,
the quarterly and full year 2023 anticipated dividends per
share.
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, 2022.
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/20230501005677/en/
Forward Air Corporation Brandon Hammer, 423-636-7173
bhammer@forwardair.com
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