Financial News

Forward Air Corporation Reports Third Quarter 2022 Results

Third quarter all-time record reported revenue, income from operations and net income per diluted share

Guides record fourth quarter 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, 2022 as presented in the tables below on a continuing operations basis.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20221026005979/en/

Forward Air Corporation Reports Third Quarter 2022 Results (Photo: Business Wire)

Forward Air Corporation Reports Third Quarter 2022 Results (Photo: Business Wire)

Tom Schmitt, Chairman, President and CEO, commenting on third quarter results from continuing operations said, “Our third quarter reported revenue, net income and net income per diluted share represent the best third quarter financial performance in the Company’s history and each set all-time third quarter records. Our collaboration with customers on selecting, handling, and pricing higher quality freight led to our strong third quarter financial performance with our less-than-truckload line of business reporting continued improvement in revenue per shipment and revenue per hundredweight over the same period last year. Our reported net income per diluted share of $1.93 exceeded the high end of our $1.88 to $1.92 guidance range, and our third quarter revenue growth of 22% came within the guidance range of 20% to 24%.”

Mr. Schmitt continued, “We are winning in a softer environment. While tonnage is down through the first few weeks of October, our performance levers work - from more live events business to near record low levels of outside miles. We therefore expect the fourth quarter to be more profitable than the third quarter, and 2023 net income per diluted share to be higher than 2022 net income per diluted share.”

In closing, Mr. Schmitt said, “I want to thank our employees and independent contractors for their remarkable efforts. Their commitment to Forward Air and its customers has been incredible.”

Regarding the Company’s fourth quarter 2022 continuing operations guidance, Rebecca J. Garbrick, CFO, said, “We expect our year-over-year revenue growth will be 7% to 11% and net income per diluted share to be between $1.98 to $2.02, compared to reported and adjusted net income per diluted share of $1.40 in the fourth quarter of 2021.”

Continuing Operations

 

Three Months Ended

(in thousands, except per share data)

 

September 30,

2022

 

September 30,

2021

 

Change

 

Percent Change

Operating revenue

 

$

510,023

 

 

$

419,625

 

 

$

90,398

 

21.5

%

Income from operations

 

$

71,665

 

 

$

42,476

 

 

$

29,189

 

68.7

%

Operating margin

 

 

14.1

%

 

 

10.1

%

 

400 bps

Net income

 

$

52,133

 

 

$

30,503

 

 

$

21,630

 

70.9

%

Net income per diluted share

 

$

1.93

 

 

$

1.12

 

 

$

0.81

 

72.3

%

Cash provided by operating activities

 

$

83,994

 

 

$

43,091

 

 

$

40,903

 

94.9

%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

71,665

 

 

$

43,445

 

 

$

28,220

 

65.0

%

Adjusted net income

 

$

52,133

 

 

$

31,215

 

 

$

20,918

 

67.0

%

Adjusted net income per diluted share

 

$

1.93

 

 

$

1.14

 

 

$

0.79

 

69.3

%

EBITDA

 

$

83,934

 

 

$

51,892

 

 

$

32,042

 

61.7

%

Free cash flow

 

$

77,922

 

 

$

29,676

 

 

$

48,246

 

162.6

%

 

 

 

 

 

 

 

 

 

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,

2022

 

September 30,

2021

 

Change

 

Percent Change

Operating revenue

 

$

1,492,203

 

 

$

1,202,498

 

 

$

289,705

 

24.1

%

Income from operations

 

$

204,561

 

 

$

107,324

 

 

$

97,237

 

90.6

%

Operating margin

 

 

13.7

%

 

 

8.9

%

 

480 bps

Net income

 

$

150,249

 

 

$

77,894

 

 

$

72,355

 

92.9

%

Net income per diluted share

 

$

5.53

 

 

$

2.83

 

 

$

2.70

 

95.4

%

Cash provided by operating activities

 

$

196,814

 

 

$

82,752

 

 

$

114,062

 

137.8

%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

204,267

 

 

$

114,863

 

 

$

89,404

 

77.8

%

Adjusted net income

 

$

150,029

 

 

$

83,548

 

 

$

66,481

 

79.6

%

Adjusted net income per diluted share

 

$

5.53

 

 

$

3.03

 

 

$

2.50

 

82.5

%

EBITDA

 

$

239,555

 

 

$

135,391

 

 

$

104,164

 

76.9

%

Free cash flow

 

$

172,836

 

 

$

62,076

 

 

$

110,760

 

178.4

%

 

 

 

 

 

 

 

 

 

1 Reconciliation of these non-GAAP financial measures are provided below the financial tables.

On October 25, 2022, 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 November 23, 2022 and is expected to be paid on December 8, 2022. 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 2022, 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.

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.

Review of Financial Results

Forward Air will hold a conference call to discuss third quarter 2022 results on Thursday, October 27, 2022 at 9:00 a.m. EDT. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, or by dialing (844) 291-5490, Access Code: 6420664.

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 provider of transportation 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. 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

 

Nine Months Ended

 

September 30,

2022

 

September 30,

2021

 

September 30,

2022

 

September 30,

2021

Operating revenue:

 

 

 

 

 

 

 

Expedited Freight

$

395,635

 

 

$

341,557

 

 

$

1,181,083

 

 

$

997,478

 

Intermodal

 

114,421

 

 

 

78,173

 

 

 

311,272

 

 

 

205,820

 

Eliminations and other operations

 

(33

)

 

 

(105

)

 

 

(152

)

 

 

(800

)

Operating revenues

 

510,023

 

 

 

419,625

 

 

 

1,492,203

 

 

 

1,202,498

 

Operating expenses:

 

 

 

 

 

 

 

Purchased transportation

 

229,326

 

 

 

205,474

 

 

 

693,648

 

 

 

605,299

 

Salaries, wages and employee benefits

 

90,755

 

 

 

84,410

 

 

 

263,194

 

 

 

243,948

 

Operating leases

 

24,965

 

 

 

20,536

 

 

 

71,097

 

 

 

60,073

 

Depreciation and amortization

 

12,269

 

 

 

9,416

 

 

 

34,994

 

 

 

28,067

 

Insurance and claims

 

12,093

 

 

 

9,984

 

 

 

37,257

 

 

 

30,616

 

Fuel expense

 

6,772

 

 

 

4,457

 

 

 

20,951

 

 

 

12,218

 

Other operating expenses

 

62,178

 

 

 

42,872

 

 

 

166,501

 

 

 

114,953

 

Total operating expenses

 

438,358

 

 

 

377,149

 

 

 

1,287,642

 

 

 

1,095,174

 

Income (loss) from continuing operations:

 

 

 

 

 

 

 

Expedited Freight

 

56,304

 

 

 

34,636

 

 

 

167,091

 

 

 

93,854

 

Intermodal

 

16,610

 

 

 

8,712

 

 

 

43,005

 

 

 

21,607

 

Other Operations

 

(1,249

)

 

 

(872

)

 

 

(5,535

)

 

 

(8,137

)

Income from continuing operations

 

71,665

 

 

 

42,476

 

 

 

204,561

 

 

 

107,324

 

Other expense:

 

 

 

 

 

 

 

Interest expense

 

(1,544

)

 

 

(973

)

 

 

(3,521

)

 

 

(3,461

)

Total other expense

 

(1,544

)

 

 

(973

)

 

 

(3,521

)

 

 

(3,461

)

Income before income taxes

 

70,121

 

 

 

41,503

 

 

 

201,040

 

 

 

103,863

 

Income tax expense

 

17,988

 

 

 

11,000

 

 

 

50,791

 

 

 

25,969

 

Net income from continuing operations

 

52,133

 

 

 

30,503

 

 

 

150,249

 

 

 

77,894

 

Loss from discontinued operation, net of tax

 

 

 

 

(6,967

)

 

 

 

 

 

(12,500

)

Net income and comprehensive income

$

52,133

 

 

$

23,536

 

 

$

150,249

 

 

$

65,394

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic net income (loss) per share

 

 

 

 

 

 

 

Continuing operations

$

1.94

 

 

$

1.12

 

 

$

5.56

 

 

$

2.84

 

Discontinued operation

 

 

 

 

(0.26

)

 

 

 

 

 

(0.46

)

Net income per basic share

$

1.94

 

 

$

0.86

 

 

$

5.56

 

 

$

2.39

 

 

 

 

 

 

 

 

 

Diluted net income (loss) per share

 

 

 

 

 

 

 

Continuing operations

$

1.93

 

 

$

1.12

 

 

$

5.53

 

 

$

2.83

 

Discontinued operation

 

 

 

 

(0.26

)

 

 

 

 

 

(0.46

)

Net income per diluted share

$

1.93

 

 

$

0.86

 

 

$

5.53

 

 

$

2.37

 

Dividends per share

$

0.24

 

 

$

0.21

 

 

$

0.72

 

 

$

0.63

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expedited Freight Segment Information

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

September 30,

2022

 

Percent of

Revenue

 

September 30,

2021

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue:

 

 

 

 

 

 

 

 

 

 

 

Network 1

$

240,482

 

60.8

%

 

$

199,360

 

58.4

%

 

$

41,122

 

20.6

%

Truckload

 

55,607

 

14.1

 

 

 

53,651

 

15.7

 

 

 

1,956

 

3.6

 

Final Mile

 

76,822

 

19.4

 

 

 

71,355

 

20.9

 

 

 

5,467

 

7.7

 

Other

 

22,724

 

5.7

 

 

 

17,191

 

5.0

 

 

 

5,533

 

32.2

 

Total operating revenue

 

395,635

 

100.0

 

 

 

341,557

 

100.0

 

 

 

54,078

 

15.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

200,783

 

50.7

 

 

 

182,596

 

53.5

 

 

 

18,187

 

10.0

 

Salaries, wages and employee benefits

 

71,543

 

18.1

 

 

 

65,898

 

19.3

 

 

 

5,645

 

8.6

 

Operating leases

 

15,819

 

4.0

 

 

 

14,687

 

4.3

 

 

 

1,132

 

7.7

 

Depreciation and amortization

 

8,140

 

2.1

 

 

 

6,784

 

2.0

 

 

 

1,356

 

20.0

 

Insurance and claims

 

9,196

 

2.3

 

 

 

8,074

 

2.4

 

 

 

1,122

 

13.9

 

Fuel expense

 

2,873

 

0.7

 

 

 

2,225

 

0.7

 

 

 

648

 

29.1

 

Other operating expenses

 

30,977

 

7.8

 

 

 

26,657

 

7.8

 

 

 

4,320

 

16.2

 

Total operating expenses

 

339,331

 

85.8

 

 

 

306,921

 

89.9

 

 

 

32,410

 

10.6

 

Income from operations

$

56,304

 

14.2

%

 

$

34,636

 

10.1

%

 

$

21,668

 

62.6

%

 

 

 

 

 

 

 

 

 

 

 

 

1 Network revenue is comprised of all revenue, including linehaul, pickup and/or delivery, and fuel surcharge revenue, excluding accessorial, Truckload and Final Mile revenue.

Expedited Freight Operating Statistics

 

 

 

Three Months Ended

 

September 30,

2022

 

September 30,

2021

 

Percent

Change

Business days

 

64

 

 

64

 

%

 

 

 

 

 

 

Tonnage 1,2

 

 

 

 

 

Total pounds

 

698,004

 

 

687,816

 

1.5

 

Pounds per day

 

10,906

 

 

10,747

 

1.5

 

 

 

 

 

 

 

Shipments 1,2

 

 

 

 

 

Total shipments

 

916

 

 

845

 

8.4

 

Shipments per day

 

14.3

 

 

13.2

 

8.3

 

 

 

 

 

 

 

Weight per shipment

 

762

 

 

814

 

(6.4

)

 

 

 

 

 

 

Revenue per hundredweight 3

$

34.70

 

$

29.32

 

18.3

 

Revenue per hundredweight, ex fuel 3

$

26.05

 

$

24.34

 

7.0

 

 

 

 

 

 

 

Revenue per shipment 3

$

264.30

 

$

238.68

 

10.7

 

Revenue per shipment, ex fuel 3

$

198.39

 

$

198.18

 

0.1

 

 

 

 

 

 

 

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

 

September 30,

2022

 

Percent of

Revenue

 

September 30,

2021

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue

$

114,421

 

100.0

%

 

$

78,173

 

100.0

%

 

$

36,248

 

 

46.4

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

28,610

 

25.0

 

 

 

22,984

 

29.4

 

 

 

5,626

 

 

24.5

 

Salaries, wages and employee benefits

 

17,945

 

15.7

 

 

 

17,596

 

22.5

 

 

 

349

 

 

2.0

 

Operating leases

 

9,146

 

8.0

 

 

 

5,856

 

7.5

 

 

 

3,290

 

 

56.2

 

Depreciation and amortization

 

4,129

 

3.6

 

 

 

2,616

 

3.3

 

 

 

1,513

 

 

57.8

 

Insurance and claims

 

2,241

 

2.0

 

 

 

2,708

 

3.5

 

 

 

(467

)

 

(17.2

)

Fuel expense

 

3,899

 

3.4

 

 

 

2,231

 

2.9

 

 

 

1,668

 

 

74.8

 

Other operating expenses

 

31,841

 

27.8

 

 

 

15,470

 

19.8

 

 

 

16,371

 

 

105.8

 

Total operating expenses

 

97,811

 

85.5

 

 

 

69,461

 

88.9

 

 

 

28,350

 

 

40.8

 

Income from operations

$

16,610

 

14.5

%

 

$

8,712

 

11.1

%

 

$

7,898

 

 

90.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Intermodal Operating Statistics

 

 

 

Three Months Ended

 

September 30,

2022

 

September 30

2021

 

Percent

Change

Drayage shipments

 

89,236

 

 

91,774

 

(2.8

)%

Drayage revenue per shipment

$

1,203

 

$

742

 

62.1

%

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

September 30,

2022

 

December 31,

2021

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

46,846

 

$

37,316

Accounts receivable, net

 

247,730

 

 

208,085

Other receivables, net

 

 

 

8,097

Other current assets

 

18,391

 

 

29,309

Total current assets

 

312,967

 

 

282,807

 

 

 

 

Property and equipment, net

 

230,924

 

 

219,095

Operating lease right-of-use assets

 

147,283

 

 

148,198

Goodwill

 

288,496

 

 

266,752

Other acquired intangibles, net

 

155,161

 

 

154,717

Other assets

 

51,228

 

 

46,254

Total assets

$

1,186,059

 

$

1,117,823

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

50,666

 

$

44,837

Accrued expenses

 

67,980

 

 

61,621

Other current liabilities

 

4,411

 

 

4,614

Current portion of debt and finance lease obligations

 

7,891

 

 

6,088

Current portion of operating lease liabilities

 

48,611

 

 

47,532

Total current liabilities

 

179,559

 

 

164,692

 

 

 

 

Finance lease obligations, less current portion

 

11,134

 

 

9,571

Long-term debt, less current portion and debt issuance costs

 

106,934

 

 

155,466

Operating lease liabilities, less current portion

 

102,889

 

 

101,409

Other long-term liabilities

 

57,476

 

 

49,624

Deferred income taxes

 

45,369

 

 

43,407

 

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock

 

 

 

Common stock

 

266

 

 

270

Additional paid-in capital

 

267,809

 

 

258,474

Retained earnings

 

414,623

 

 

334,910

Total shareholders’ equity

 

682,698

 

 

593,654

Total liabilities and shareholders’ equity

$

1,186,059

 

$

1,117,823

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three Months Ended

 

September 30,

2022

 

September 30

2021

Operating activities:

 

 

 

Net income from continuing operations

$

52,133

 

 

$

30,503

 

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

 

 

 

Depreciation and amortization

 

12,269

 

 

 

9,416

 

Change in fair value of earn-out liability

 

 

 

 

 

Share-based compensation expense

 

2,676

 

 

 

2,601

 

Provision for revenue adjustments

 

4,368

 

 

 

1,979

 

Deferred income tax expense (benefit)

 

 

 

 

(812

)

Other

 

(966

)

 

 

217

 

Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses:

 

 

 

Accounts receivable

 

(6,421

)

 

 

1,932

 

Other receivables

 

1,004

 

 

 

(727

)

Other current and noncurrent assets

 

2,825

 

 

 

1,452

 

Accounts payable, accrued expenses and long-term liabilities

 

16,106

 

 

 

(3,470

)

Net cash provided by operating activities of continuing operations

 

83,994

 

 

 

43,091

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

656

 

 

 

1,025

 

Purchases of property and equipment

 

(6,728

)

 

 

(14,440

)

Purchases of a business, net of cash acquired

 

 

 

 

(510

)

Net cash used in investing activities of continuing operations

 

(6,072

)

 

 

(13,925

)

 

 

 

 

Financing activities:

 

 

 

Repayments of finance lease obligations

 

(1,626

)

 

 

(492

)

Payment of debt issuance costs

 

 

 

 

(119

)

Payments on credit facility

 

(40,375

)

 

 

 

Payment of earn-out liability

 

 

 

 

(6,519

)

Proceeds from issuance of common stock upon stock option exercises

 

 

 

 

 

Payments of dividends to shareholders

 

(6,467

)

 

 

(5,705

)

Repurchases and retirement of common stock

 

(29,994

)

 

 

(14,997

)

Payment of minimum tax withholdings on share-based awards

 

 

 

 

(248

)

Contributions from subsidiary held for sale

 

 

 

 

 

Net cash used in financing activities from continuing operations

 

(78,462

)

 

 

(28,080

)

Net (decrease) increase in cash and cash equivalents of continuing operations

 

(540

)

 

 

1,086

 

 

 

 

 

Cash from discontinued operation:

 

 

 

Net cash used in operating activities of discontinued operation

 

 

 

 

 

Net cash provided by investing activities of discontinued operation

 

 

 

 

 

Net cash used in financing activities of discontinued operation

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(540

)

 

 

1,086

 

Cash and cash equivalents at beginning of period of continuing operations

 

47,386

 

 

 

50,844

 

Cash at beginning of period of discontinued operation

 

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(540

)

 

 

1,086

 

Less: cash at end of period of discontinued operation

 

 

 

 

 

Cash and cash equivalents at end of period of continuing operations

$

46,846

 

 

$

51,930

 

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Nine Months Ended

 

September 30,

2022

 

September 30,

2021

Operating activities:

 

 

 

Net income from continuing operations

$

150,249

 

 

$

77,894

 

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

 

 

 

Depreciation and amortization

 

34,994

 

 

 

28,067

 

Change in fair value of earn-out liability

 

(294

)

 

 

(385

)

Share-based compensation expense

 

8,743

 

 

 

8,179

 

Provision for revenue adjustments

 

7,302

 

 

 

5,504

 

Deferred income tax expense (benefit)

 

1,962

 

 

 

(1,384

)

Other

 

417

 

 

 

406

 

Changes in operating assets and liabilities, net of effects from the purchase of acquired businesses:

 

 

 

Accounts receivable

 

(43,172

)

 

 

(49,086

)

Other receivables

 

8,097

 

 

 

(14,218

)

Other current and noncurrent assets

 

6,743

 

 

 

8,198

 

Accounts payable, accrued expenses and other long-term liabilities

 

21,773

 

 

 

19,577

 

Net cash provided by operating activities of continuing operations

 

196,814

 

 

 

82,752

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

1,423

 

 

 

2,339

 

Purchases of property and equipment

 

(25,401

)

 

 

(23,015

)

Purchases of a business, net of cash acquired

 

(40,433

)

 

 

(23,053

)

Net cash used in investing activities of continuing operations

 

(64,411

)

 

 

(43,729

)

 

 

 

 

Financing activities:

 

 

 

Repayments of finance lease obligations

 

(4,209

)

 

 

(1,445

)

Proceeds from credit facility

 

 

 

 

45,000

 

Payment of debt issuance costs

 

 

 

 

(119

)

Payments on credit facility

 

(48,625

)

 

 

 

Payment of earn-out liability

 

(91

)

 

 

(6,519

)

Proceeds from issuance of common stock upon stock option exercises

 

206

 

 

 

3,563

 

Payments of dividends to shareholders

 

(19,461

)

 

 

(17,270

)

Repurchases and retirement of common stock

 

(47,774

)

 

 

(48,989

)

Proceeds from common stock issued under employee stock purchase plan

 

374

 

 

 

388

 

Payment of minimum tax withholdings on share-based awards

 

(3,293

)

 

 

(3,074

)

Contributions from subsidiary held for sale

 

 

 

 

1,118

 

Net cash used in financing activities from continuing operations

 

(122,873

)

 

 

(27,347

)

Net increase in cash and cash equivalents of continuing operations

 

9,530

 

 

 

11,676

 

 

 

 

 

Cash from discontinued operation:

 

 

 

Net cash used in operating activities of discontinued operation

 

 

 

 

(6,902

)

Net cash provided by investing activities of discontinued operation

 

 

 

 

8,020

 

Net cash used in financing activities of discontinued operation

 

 

 

 

(1,118

)

Net increase in cash and cash equivalents

 

9,530

 

 

 

11,676

 

Cash and cash equivalents at beginning of period of continuing operations

 

37,316

 

 

 

40,254

 

Cash at beginning of period of discontinued operation

 

 

 

 

 

Net increase in cash and cash equivalents

 

9,530

 

 

 

11,676

 

Less: cash at end of period of discontinued operation

 

 

 

 

 

Cash and cash equivalents at end of period of continuing operations

$

46,846

 

 

$

51,930

 

 

 

 

 

 

 

 

 

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, 2022 and 2021, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), free cash flow, adjusted income from continuing operations, adjusted net income, and adjusted net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.

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. 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 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 to EBITDA for the three and nine months ended September 30, 2022 and 2021 (in thousands):

 

 

Three Months Ended

 

Nine Months Ended

Continuing Operations

 

September 30,

2022

 

September 30,

2021

 

September 30,

2022

 

September 30,

2021

Net income

 

$

52,133

 

$

30,503

 

$

150,249

 

$

77,894

Interest expense

 

 

1,544

 

 

973

 

 

3,521

 

 

3,461

Income tax expense

 

 

17,988

 

 

11,000

 

 

50,791

 

 

25,969

Depreciation and amortization

 

 

12,269

 

 

9,416

 

 

34,994

 

 

28,067

EBITDA

 

$

83,934

 

$

51,892

 

$

239,555

 

$

135,391

 

 

 

 

 

 

 

 

 

The following is a reconciliation of net cash provided by operating activities to free cash flow for the three and nine months ended September 30, 2022 and 2021 (in thousands):

 

 

Three Months Ended

 

Nine Months Ended

Continuing Operations

 

September 30,

2022

 

September 30,

2021

 

September 30,

2022

 

September 30,

2021

Net cash provided by operating activities

 

$

83,994

 

 

$

43,091

 

 

$

196,814

 

 

$

82,752

 

Proceeds from sale of property and equipment

 

 

656

 

 

 

1,025

 

 

 

1,423

 

 

 

2,339

 

Purchases of property and equipment

 

 

(6,728

)

 

 

(14,440

)

 

 

(25,401

)

 

 

(23,015

)

Free cash flow

 

$

77,922

 

 

$

29,676

 

 

$

172,836

 

 

$

62,076

 

The following is a reconciliation of reported income from operations, net income, and net income per diluted share to adjusted income from operations, net income, and net income per diluted share for the three and nine months ended September 30, 2022 and 2021 (in thousands, except net income per diluted share):

 

 

Three Months Ended September 30, 2022

 

Three Months Ended September 30, 2021

Continuing Operations

 

Income From

Operations

 

Net Income

 

Net Income

Per Diluted

Share

 

Income From

Operations

 

Net Income1

 

Net Income

Per Diluted

Share1,2

As Reported

 

$

71,665

 

$

52,133

 

$

1.93

 

$

42,476

 

$

30,503

 

$

1.12

Professional fees for an operational improvement project

 

 

 

 

 

 

 

 

969

 

 

712

 

 

0.03

As Adjusted

 

$

71,665

 

$

52,133

 

$

1.93

 

$

43,445

 

$

31,215

 

$

1.14

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effect of the above item is $257.

2 Rounding may impact summation of amounts.

 

 

Nine Months Ended September 30, 2022

 

Nine Months Ended September 30, 2021

Continuing Operations

 

Income From

Operations

 

Net Income1

 

Net Income

Per Diluted

Share1,3

 

Income From

Operations

 

Net Income2

 

Net Income

Per Diluted

Share2,3

As Reported

 

$

204,561

 

 

$

150,249

 

 

$

5.53

 

 

$

107,324

 

 

$

77,894

 

 

$

2.83

 

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

 

Change in the fair value of the earn-out liability

 

 

(294

)

 

 

(220

)

 

 

(0.01

)

 

 

(385

)

 

 

(289

)

 

 

(0.01

)

As Adjusted

 

$

204,267

 

 

$

150,029

 

 

$

5.53

 

 

$

114,863

 

 

$

83,548

 

 

$

3.03

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effect of the above item is ($74).

2 Net income and net income per diluted share amounts are based on the after-tax effect of each item. The income tax effect is calculated by applying the effective tax rate to the pre-tax amount. The total tax effects of the above items is $1,885.

3 Rounding may impact summation of amounts.

The following is a reconciliation of reported net income per diluted share to adjusted net income per diluted share for the three months ended December 31, 2021:

 

 

Net Income Per

Diluted Share1

Continuing Operations

 

Three Months Ended

December 31, 2021

As reported

 

$

1.40

Change in the fair value of the earn-out liability

 

 

As adjusted

 

$

1.40

 

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, 2022

Net income from continuing operations

 

$

52,133

 

Income allocated to participating securities

 

 

(325

)

Numerator for diluted net income per share - net income

 

$

51,808

 

 

 

 

Weighted-average common shares and common share equivalent outstanding - diluted

 

 

26,902

 

Diluted net income per share

 

$

1.93

 

 

 

 

Projected

 

Full Year 2022

Projected tax rate - continuing operations

 

 

25.6

%

 

 

 

Projected purchases of property and equipment, net of proceeds from sale of property and equipment

 

$

38,000

 

 

 

 

Projected

 

December 31, 2022

Projected weighted-average common shares and common share equivalent outstanding - diluted

 

 

26,900

 

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 2022 revenue, revenue growth, net income per diluted share, adjusted net income per diluted share and volume, expectations regarding continued momentum in our business into 2023 and 2024, 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, changes in fuel prices and/or fuel taxes, a decrease in demand for transportation services, pricing pressure, changes in freight volume, 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, loss of a major customer, increasing competition,, 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, 2021.

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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