Le Lézard
Classified in: Transportation, Business
Subjects: EARNINGS, Dividend, Conference Call, Webcast

Forward Air Corporation Reports Fourth Quarter 2019 Results


Forward Air Corporation (NASDAQ:FWRD) today reported financial results for the three and twelve months ended December 31, 2019.

Revenue for the three months ended December 31, 2019 increased 7.0% to $381.5 million from $356.6 million for the same period of 2018. Income from operations was $32.9 million compared to $35.0 million in the prior year period. Net income during the three months ended December 31, 2019 was $24.2 million compared to $27.7 million in the same period of 2018. Net income per diluted share for the three months ended December 31, 2019 was $0.85 compared to $0.95 in the same period of 2018.

Revenue for the year ended December 31, 2019 increased 6.8% to $1,410.4 million from $1,320.9 million for the same period in 2018. Income from operations was $118.8 million compared to $122.0 million in the prior year. Net income during the period was $87.1 million compared to $92.1 million in the same period of 2018. Net income per diluted share was $3.04 for the year ended December 31, 2019 compared to $3.12 in the same period of 2018.

For the three months ended December 31, 2019, the Company generated $43.7 million of cash flow from operations compared to $38.7 million for the same period of 2018. For the year ended December 31, 2019, the Company generated $161.5 million of cash flow from operations compared to $152.6 million for the same period of 2018.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") was $42.9 million for the three months ended December 31, 2019 compared to $45.9 million for the same period of 2018. Free cash flow was $41.4 million for the three months ended December 31, 2019 compared to $31.8 million for the same period of 2018.

EBITDA was $160.9 million for the year ended December 31, 2019 compared to $164.2 million for the same period of 2018. Free cash flow was $134.1 million for the year ended December 31, 2019 compared to $117.3 million in the same period of 2018.

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

Tom Schmitt, Chairman, President and CEO, commenting on fourth quarter results said, "Our growth strategies drove our record fourth quarter revenue. Macro headwinds amid a loose truckload market impacted our results. As we continue to on-board new revenue with precision execution we are well positioned for a pick-up in quality freight volumes."

In closing, Mr. Schmitt said, "As we end 2019, I would like to thank all of our employees and independent contractors who are helping us grow and strengthen our businesses and core support processes. The results of our efforts will show for many years to come."

Michael J. Morris, CFO, commenting on the new Expedited Freight segment said, "Our new Expedited Freight segment consolidates the previous Truckload Premium Services segment into the previous Expedited LTL segment, which included Final Mile. Since this consolidation results in a new segment with higher revenues and lower margins than the previous Expedited LTL segment, we have enhanced our Expedited Freight disclosures to provide revenue and gross margin data for the financial statement user."

Regarding the Company's fourth quarter 2019 results, Mr. Morris said, "While our business units generated good growth, our fourth quarter earnings per share fell short of our $0.90 to $0.94 guidance range, driven by a soft macro environment that impacted our entire portfolio."

Regarding the Company's first quarter 2020 guidance, Mr. Morris said, "We expect significant Final Mile revenue growth following the January 12th closing of our previously announced Linn Star acquisition, which we expect will drive consolidated first quarter year-on-year revenue growth of 13% to 17%. We expect net income per diluted share to be between $0.58 and $0.62 in the first quarter of 2020, reflecting continued headwinds from a soft macro environment as well as higher insurance-related costs. This compares to $0.64 in the first quarter of 2020."

On February 4, 2020, our Board of Directors declared a quarterly cash dividend of $0.18 per share of common stock. The dividend is payable to shareholders of record at the close of business on March 5, 2020 and is expected to be paid on March 20, 2020.

This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.72 for the full year 2020, payable in quarterly increments of $0.18 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.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter 2019 results on Friday, February 7, 2020 at 9:00 a.m. EST. The Company's conference call will be available online on the Investor Relations portion of the Company's website at www.forwardaircorp.com, where investors can easily find or navigate to pertinent information about us, or by dialing (844) 767-5679, Access Code: 2062222. A replay of the conference call will be available on the Investor Relations portion of the Company's website at www.forwardaircorp.com beginning shortly after completion of the live call.

About Forward Air Corporation

Forward Air keeps your business moving forward by providing services within three business segments: Expedited Freight (provides expedited regional, inter-regional and national LTL services, including local pick-up and delivery, final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling); Intermodal (provides first-and last-mile high-value drayage services both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services); and Pool Distribution (provides high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region). For more information, visit our website at www.forwardaircorp.com.

Forward Air Corporation

Consolidated Statements of Comprehensive Income

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

 

 

 

 

(As Adjusted)

 

 

 

(As Adjusted)

Operating revenue:

 

 

 

 

 

 

 

 

Expedited Freight

 

$

262,292

 

 

$

244,515

 

 

$

988,757

 

 

$

931,124

 

Intermodal

 

54,710

 

 

52,730

 

 

217,711

 

 

201,006

 

Pool Distribution

 

65,436

 

 

60,861

 

 

207,389

 

 

194,117

 

Eliminations and other operations

 

(934

)

 

(1,545

)

 

(3,462

)

 

(5,361

)

Operating revenue

 

381,504

 

 

356,561

 

 

1,410,395

 

 

1,320,886

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Purchased transportation

 

176,263

 

 

162,804

 

 

639,007

 

 

613,636

 

Salaries, wages and employee benefits

 

91,264

 

 

82,548

 

 

335,163

 

 

300,230

 

Operating leases

 

21,988

 

 

21,036

 

 

82,010

 

 

75,677

 

Depreciation and amortization

 

10,073

 

 

10,837

 

 

42,109

 

 

42,183

 

Insurance and claims

 

11,909

 

 

8,738

 

 

45,440

 

 

35,180

 

Fuel expense

 

6,579

 

 

6,335

 

 

24,221

 

 

23,121

 

Other operating expenses

 

30,576

 

 

29,216

 

 

123,622

 

 

108,828

 

Total operating expenses

 

348,652

 

 

321,514

 

 

1,291,572

 

 

1,198,855

 

Income (loss) from operations

 

 

 

 

 

 

 

 

Expedited Freight

 

26,597

 

 

27,069

 

 

101,065

 

 

101,440

 

Intermodal

 

5,354

 

 

6,933

 

 

23,679

 

 

23,266

 

Pool Distribution

 

2,591

 

 

2,175

 

 

7,275

 

 

5,870

 

Other operations

 

(1,690

)

 

(1,130

)

 

(13,196

)

 

(8,545

)

Income from operations

 

32,852

 

 

35,047

 

 

118,823

 

 

122,031

 

 

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

 

(795

)

 

(457

)

 

(2,711

)

 

(1,783

)

Other, net

 

(1

)

 

?

 

 

(1

)

 

(2

)

Total other expense

 

(796

)

 

(457

)

 

(2,712

)

 

(1,785

)

Income before income taxes

 

32,056

 

 

34,590

 

 

116,111

 

 

120,246

 

Income tax expense

 

7,888

 

 

6,906

 

 

29,012

 

 

28,195

 

Net income and comprehensive income

 

$

24,168

 

 

$

27,684

 

 

$

87,099

 

 

$

92,051

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

Basic

 

$

0.86

 

 

$

0.95

 

 

$

3.06

 

 

$

3.14

 

Diluted

 

$

0.85

 

 

$

0.95

 

 

$

3.04

 

 

$

3.12

 

 

 

 

 

 

 

 

 

 

Dividends per share:

 

$

0.18

 

 

$

0.18

 

 

$

0.72

 

 

$

0.63

 

 

Expedited Freight Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

December 31,

 

Percent of

 

December 31,

 

Percent of

 

 

 

Percent

 

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

(As Adjusted)

 

Operating revenue:

 

 

 

 

 

 

 

 

 

 

 

 

Network 1

 

$

172.8

 

 

65.9

%

 

$

175.7

 

 

71.9

%

 

$

(2.9

)

 

(1.7

)%

Truckload

 

48.9

 

 

18.7

 

 

48.9

 

 

20.0

 

 

?

 

 

?

 

Final Mile

 

34.2

 

 

13.0

 

 

12.5

 

 

5.1

 

 

21.7

 

 

173.6

 

Other

 

6.4

 

 

2.4

 

 

7.4

 

 

3.0

 

 

(1.0

)

 

(13.5

)

Total operating revenue

 

262.3

 

 

100.0

 

 

244.5

 

 

100.0

 

 

17.8

 

 

7.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

138.5

 

 

52.8

 

 

125.7

 

 

51.4

 

 

12.8

 

 

10.2

 

Salaries, wages and employee benefits

 

51.8

 

 

19.7

 

 

47.9

 

 

19.6

 

 

3.9

 

 

8.1

 

Operating leases

 

12.0

 

 

4.6

 

 

11.1

 

 

4.5

 

 

0.9

 

 

8.1

 

Depreciation and amortization

 

6.2

 

 

2.4

 

 

7.4

 

 

3.0

 

 

(1.2

)

 

(16.2

)

Insurance and claims

 

6.5

 

 

2.5

 

 

5.0

 

 

2.0

 

 

1.5

 

 

30.0

 

Fuel expense

 

2.5

 

 

1.0

 

 

2.5

 

 

1.0

 

 

?

 

 

?

 

Other operating expenses

 

18.2

 

 

6.9

 

 

17.8

 

 

7.3

 

 

0.4

 

 

2.2

 

Total operating expenses

 

235.7

 

 

89.9

 

 

217.4

 

 

88.9

 

 

18.3

 

 

8.4

 

Income from operations

 

$

26.6

 

 

10.1

%

 

$

27.1

 

 

11.1

%

 

$

(0.5

)

 

(1.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

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: LTL Operating Statistics

 

 

 

 

 

 

 

 

 

Three months ended

 

 

December 31,

 

December 31,

 

Percent

 

 

2019

 

2018

 

Change

 

 

(As Adjusted)

 

 

 

 

 

 

 

 

 

Business days

 

64

 

 

64

 

 

?

%

 

 

 

 

 

 

 

Tonnage 1,2

 

 

 

 

 

 

Total pounds

 

642,092

 

 

648,423

 

 

(1.0

)

Pounds per day

 

10,033

 

 

10,132

 

 

(1.0

)

 

 

 

 

 

 

 

Shipments 1,2

 

 

 

 

 

 

Total shipments

 

1,069

 

 

1,104

 

 

(3.2

)

Shipments per day

 

16.7

 

 

17.3

 

 

(3.5

)

 

 

 

 

 

 

 

Weight per shipment

 

601

 

 

587

 

 

2.4

 

 

 

 

 

 

 

 

Revenue per hundredweight 3

 

$

27.02

 

 

$

26.81

 

 

0.8

 

Revenue per hundredweight, ex fuel 3

 

$

22.72

 

 

$

22.42

 

 

1.3

 

 

 

 

 

 

 

 

Revenue per shipment 3

 

$

164

 

 

$

160

 

 

2.5

 

Revenue per shipment, ex fuel 3

 

$

139

 

 

$

134

 

 

3.7

 

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

 

41.1

%

 

35.6

%

 

15.4

 

Network gross margin 5

 

53.8

%

 

52.7

%

 

2.1

%

 

 

 

 

 

 

 

1 In thousands

 

 

 

 

 

 

2 Excludes accessorial, full truckload and final mile products

3 Includes intercompany revenue between the Network and Truckload revenue streams

4 Door-to-door shipments include all shipments with a pickup and/or delivery

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

 

Intermodal Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

December 31,

 

Percent of

 

December 31,

 

Percent of

 

 

 

Percent

 

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

Operating revenue

 

$

54.7

 

 

100.0

%

 

$

52.7

 

 

100.0

%

 

$

2.0

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

19.3

 

 

35.3

 

 

19.7

 

 

37.4

 

 

(0.4

)

 

(2.0

)

Salaries, wages and employee benefits

 

13.6

 

 

24.9

 

 

12.2

 

 

23.1

 

 

1.4

 

 

11.5

 

Operating leases

 

4.2

 

 

7.7

 

 

4.0

 

 

7.6

 

 

0.2

 

 

5.0

 

Depreciation and amortization

 

2.7

 

 

4.9

 

 

1.7

 

 

3.2

 

 

1.0

 

 

58.8

 

Insurance and claims

 

1.7

 

 

3.1

 

 

1.5

 

 

2.8

 

 

0.2

 

 

13.3

 

Fuel expense

 

2.1

 

 

3.8

 

 

1.7

 

 

3.2

 

 

0.4

 

 

23.5

 

Other operating expenses

 

5.8

 

 

10.6

 

 

5.0

 

 

9.5

 

 

0.8

 

 

16.0

 

Total operating expenses

 

49.4

 

 

90.3

 

 

45.8

 

 

86.9

 

 

3.6

 

 

7.9

 

Income from operations

 

$

5.3

 

 

9.7

%

 

$

6.9

 

 

13.1

%

 

$

(1.6

)

 

(23.2

)%

 

Intermodal Operating Statistics

 

 

 

 

 

Three months ended

 

 

December 31,

 

December 31,

 

Percent

 

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

Drayage shipments

 

77,906

 

 

81,566

 

 

(4.5

)%

Drayage revenue per shipment

 

$

603

 

 

$

560

 

 

7.7

 

Number of locations

 

21

 

 

20

 

 

5.0

%

   

Pool Distribution Segment Information

(In millions)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

 

December 31,

 

Percent of

 

December 31,

 

Percent of

 

 

 

Percent

 

 

2019

 

Revenue

 

2018

 

Revenue

 

Change

 

Change

Operating revenue

 

$

65.4

 

 

100.0

%

 

$

60.9

 

 

100.0

%

 

$

4.5

 

 

7.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

19.0

 

 

29.1

 

 

18.5

 

 

30.4

 

 

0.5

 

 

2.7

 

Salaries, wages and employee benefits

 

26.2

 

 

40.1

 

 

22.2

 

 

36.5

 

 

4.0

 

 

18.0

 

Operating leases

 

5.8

 

 

8.9

 

 

6.0

 

 

9.9

 

 

(0.2

)

 

(3.3

)

Depreciation and amortization

 

1.3

 

 

2.0

 

 

1.7

 

 

2.8

 

 

(0.4

)

 

(23.5

)

Insurance and claims

 

2.2

 

 

3.4

 

 

1.4

 

 

2.3

 

 

0.8

 

 

57.1

 

Fuel expense

 

2.0

 

 

3.1

 

 

2.1

 

 

3.4

 

 

(0.1

)

 

(4.8

)

Other operating expenses

 

6.3

 

 

9.6

 

 

6.8

 

 

11.2

 

 

(0.5

)

 

(7.4

)

Total operating expenses

 

62.8

 

 

96.0

 

 

58.7

 

 

96.4

 

 

4.1

 

 

7.0

 

Income from operations

 

$

2.6

 

 

4.0

%

 

$

2.2

 

 

3.6

%

 

$

0.4

 

 

18.2

%

 

Pool Operating Statistics

 

 

 

 

 

Three months ended

 

 

December 31,

 

December 31,

 

Percent

 

 

2019

 

2018

 

Change

 

 

 

 

 

 

 

Cartons ¹

 

33,563

 

 

30,435

 

 

10.3

%

Revenue per carton

 

$

1.95

 

 

$

2.00

 

 

(2.5

)

Terminals

 

30

 

 

28

 

 

7.1

%

 

 

 

 

 

 

 

¹ In thousands

 

 

 

 

 

 

   

Forward Air Corporation

Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

 

December 31,
2019

 

December 31,
2018

Assets

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

 

$

64,749

 

 

$

25,657

 

Accounts receivable, net

 

150,197

 

 

156,359

 

Other current assets

 

21,372

 

 

19,066

 

Total current assets

 

236,318

 

 

201,082

 

 

 

 

 

 

Property and equipment

 

426,737

 

 

413,900

 

Less accumulated depreciation and amortization

 

213,706

 

 

204,005

 

Net property and equipment

 

213,031

 

 

209,895

 

Operating lease right-of-use assets

 

151,657

 

 

?

 

Goodwill and other acquired intangibles:

 

 

 

 

Goodwill

 

221,105

 

 

199,092

 

Other acquired intangibles, net of accumulated amortization

 

127,798

 

 

113,661

 

Total goodwill and other acquired intangibles, net

 

348,903

 

 

312,753

 

Other assets

 

40,969

 

 

36,485

 

Total assets

 

$

990,878

 

 

$

760,215

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders' Equity

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

29,986

 

 

$

34,630

 

Accrued expenses

 

49,822

 

 

39,784

 

Other current liabilities

 

5,320

 

 

?

 

Current portion of debt and finance lease obligations

 

1,421

 

 

309

 

Current portion of operating lease obligations

 

50,615

 

 

?

 

Total current liabilities

 

137,164

 

 

74,723

 

 

 

 

 

 

Debt and finance lease obligations, less current portion

 

72,249

 

 

47,335

 

Operating lease obligations, less current portion

 

101,525

 

 

?

 

Other long-term liabilities

 

58,816

 

 

47,739

 

Deferred income taxes

 

43,942

 

 

37,174

 

 

 

 

 

 

Shareholders' equity:

 

 

 

 

Common stock

 

279

 

 

285

 

Additional paid-in capital

 

226,869

 

 

210,296

 

Retained earnings

 

350,034

 

 

342,663

 

Total shareholders' equity

 

577,182

 

 

553,244

 

Total liabilities and shareholders' equity

 

$

990,878

 

 

$

760,215

 

 

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three months ended

 

 

December 31,
2019

 

December 31,
2018

Operating activities:

 

 

 

 

Net income

 

$

24,168

 

 

$

27,684

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

10,073

 

 

10,837

 

Change in fair value of earn-out liability

 

(923

)

 

?

 

Share-based compensation

 

2,901

 

 

3,024

 

Loss (gain) on disposal of property and equipment

 

111

 

 

(157

)

Provision for (recovery) loss on receivables

 

(67

)

 

191

 

Provision for revenue adjustments

 

1,099

 

 

707

 

Deferred income tax

 

837

 

 

1,418

 

Changes in operating assets and liabilities

 

 

 

 

Accounts receivable

 

6,264

 

 

(8,792

)

Prepaid expenses and other assets

 

832

 

 

2,315

 

Income taxes

 

3,840

 

 

1,937

 

Accounts payable and accrued expenses

 

(5,390

)

 

(456

)

Net cash provided by operating activities

 

43,745

 

 

38,708

 

 

 

 

 

 

Investing activities:

 

 

 

 

Proceeds from disposal of property and equipment

 

1,193

 

 

1,070

 

Purchases of property and equipment

 

(3,564

)

 

(7,949

)

Acquisition of business

 

?

 

 

(16,250

)

Other

 

?

 

 

115

 

Net cash used in investing activities

 

(2,371

)

 

(23,014

)

 

 

 

 

 

Financing activities:

 

 

 

 

Payments of finance lease obligations

 

(418

)

 

(74

)

Proceeds from senior credit facility

 

?

 

 

7,000

 

Proceeds from exercise of stock options

 

1,987

 

 

239

 

Payments of cash dividends

 

(5,073

)

 

(5,214

)

Repurchase of common stock (repurchase program)

 

(8,298

)

 

(21,141

)

Common stock issued under employee stock purchase plan

 

353

 

 

242

 

Net cash used in by financing activities

 

(11,449

)

 

(18,948

)

Net increase (decrease) in cash

 

29,925

 

 

(3,254

)

Cash at beginning of period

 

34,824

 

 

28,911

 

Cash at end of period

 

$

64,749

 

 

$

25,657

 

 

Forward Air Corporation

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

 

Year ended

 

 

December 31,
2019

 

December 31,
2018

Operating activities:

 

 

 

 

Net income

 

$

87,099

 

 

$

92,051

 

Adjustments to reconcile net income to net cash provided by operating activities

 

 

 

 

Depreciation and amortization

 

42,109

 

 

42,183

 

Change in fair value of earn-out liability

 

(33

)

 

(455

)

Share-based compensation

 

11,907

 

 

10,549

 

Loss (gain) on disposal of property and equipment

 

1,121

 

 

(171

)

Provision for loss on receivables

 

761

 

 

139

 

Provision for revenue adjustments

 

3,342

 

 

3,628

 

Deferred income taxes

 

6,768

 

 

8,094

 

Changes in operating assets and liabilities

 

 

 

 

Accounts receivable

 

2,059

 

 

(12,178

)

Prepaid expenses and other assets

 

(3,641

)

 

(2,565

)

Income taxes

 

1,284

 

 

(1,256

)

Accounts payable and accrued expenses

 

8,700

 

 

12,535

 

Net cash provided by operating activities

 

161,476

 

 

152,554

 

 

 

 

 

 

Investing activities:

 

 

 

 

Proceeds from disposal of property and equipment

 

3,294

 

 

7,059

 

Purchases of property and equipment

 

(30,666

)

 

(42,293

)

Acquisition of business, net of cash acquired

 

(39,000

)

 

(19,987

)

Other

 

?

 

 

(242

)

Net cash used in investing activities

 

(66,372

)

 

(55,463

)

 

 

 

 

 

Financing activities:

 

 

 

 

Payments of finance lease obligations

 

(946

)

 

(302

)

Proceeds from senior credit facility

 

20,000

 

 

7,000

 

Proceeds from exercise of stock options

 

4,050

 

 

3,921

 

Payments of cash dividends

 

(20,494

)

 

(18,427

)

Repurchase of common stock (repurchase program)

 

(56,204

)

 

(66,126

)

Common stock issued under employee stock purchase plan

 

614

 

 

479

 

Cash settlement of share-based awards for tax withholdings

 

(3,032

)

 

(1,872

)

Net cash used in financing activities

 

(56,012

)

 

(75,327

)

Net increase in cash

 

39,092

 

 

21,764

 

Cash at beginning of year

 

25,657

 

 

3,893

 

Cash at end of year

 

$

64,749

 

 

$

25,657

 

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

The Company reports its financial results in accordance with GAAP (also referred to herein as "reported"). However, the Company also uses "non-GAAP financial measures" that are derived on the basis of methodologies other than in accordance with GAAP. Specifically, the Company believes that meaningful analysis of its financial performance in 2019 and 2018 requires an understanding of the factors underlying that performance, including an understanding of items that are non-operational. Management uses these non-GAAP financial measures in making financial, operating, compensation and planning decisions and in evaluating the Company's performance.

This press release contains the following non-GAAP financial measures on a consolidated basis: earnings before interest, taxes, depreciation and amortization ("EBITDA") and free cash flow for the three months and year ended December 31, 2019 and 2018. The Company believes that including these items will assist investors in understanding its core operating performance and allow for more accurate comparisons of results, as they eliminate the impact of investing activities.

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), tax impacts and other adjustments as set out in the attached tables. 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 stockholder value.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the tables below present, for the periods indicated, a reconciliation of the Company's presented non-GAAP financial measures to the most directly comparable GAAP financial measures.

Forward Air Corporation

Reconciliation to U.S. GAAP

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Net income

 

$

24,168

 

 

$

27,684

 

 

$

87,099

 

 

$

92,051

 

Interest expense

 

795

 

 

457

 

 

2,711

 

 

1,783

 

Income tax expense

 

7,888

 

 

6,906

 

 

29,012

 

 

28,195

 

Depreciation and amortization

 

10,073

 

 

10,837

 

 

42,109

 

 

42,183

 

EBITDA

 

$

42,924

 

 

$

45,884

 

 

$

160,931

 

 

$

164,212

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended

 

Year ended

 

 

December 31,
2019

 

December 31,
2018

 

December 31,
2019

 

December 31,
2018

Net cash provided by operating activities

 

$

43,745

 

 

$

38,708

 

 

$

161,476

 

 

$

152,553

 

Proceeds from disposal of property and equipment

 

1,193

 

 

1,070

 

 

3,294

 

 

7,059

 

Purchases of property and equipment

 

(3,564

)

 

(7,949

)

 

(30,666

)

 

(42,293

)

Free cash flow

 

$

41,374

 

 

$

31,829

 

 

$

134,104

 

 

$

117,319

 

 

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

Forward Air Corporation

Additional Guidance Data

(In thousands, except per share data)

(Unaudited)

 

 

 

 

 

Three months ended

Actual

 

December 31, 2019

Net income

 

$

24,168

 

Income allocated to participating securities

 

(254

)

Numerator for diluted income per share - net income

 

$

23,914

 

 

 

 

Fully diluted share count

 

28,005

 

Diluted earnings per share

 

$

0.85

 

 

 

 

 

 

 

Projected

 

Full year 2020

Projected tax rate

 

25.0

%

 

 

 

Projected capital expenditures, net

 

$

36,500

 

 

 

 

 

 

Three months ended

Projected

 

December 31, 2020

Projected year end fully diluted share count

 

27,500

 

Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Forward-looking statements included in this press release relate to the effects of our business efforts, expected 2020 guidance, including first quarter 2020 revenue growth, first quarter 2020 net income per diluted shares, full year 2020 projected tax rate, fully diluted share count (before consideration of future share repurchase), projected capital expenditures, the future declaration of dividends and the quarterly and full year 2020 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, our ability to manage our growth and ability to grow, in part, through acquisitions, while being able to successfully integrate such acquisitions, our inability to maintain our historical growth rate because of decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers' transportation needs, 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, season 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, 2018 and quarterly reports on Form 10-Q filed thereafter.

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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