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Forward Air Corporation Reports Fourth Quarter 2021 Results

Reports all-time quarterly record revenue, net income and net income per diluted share

Guides strong first quarter revenue and net income per diluted share

Announces 14% dividend increase

Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”, “our”, or “us”) today reported financial results for the three and twelve months ended December 31, 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/20220209006084/en/

Forward Air Corporation Reports Fourth Quarter 2021 Results (Photo: Business Wire)

Forward Air Corporation Reports Fourth Quarter 2021 Results (Photo: Business Wire)

Tom Schmitt, Chairman, President and CEO, commenting on fourth quarter results from continuing operations, said, “Our fourth quarter reported revenue, net income and net income per diluted share represent the best quarterly financial performance in Forward history and each set all-time quarterly records. With higher quality freight in our network, our less-than-truckload line of business reported record levels in weight per shipment and revenue per shipment for the fourth quarter. Our solid growth strategies combined with continued strong demand for our services drove our record fourth quarter revenue growth of 31%, which came in above the high end of our guidance range of 23% to 27%. Our record reported net income per diluted share of $1.40 exceeded the high end of our $1.25 to $1.29 guidance range.”

Mr. Schmitt continued, “We anticipate solid performance in the first quarter of 2022 with volumes expected to exceed the same period of 2021. For the month of January, our revenue per shipment increased 54.8%, weight per shipment increased 33.0% and tonnage increased 10.7% year-over-year. Based on the continued precision execution of our strategic priorities, at this moment, we are ahead of pace toward our previously announced full year 2023 targets.”

In closing, Mr. Schmitt said, “We achieved record-breaking annual performance in 2021. I would like to thank our employees and independent contractors for their remarkable efforts to serve our customers and their valuable contribution to this important milestone for Forward.”

Regarding the Company’s first quarter 2022 continuing operations guidance, Rebecca J. Garbrick, CFO, said, “We expect first quarter year-over-year revenue growth of 18% to 22% and net income per diluted share to be between $1.15 to $1.19, compared to reported net income per diluted share of $0.60 and adjusted net income per diluted share of $0.80 in the first quarter of 2021.”

Continuing Operations

 

Three Months Ended

(in thousands, except per share data)

 

December 31,

2021

 

December 31,

2020

 

Change

 

Percent Change

Operating revenue

 

$

459,929

 

 

$

350,341

 

 

$

109,588

 

31.3

%

Income from operations

 

$

51,977

 

 

$

20,726

 

 

$

31,251

 

150.8

%

Operating margin

 

 

11.3

%

 

 

5.9

%

 

540 bps

Net income from continuing operations

 

$

38,197

 

 

$

15,133

 

 

$

23,064

 

152.4

%

Net income per diluted share

 

$

1.40

 

 

$

0.55

 

 

$

0.85

 

154.5

%

Cash provided by operating activities

 

$

42,144

 

 

$

15,612

 

 

$

26,532

 

169.9

%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

51,866

 

 

$

25,237

 

 

$

26,629

 

105.5

%

Adjusted net income

 

$

38,114

 

 

$

18,629

 

 

$

19,485

 

104.6

%

Adjusted net income per diluted share

 

$

1.40

 

 

$

0.68

 

 

$

0.72

 

105.9

%

EBITDA

 

$

63,462

 

 

$

29,929

 

 

$

33,533

 

112.0

%

Free cash flow

 

$

26,354

 

 

$

12,781

 

 

$

13,573

 

106.2

%

 

 

 

 

 

 

 

 

 

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

 

Continuing Operations

 

Twelve Months Ended

(in thousands, except per share data)

 

December 31,

2021

 

December 31,

2020

 

Change

 

Percent Change

Operating revenue

 

$

1,662,427

 

 

$

1,269,573

 

 

$

392,854

 

30.9

%

Income from operations

 

$

159,301

 

 

$

73,924

 

 

$

85,377

 

115.5

%

Operating margin

 

 

9.6

%

 

 

5.8

%

 

380 bps

Net income from continuing operations

 

$

116,091

 

 

$

52,767

 

 

$

63,324

 

120.0

%

Net income per diluted share

 

$

4.22

 

 

$

1.89

 

 

$

2.33

 

123.3

%

Cash provided by operating activities

 

$

124,896

 

 

$

96,105

 

 

$

28,791

 

30.0

%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

166,729

 

 

$

79,523

 

 

$

87,206

 

109.7

%

Adjusted net income

 

$

121,654

 

 

$

57,027

 

 

$

64,627

 

113.3

%

Adjusted net income per diluted share

 

$

4.43

 

 

$

2.05

 

 

$

2.38

 

116.1

%

EBITDA

 

$

198,853

 

 

$

111,046

 

 

$

87,807

 

79.1

%

Free cash flow

 

$

88,430

 

 

$

78,250

 

 

$

10,180

 

13.0

%

 

 

 

 

 

 

 

 

 

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

On February 8, 2022, our Board of Directors approved a 14% increase to the Company’s quarterly dividend, raising it from $0.21 to $0.24 per share of common stock. The dividend is payable to shareholders of record at the close of business on March 3, 2022 and is expected to be paid on March 18, 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.

Commenting on the increased dividend payment, Ms. Garbrick said, “This increase reflects our confidence in the growth potential of our businesses, and the Company’s continued focus on returning a portion of its free cash flow back to shareholders. In the past five years, we have returned approximately $365 million to shareholders in the form of dividends and share repurchases.”

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 fourth quarter 2021 results on Thursday, February 10, 2022 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, or by dialing (844) 867-6169, Access Code: 3231672.

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. We are more than a transportation company. As a single resource for your shipping needs, Forward is your supply chain partner. 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

 

Twelve Months Ended

 

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Operating revenue:

 

 

 

 

 

 

 

Expedited Freight

$

376,792

 

 

$

299,500

 

 

$

1,374,270

 

 

$

1,072,301

 

Intermodal

 

83,394

 

 

 

51,767

 

 

 

289,214

 

 

 

199,603

 

Eliminations and other operations

 

(257

)

 

 

(926

)

 

 

(1,057

)

 

 

(2,331

)

Operating revenue

 

459,929

 

 

 

350,341

 

 

 

1,662,427

 

 

 

1,269,573

 

Operating expenses:

 

 

 

 

 

 

 

Purchased transportation

 

227,776

 

 

 

184,943

 

 

 

833,075

 

 

 

650,664

 

Salaries, wages and employee benefits

 

83,866

 

 

 

70,527

 

 

 

327,814

 

 

 

270,785

 

Operating leases

 

19,560

 

 

 

17,122

 

 

 

79,633

 

 

 

69,720

 

Depreciation and amortization

 

11,485

 

 

 

9,206

 

 

 

39,552

 

 

 

37,125

 

Insurance and claims

 

11,570

 

 

 

8,475

 

 

 

42,186

 

 

 

34,912

 

Fuel expense

 

4,809

 

 

 

2,919

 

 

 

17,027

 

 

 

12,166

 

Other operating expenses

 

48,886

 

 

 

36,423

 

 

 

163,839

 

 

 

120,277

 

Total operating expenses

 

407,952

 

 

 

329,615

 

 

 

1,503,126

 

 

 

1,195,649

 

Income (loss) from continuing operations

 

 

 

 

 

 

 

Expedited Freight

 

45,467

 

 

 

20,872

 

 

 

139,321

 

 

 

71,266

 

Intermodal

 

8,510

 

 

 

3,428

 

 

 

30,117

 

 

 

16,391

 

Other operations

 

(2,000

)

 

 

(3,574

)

 

 

(10,137

)

 

 

(13,733

)

Income from continuing operations

 

51,977

 

 

 

20,726

 

 

 

159,301

 

 

 

73,924

 

Other expense:

 

 

 

 

 

 

 

Interest expense

 

(877

)

 

 

(1,206

)

 

 

(4,338

)

 

 

(4,561

)

Other, net

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Total other expense

 

(877

)

 

 

(1,209

)

 

 

(4,338

)

 

 

(4,564

)

Income before income taxes

 

51,100

 

 

 

19,517

 

 

 

154,963

 

 

 

69,360

 

Income tax expense

 

12,903

 

 

 

4,384

 

 

 

38,872

 

 

 

16,593

 

Net income from continuing operations

 

38,197

 

 

 

15,133

 

 

 

116,091

 

 

 

52,767

 

Income (Loss) from discontinued operation, net of tax

 

2,268

 

 

 

(19,576

)

 

 

(10,232

)

 

 

(29,034

)

Net income (loss) and comprehensive income (loss)

$

40,465

 

 

$

(4,443

)

 

$

105,859

 

 

$

23,733

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic net income (loss) per share:

 

 

 

 

 

 

 

Continuing operations

$

1.41

 

 

$

0.55

 

 

$

4.25

 

 

$

1.90

 

Discontinued operation

 

0.08

 

 

 

(0.72

)

 

 

(0.37

)

 

 

(1.05

)

Net income (loss) per share1

$

1.49

 

 

$

(0.17

)

 

$

3.87

 

 

$

0.84

 

Diluted net income (loss) per share:

 

 

 

 

 

 

 

Continuing operations

$

1.40

 

 

$

0.55

 

 

$

4.22

 

 

$

1.89

 

Discontinued operation

 

0.08

 

 

 

(0.72

)

 

 

(0.37

)

 

 

(1.05

)

Net income (loss) per share1

$

1.48

 

 

$

(0.17

)

 

$

3.85

 

 

$

0.84

 

 

 

 

 

 

 

 

 

Dividends per share:

$

0.21

 

 

$

0.21

 

 

$

0.84

 

 

$

0.75

 

1 Rounding may impact summation of amounts.

 

 

Expedited Freight Segment Information

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31,

2021

 

Percent of

Revenue

 

December 31,

2020

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue:

 

 

 

 

 

 

 

 

 

 

 

Network 1

$

234,792

 

62.4

%

 

$

170,035

 

56.8

%

 

$

64,757

 

38.1

%

Truckload

 

60,026

 

15.9

 

 

 

54,829

 

18.3

 

 

 

5,197

 

9.5

 

Final Mile

 

71,706

 

19.0

 

 

 

66,252

 

22.1

 

 

 

5,454

 

8.2

 

Other

 

10,268

 

2.7

 

 

 

8,383

 

2.8

 

 

 

1,885

 

22.5

 

Total operating revenue

 

376,792

 

100.0

 

 

 

299,499

 

100.0

 

 

 

77,293

 

25.8

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

204,810

 

54.4

 

 

 

167,205

 

55.8

 

 

 

37,605

 

22.5

 

Salaries, wages and employee benefits

 

66,260

 

17.6

 

 

 

58,386

 

19.5

 

 

 

7,874

 

13.5

 

Operating leases

 

13,536

 

3.6

 

 

 

13,302

 

4.4

 

 

 

234

 

1.8

 

Depreciation and amortization

 

8,481

 

2.3

 

 

 

6,812

 

2.4

 

 

 

1,669

 

24.5

 

Insurance and claims

 

8,173

 

2.2

 

 

 

5,928

 

2.0

 

 

 

2,245

 

37.9

 

Fuel expense

 

2,387

 

0.6

 

 

 

1,699

 

0.6

 

 

 

688

 

40.5

 

Other operating expenses

 

27,678

 

7.3

 

 

 

25,295

 

8.4

 

 

 

2,383

 

9.4

 

Total operating expenses

 

331,325

 

87.9

 

 

 

278,627

 

93.0

 

 

 

52,698

 

18.9

 

Income from operations

$

45,467

 

12.1

%

 

$

20,872

 

7.0

%

 

$

24,595

 

117.8

%

 

 

 

 

 

 

 

 

 

 

 

 

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 Operating Statistics

 

 

 

 

 

 

 

Three Months Ended

 

December 31,

2021

 

December 31,

2020

 

Percent Change

 

 

 

 

 

 

Business days

 

63

 

 

 

64

 

 

(1.6

) %

 

 

 

 

 

 

Tonnage 1,2

 

 

 

 

 

Total pounds

 

744,725

 

 

 

641,370

 

 

16.1

 

Pounds per day

 

11,821

 

 

 

10,021

 

 

18.0

 

 

 

 

 

 

 

Shipments 1,2

 

 

 

 

 

Total shipments

 

889

 

 

 

1,052

 

 

(15.5

)

Shipments per day

 

14.1

 

 

 

16.4

 

 

(14.0

)

 

 

 

 

 

 

Weight per shipment

 

838

 

 

 

610

 

 

37.4

 

 

 

 

 

 

 

Revenue per hundredweight 3

$

30.23

 

 

$

26.65

 

 

13.4

 

Revenue per hundredweight, excluding fuel 3

$

25.41

 

 

$

23.23

 

 

9.4

 

 

 

 

 

 

 

Revenue per shipment 3

$

258.29

 

 

$

161.79

 

 

59.6

 

Revenue per shipment, excluding fuel 3

$

217.91

 

 

$

140.94

 

 

54.6

 

 

 

 

 

 

 

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

 

45.0

%

 

 

46.6

%

 

(3.4

)

 

 

 

 

 

 

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.

Intermodal Segment Information

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31,

2021

 

Percent of

Revenue

 

December 31,

2020

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue

$

83,394

 

100.0

%

 

$

51,768

 

100.0

%

 

$

31,626

 

61.1

%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

23,221

 

27.9

 

 

 

18,365

 

35.5

 

 

 

4,856

 

26.4

 

Salaries, wages and employee benefits

 

17,711

 

21.2

 

 

 

12,404

 

24.0

 

 

 

5,307

 

42.8

 

Operating leases

 

6,024

 

7.2

 

 

 

3,921

 

7.6

 

 

 

2,103

 

53.6

 

Depreciation and amortization

 

2,983

 

3.6

 

 

 

2,352

 

4.5

 

 

 

631

 

26.8

 

Insurance and claims

 

2,385

 

2.9

 

 

 

2,052

 

4.0

 

 

 

333

 

16.2

 

Fuel expense

 

2,422

 

2.9

 

 

 

1,220

 

2.4

 

 

 

1,202

 

98.5

 

Other operating expenses

 

20,138

 

24.1

 

 

 

8,026

 

15.5

 

 

 

12,112

 

150.9

 

Total operating expenses

 

74,884

 

89.8

 

 

 

48,340

 

93.4

 

 

 

26,544

 

54.9

 

Income from operations

$

8,510

 

10.2

%

 

$

3,428

 

6.6

%

 

$

5,082

 

148.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Intermodal Operating Statistics

 

 

 

Three Months Ended

 

December 31,

2021

 

December 31,

2020

 

Percent Change

 

 

 

 

 

 

Drayage shipments

 

91,113

 

 

75,500

 

20.7

%

Drayage revenue per shipment

$

777

 

$

583

 

33.3

%

Number of locations

 

29

 

 

24

 

20.8

%

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

December 31,

2021

 

December 31,

2020

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

37,316

 

$

40,254

Accounts receivable, net

 

208,085

 

 

156,490

Other receivables

 

8,097

 

 

Other current assets

 

29,309

 

 

28,150

Current assets held for sale

 

 

 

21,002

Total current assets

 

282,807

 

 

245,896

 

 

 

 

Property and equipment

 

419,962

 

 

380,519

Less accumulated depreciation and amortization

 

200,867

 

 

190,652

Total property and equipment, net

 

219,095

 

 

189,867

Operating lease right-of-use assets

 

148,198

 

 

123,338

Goodwill

 

266,752

 

 

244,982

Other acquired intangibles, net of accumulated amortization

 

154,717

 

 

145,032

Other assets

 

46,254

 

 

45,181

Noncurrent assets held for sale

 

 

 

53,097

Total assets

$

1,117,823

 

$

1,047,393

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

44,837

 

$

38,371

Accrued expenses

 

61,621

 

 

51,264

Other current liabilities

 

4,614

 

 

10,580

Current portion of debt and finance lease obligations

 

6,088

 

 

1,801

Current portion of operating lease liabilities

 

47,532

 

 

43,680

Current liabilities held for sale

 

 

 

25,924

Total current liabilities

 

164,692

 

 

171,620

 

 

 

 

Debt and finance lease obligations, less current portion

 

165,037

 

 

117,408

Operating lease liabilities, less current portion

 

101,409

 

 

80,346

Other long-term liabilities

 

49,624

 

 

54,129

Deferred income taxes

 

43,407

 

 

41,986

Noncurrent liabilities held for sale

 

 

 

34,575

 

 

 

 

Shareholders’ equity:

 

 

 

Common stock

 

270

 

 

273

Additional paid-in capital

 

258,474

 

 

242,916

Retained earnings

 

334,910

 

 

304,140

Total shareholders’ equity

 

593,654

 

 

547,329

Total liabilities and shareholders’ equity

$

1,117,823

 

$

1,047,393

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three Months Ended

 

December 31,

2021

 

December 31,

2020

Operating activities:

 

 

 

Net income from continuing operations

$

38,197

 

 

$

15,133

 

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

 

 

 

Depreciation and amortization

 

11,485

 

 

 

9,206

 

Change in fair value of earn-out liability

 

(111

)

 

 

2,588

 

Share-based compensation expense

 

2,734

 

 

 

3,181

 

Provision for revenue adjustments

 

2,439

 

 

 

1,779

 

Deferred income tax expense

 

2,805

 

 

 

(3,545

)

Other

 

670

 

 

 

(127

)

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

 

 

 

Accounts receivable

 

(3,598

)

 

 

(5,303

)

Other receivables

 

6,121

 

 

 

 

Prepaid expenses, other current assets and other assets

 

(16,200

)

 

 

(10,677

)

Accounts payable, accrued expenses and other long-term liabilities

 

(2,398

)

 

 

3,377

 

Net cash provided by operating activities of continuing operations

 

42,144

 

 

 

15,612

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

304

 

 

 

998

 

Purchases of property and equipment

 

(16,094

)

 

 

(3,829

)

Purchase of businesses, net of cash acquired

 

(36,813

)

 

 

(7,720

)

Net cash used in investing activities of continuing operations

 

(52,603

)

 

 

(10,551

)

 

 

 

 

Financing activities:

 

 

 

Proceeds from revolving credit facility

 

150,000

 

 

 

 

Payments on revolving credit facility

 

(150,000

)

 

 

 

Repayments of finance lease obligations

 

(978

)

 

 

(917

)

Payment of debt issuance costs

 

(363

)

 

 

 

Proceeds from issuance of common stock upon stock option exercises

 

143

 

 

 

2,336

 

Payments of dividends to shareholders

 

(5,706

)

 

 

(5,779

)

Proceeds from common stock issued under employee stock purchase plan

 

523

 

 

 

370

 

Payment of minimum tax withholdings on share-based awards

 

(41

)

 

 

(64

)

Contributions from (distributions to) subsidiary held for sale

 

2,267

 

 

 

(3,743

)

Net cash used in financing activities of continuing operations

 

(4,155

)

 

 

(7,797

)

Net decrease in cash of continuing operations

 

(14,614

)

 

 

(2,736

)

 

 

 

 

Cash from discontinued operation:

 

 

 

Net cash provided by (used in) operating activities of discontinued operation

 

2,267

 

 

 

(3,349

)

Net cash used in investing activities of discontinued operation

 

 

 

 

(394

)

Net cash (used in) provided by financing activities of discontinued operation

 

(2,267

)

 

 

3,743

 

Decrease in cash and cash equivalents

 

(14,614

)

 

 

(2,736

)

Cash and cash equivalents at beginning of period of continuing operations

 

51,930

 

 

 

42,990

 

Cash at beginning of period of discontinued operation

 

 

 

 

 

Decrease in cash and cash equivalents

 

(14,614

)

 

 

(2,736

)

Less: cash at beginning of period of discontinued operation

 

 

 

 

 

Cash and cash equivalents at end of period of continuing operations

$

37,316

 

 

$

40,254

 

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Year Ended

 

December 31,

2021

 

December 31,

2020

Operating activities:

 

 

 

Net income from continuing operations

$

116,091

 

 

$

52,767

 

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

 

 

 

Depreciation and amortization

 

39,552

 

 

 

37,125

 

Change in fair value of earn-out liability

 

(496

)

 

 

379

 

Share-based compensation expense

 

10,913

 

 

 

11,033

 

Provision for revenue adjustments

 

7,943

 

 

 

4,751

 

Deferred income tax expense

 

1,421

 

 

 

772

 

Other

 

1,076

 

 

 

587

 

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

 

 

 

Accounts receivable

 

(52,684

)

 

 

(25,739

)

Other receivables

 

(8,097

)

 

 

 

Prepaid expenses, other current assets and other assets

 

(8,002

)

 

 

(9,424

)

Accounts payable, accrued expenses and other long-term liabilities

 

17,179

 

 

 

23,854

 

Net cash provided by operating activities of continuing operations

 

124,896

 

 

 

96,105

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

2,643

 

 

 

2,413

 

Purchases of property and equipment

 

(39,109

)

 

 

(20,268

)

Purchase of businesses, net of cash acquired

 

(59,866

)

 

 

(63,651

)

Net cash used in investing activities of continuing operations

 

(96,332

)

 

 

(81,506

)

 

 

 

 

Financing activities:

 

 

 

Proceeds from revolving credit facility

 

195,000

 

 

 

65,000

 

Payments on revolving credit facility

 

(150,000

)

 

 

(20,000

)

Repayments of finance lease obligations

 

(2,423

)

 

 

(1,446

)

Payment of debt issuance costs

 

(482

)

 

 

 

Proceeds from issuance of common stock upon stock option exercises

 

3,706

 

 

 

4,237

 

Payment of earn-out liability

 

(6,519

)

 

 

(5,284

)

Payments of dividends to shareholders

 

(22,976

)

 

 

(20,869

)

Repurchases and retirement of common stock

 

(48,989

)

 

 

(45,248

)

Proceeds from common stock issued under employee stock purchase plan

 

911

 

 

 

664

 

Payment of minimum tax withholdings on share-based awards

 

(3,115

)

 

 

(3,508

)

Contributions from (distributions to) subsidiary held for sale

 

3,385

 

 

 

(12,640

)

Net cash used in financing activities of continuing operations

 

(31,502

)

 

 

(39,094

)

Net decrease in cash of continuing operations

 

(2,938

)

 

 

(24,495

)

 

 

 

 

Cash from discontinued operation:

 

 

 

Net cash used in operating activities of discontinued operation

 

(4,635

)

 

 

(11,439

)

Net cash provided by (used in) investing activities of discontinued operation

 

8,020

 

 

 

(1,201

)

Net cash used in (provided by) financing activities of discontinued operation

 

(3,385

)

 

 

12,640

 

Decrease in cash and cash equivalents

 

(2,938

)

 

 

(24,495

)

Cash and cash equivalents at beginning of period of continuing operations

 

40,254

 

 

 

64,749

 

Cash at beginning of period of discontinued operation

 

 

 

 

 

Decrease in cash and cash equivalents

 

(2,938

)

 

 

(24,495

)

Less: cash at beginning of period of discontinued operation

 

 

 

 

 

Cash and cash equivalents at end of period of continuing operations

$

37,316

 

 

$

40,254

 

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 twelve months ended December 31, 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 twelve months ended December 31, 2021 and 2020 (in thousands):

 

 

Three Months Ended

 

Twelve Months Ended

Continuing Operations

 

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Net income

 

$

38,197

 

$

15,133

 

$

116,091

 

$

52,767

Interest expense

 

 

877

 

 

1,206

 

 

4,338

 

 

4,561

Income tax expense

 

 

12,903

 

 

4,384

 

 

38,872

 

 

16,593

Depreciation and amortization

 

 

11,485

 

 

9,206

 

 

39,552

 

 

37,125

EBITDA

 

$

63,462

 

$

29,929

 

$

198,853

 

$

111,046

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 twelve months ended December 31, 2021 and 2020 (in thousands):

 

 

Three Months Ended

 

Twelve Months Ended

Continuing Operations

 

December 31,

2021

 

December 31,

2020

 

December 31,

2021

 

December 31,

2020

Net cash provided by operating activities

 

$

42,144

 

 

$

15,612

 

 

$

124,896

 

 

$

96,105

 

Proceeds from sale of property and equipment

 

 

304

 

 

 

998

 

 

 

2,643

 

 

 

2,413

 

Purchases of property and equipment

 

 

(16,094

)

 

 

(3,829

)

 

 

(39,109

)

 

 

(20,268

)

Free cash flow

 

$

26,354

 

 

$

12,781

 

 

$

88,430

 

 

$

78,250

 

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 twelve months ended December 31, 2021 and 2020 (in thousands, except net income per diluted share):

 

 

Three Months Ended December 31, 2021

 

Three Months Ended December 31, 2020

Continuing Operations

 

Income From

Operations

 

Net Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net Income1

 

Net Income

Per Diluted

Share1,2

As Reported

 

$

51,977

 

 

$

38,197

 

 

$

1.40

 

 

$

20,726

 

$

15,133

 

$

0.55

Professional fees for cybersecurity and shareholder engagement activities

 

 

 

 

 

 

 

 

 

 

 

1,923

 

 

1,490

 

 

0.05

Change in the fair value of the earn-out liability

 

 

(111

)

 

 

(83

)

 

 

 

 

 

2,588

 

 

2,006

 

 

0.07

As Adjusted

 

$

51,866

 

 

$

38,114

 

 

$

1.40

 

 

$

25,237

 

$

18,629

 

$

0.68

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Net income and net income per diluted share amounts are after tax

2 Rounding may impact summation of amounts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2021

 

Twelve Months Ended December 31, 2020

Continuing Operations

 

Income From

Operations

 

Net Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net Income1

 

Net Income

Per Diluted

Share1,2

As Reported

 

$

159,301

 

 

$

116,091

 

 

$

4.22

 

 

$

73,924

 

$

52,767

 

$

1.89

Professional fees for an operational improvement project

 

 

969

 

 

 

726

 

 

 

0.03

 

 

 

 

 

 

 

Professional fees for cybersecurity and shareholder engagement activities

 

 

6,955

 

 

 

5,209

 

 

 

0.19

 

 

 

1,923

 

 

1,463

 

 

0.05

Reserve for a litigated contract dispute

 

 

 

 

 

 

 

 

 

 

 

2,300

 

 

1,750

 

 

0.06

Change in the fair value of the earn-out liability

 

 

(496

)

 

 

(372

)

 

 

(0.01

)

 

 

379

 

 

288

 

 

0.01

Severance expenses

 

 

 

 

 

 

 

 

 

 

 

997

 

 

759

 

 

0.03

As Adjusted

 

$

166,729

 

 

$

121,654

 

 

$

4.43

 

 

$

79,523

 

$

57,027

 

$

2.05

 

 

 

 

 

 

 

 

 

 

 

 

 

1 Net income and net income per diluted share amounts are after tax

2 Rounding may impact summation of amounts.

The following is a 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 ended March 31, 2021:

Continuing Operations

 

Net Income Per Diluted Share1

As reported

 

$

0.60

Professional fees for cybersecurity and shareholder engagement activities

 

 

0.20

As adjusted

 

$

0.80

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

December 31, 2021

Net income from continuing operations

 

$

38,197

 

Income allocated to participating securities

 

 

(288

)

Numerator for diluted income per share - net income

 

$

37,909

 

 

 

 

Weighted-average shares outstanding-diluted

 

 

27,109

 

Diluted net income per share

 

$

1.40

 

 

 

 

Projected

 

Full Year 2022

Projected tax rate - continuing operations

 

 

25.8

%

 

 

 

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

 

$

35,000

 

 

 

 

 

 

 

 

 

 

Projected - Continuing Operations

 

December 31, 2022

Projected weighted-average shares outstanding-diluted

 

 

26,800

 

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 organic growth and future performance of the Company, expected first quarter 2022 revenue growth, first quarter 2022 net income per diluted share, pace towards 2023 targets, full year 2022 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 2022 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, 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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