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Forward Air Corporation Reports Second Quarter 2023 Results

Challenging market conditions in intermodal and truckload brokerage

Positive momentum for less-than-truckload services

Precision execution of revenue growth strategies designed to win market share

Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”, “our”, or “us”) today reported financial results for the three and six months ended June 30, 2023 as presented in the tables below.

Tom Schmitt, Chairman, President and CEO, commenting on second quarter results said, “Weaker-than-expected demand for our intermodal and truckload brokerage services resulted in our reported net income per diluted share of $0.76 and adjusted net income per diluted share of $0.91 coming in below the low end of our $1.28 to $1.32 guidance range. Demand for intermodal and truckload brokerage capacity has been significantly impacted by the trough in the freight cycle. Furthermore, the challenging market conditions led to decreased customer demand for our accessorial services within the intermodal line of business. The softer than anticipated demand for intermodal and truckload services throughout the second quarter and the significant decrease in the price of diesel fuel resulted in a 22% decline in revenue on a consolidated basis, below the low end of our guidance range of minus 7% to 17%.”

Mr. Schmitt continued, “Despite the softer economic environment, we have seen momentum in the less-than-truckload service with a sequential improvement in pounds per day from (12%) in the first quarter over the same period in the prior year to (7%) in the second quarter over the same period in the prior year. The positive momentum continued in the month of July. In the current week, we are enjoying year-over-year growth of +7%. Precision execution of our revenue growth strategies led to the sequential growth trends and improvement in our revenue quality metrics. Weight per shipment increased from 770 pounds in the first quarter to 801 pounds in the second quarter and weight per piece increased 2.4% from the first quarter to the second quarter. We believe the continued execution of our revenue growth strategies, strong collaboration with customers on selecting, handling and pricing of higher quality freight, and planned network expansion with a target of opening 30 new terminals over the next five years positions us well to win market share over the long-term. We are seeing the benefits of our strategy work with the addition of six new terminals in the first six months of 2023 allowing us to better serve the needs of customers in new markets.”

In closing, Mr. Schmitt said, “We are committed to exceptional customer service which is reflected in our on-time performance of 99% and a cargo claims ratio of 0.1% during the second quarter. I am so proud of our teammates and independent contractors who make us the best in the LTL industry in damage-free, intact, on-time shipments. We are the most compelling choice for customers with shipments of consequence.”

Regarding the Company’s third quarter 2023 guidance, Rebecca J. Garbrick, CFO, said, “We expect our year-over-year revenue to decline 11% to 21% and adjusted net income per diluted share in the range of $1.12 to $1.16, compared to reported net income per diluted share of $1.93 in the third quarter of 2022.”

 

 

Three Months Ended

(in thousands, except per share data)

 

June 30, 2023

 

June 30, 2022

 

Change

 

Percent Change

Operating revenue

 

$

402,182

 

 

$

515,219

 

 

$

(113,037

)

 

(21.9

)%

Income from operations

 

$

30,211

 

 

$

75,545

 

 

$

(45,334

)

 

(60.0

)%

Operating margin

 

 

7.5

%

 

 

14.7

%

 

(720) bps

Net income

 

$

19,951

 

 

$

55,430

 

 

$

(35,479

)

 

(64.0

)%

Net income per diluted share

 

$

0.76

 

 

$

2.04

 

 

$

(1.28

)

 

(62.7

)%

Cash provided by operating activities

 

$

63,573

 

 

$

50,334

 

 

$

13,239

 

 

26.3

%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

35,711

 

 

$

75,545

 

 

$

(39,834

)

 

(52.7

)%

Adjusted net income

 

$

23,923

 

 

$

55,430

 

 

$

(31,507

)

 

(56.8

)%

Adjusted net income per diluted share

 

$

0.91

 

 

$

2.04

 

 

$

(1.13

)

 

(55.4

)%

EBITDA

 

$

44,724

 

 

$

87,140

 

 

$

(42,416

)

 

(48.7

)%

Free cash flow

 

$

54,143

 

 

$

41,825

 

 

$

12,318

 

 

29.5

%

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended

(in thousands, except per share data)

 

June 30, 2023

 

June 30, 2022

 

Change

 

Percent Change

Operating revenue

 

$

829,248

 

 

$

982,180

 

 

$

(152,932

)

 

(15.6

)%

Income from operations

 

$

80,720

 

 

$

132,896

 

 

$

(52,176

)

 

(39.3

)%

Operating margin

 

 

9.7

%

 

 

13.5

%

 

(380) bps

Net income

 

$

56,319

 

 

$

98,116

 

 

$

(41,797

)

 

(42.6

)%

Net income per diluted share

 

$

2.13

 

 

$

3.61

 

 

$

(1.48

)

 

(41.0

)%

Cash provided by operating activities

 

$

129,566

 

 

$

112,820

 

 

$

16,746

 

 

14.8

%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

86,220

 

 

$

132,602

 

 

$

(46,382

)

 

(35.0

)%

Adjusted net income

 

$

60,291

 

 

$

97,896

 

 

$

(37,605

)

 

(38.4

)%

Adjusted net income per diluted share

 

$

2.28

 

 

$

3.60

 

 

$

(1.32

)

 

(36.7

)%

EBITDA

 

$

108,868

 

 

$

155,621

 

 

$

(46,753

)

 

(30.0

)%

Free cash flow

 

$

115,162

 

 

$

94,914

 

 

$

20,248

 

 

21.3

%

 

 

 

 

 

 

 

 

 

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

On July 25, 2023, our Board of Directors declared a quarterly cash dividend of $0.24 per share of common stock. The dividend is payable to shareholders of record at the close of business on August 17, 2023 and is expected to be paid on September 7, 2023. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.96 for the full year 2023, payable in quarterly increments of $0.24 per share of common stock. The actual declaration of future cash dividends, and the establishment of record and payment dates, is subject to final determination by the Board of Directors each quarter after its review of the Company’s financial performance and position.

Review of Financial Results

Forward Air will hold a conference call to discuss second quarter 2023 results on Thursday, August 3, 2023 at 9:00 a.m. EDT. The Company’s conference call will be available online on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, or by dialing (877) 336-4440, Access Code: 6257043.

A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which we use as a primary mechanism to communicate with our investors. Investors are urged to monitor the Investor Relations portion of the Company’s website to easily find or navigate to current and pertinent information about us.

About Forward Air Corporation

Forward Air is a leading asset-light provider of transportation services across the United States, Canada and Mexico. We provide expedited less-than-truckload (“LTL”) services, including local pick-up and delivery, shipment consolidation/deconsolidation, warehousing, and customs brokerage by utilizing a comprehensive national network of terminals. In addition, we offer final mile services, including delivery of heavy-bulky freight, truckload brokerage services, including dedicated fleet services; and intermodal, first-and last-mile, high-value drayage services, both to and from seaports and railheads, dedicated contract and Container Freight Station warehouse and handling services. We are more than a transportation company. Forward is a single resource for your shipping needs. For more information, visit our website at www.forwardaircorp.com.

Forward Air Corporation

Condensed Consolidated Statements of Comprehensive Income

(Unaudited, in thousands, except per share data)

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

June 30,

2023

 

June 30,

2022

 

June 30,

2023

 

June 30,

2022

Operating revenue:

 

 

 

 

 

 

 

Expedited Freight

$

337,996

 

 

$

408,857

 

 

$

676,930

 

 

$

785,448

 

Intermodal

 

64,251

 

 

 

106,411

 

 

 

152,420

 

 

 

196,851

 

Eliminations and other operations

 

(65

)

 

 

(49

)

 

 

(102

)

 

 

(119

)

Operating revenues

 

402,182

 

 

 

515,219

 

 

 

829,248

 

 

 

982,180

 

Operating expenses:

 

 

 

 

 

 

 

Purchased transportation

 

181,643

 

 

 

239,490

 

 

 

366,860

 

 

 

464,322

 

Salaries, wages and employee benefits

 

86,686

 

 

 

86,358

 

 

 

166,206

 

 

 

172,439

 

Operating leases

 

26,184

 

 

 

23,459

 

 

 

53,432

 

 

 

46,132

 

Depreciation and amortization

 

14,513

 

 

 

11,595

 

 

 

28,148

 

 

 

22,725

 

Insurance and claims

 

13,360

 

 

 

13,196

 

 

 

27,142

 

 

 

25,164

 

Fuel expense

 

5,274

 

 

 

8,314

 

 

 

11,058

 

 

 

14,179

 

Other operating expenses

 

44,311

 

 

 

57,262

 

 

 

95,682

 

 

 

104,323

 

Total operating expenses

 

371,971

 

 

 

439,674

 

 

 

748,528

 

 

 

849,284

 

Income (loss) from operations:

 

 

 

 

 

 

 

Expedited Freight

 

30,949

 

 

 

63,107

 

 

 

63,947

 

 

 

110,787

 

Intermodal

 

4,312

 

 

 

15,249

 

 

 

15,515

 

 

 

26,395

 

Other Operations

 

(5,050

)

 

 

(2,811

)

 

 

1,258

 

 

 

(4,286

)

Income from operations

 

30,211

 

 

 

75,545

 

 

 

80,720

 

 

 

132,896

 

Other expense:

 

 

 

 

 

 

 

Interest expense, net

 

(2,585

)

 

 

(1,193

)

 

 

(4,940

)

 

 

(1,977

)

Total other expense

 

(2,585

)

 

 

(1,193

)

 

 

(4,940

)

 

 

(1,977

)

Income before income taxes

 

27,626

 

 

 

74,352

 

 

 

75,780

 

 

 

130,919

 

Income tax expense

 

7,675

 

 

 

18,922

 

 

 

19,461

 

 

 

32,803

 

Net income and comprehensive income

$

19,951

 

 

$

55,430

 

 

$

56,319

 

 

$

98,116

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic

$

0.76

 

 

$

2.05

 

 

$

2.14

 

 

$

3.63

 

Diluted

$

0.76

 

 

$

2.04

 

 

$

2.13

 

 

$

3.61

 

 

 

 

 

 

 

 

 

Dividends per share:

$

0.24

 

 

$

0.24

 

 

$

0.48

 

 

$

0.48

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expedited Freight Segment Information

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

June 30,

2023

 

Percent of

Revenue

 

June 30,

2022

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue:

 

 

 

 

 

 

 

 

 

 

 

Network 1

$

205,762

 

60.9

%

 

$

251,872

 

61.6

%

 

$

(46,110

)

 

(18.3

)%

Truckload

 

40,432

 

12.0

 

 

 

60,144

 

14.7

 

 

$

(19,712

)

 

(32.8

)

Final Mile

 

68,560

 

20.3

 

 

 

73,028

 

17.9

 

 

$

(4,468

)

 

(6.1

)

Other

 

23,242

 

6.9

 

 

 

23,813

 

5.8

 

 

$

(571

)

 

(2.4

)

Total operating revenue

 

337,996

 

100.0

 

 

 

408,857

 

100.0

 

 

$

(70,861

)

 

(17.3

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

163,798

 

48.5

 

 

 

212,575

 

52.0

 

 

$

(48,777

)

 

(22.9

)

Salaries, wages and employee benefits

 

70,360

 

20.8

 

 

 

69,497

 

17.0

 

 

$

863

 

 

1.2

 

Operating leases

 

19,489

 

5.8

 

 

 

15,933

 

3.9

 

 

$

3,556

 

 

22.3

 

Depreciation and amortization

 

9,707

 

2.9

 

 

 

7,817

 

1.9

 

 

$

1,890

 

 

24.2

 

Insurance and claims

 

10,703

 

3.2

 

 

 

8,311

 

2.0

 

 

$

2,392

 

 

28.8

 

Fuel expense

 

2,583

 

0.8

 

 

 

3,229

 

0.8

 

 

$

(646

)

 

(20.0

)

Other operating expenses

 

30,407

 

9.0

 

 

 

28,388

 

7.0

 

 

$

2,019

 

 

7.1

 

Total operating expenses

 

307,047

 

90.8

 

 

 

345,750

 

84.6

 

 

$

(38,703

)

 

(11.2

)

Income from operations

$

30,949

 

9.2

%

 

$

63,107

 

15.4

%

 

$

(32,158

)

 

(51.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

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

Expedited Freight Operating Statistics

 

 

 

Three Months Ended

 

June 30,

2023

 

June 30,

2022

 

Percent Change

 

 

 

 

 

 

Business days

 

64

 

 

64

 

%

 

 

 

 

 

 

Tonnage 1,2

 

 

 

 

 

Total pounds

 

673,878

 

 

730,128

 

(7.7

)

Pounds per day

 

10,529

 

 

11,408

 

(7.7

)

 

 

 

 

 

 

Shipments 1,2

 

 

 

 

 

Total shipments

 

842

 

 

961

 

(12.4

)

Shipments per day

 

13.2

 

 

15.0

 

(12.0

)

 

 

 

 

 

 

Weight per shipment

 

801

 

 

760

 

5.4

 

 

 

 

 

 

 

Revenue per hundredweight 3

$

30.79

 

$

34.75

 

(11.4

)

Revenue per hundredweight, ex fuel 3

$

24.08

 

$

25.89

 

(7.0

)

 

 

 

 

 

 

Revenue per shipment 3

$

246.59

 

$

264.09

 

(6.6

)

Revenue per shipment, ex fuel 3

$

192.85

 

$

196.78

 

(2.0

)

 

 

 

 

 

 

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

 

June 30,

2023

 

Percent of

Revenue

 

June 30,

2022

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue

$

64,251

 

100.0

%

 

106,411

 

100.0

%

 

(42,160

)

 

(39.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

17,909

 

27.9

 

 

26,963

 

25.3

 

 

(9,054

)

 

(33.6

)

Salaries, wages and employee benefits

 

16,650

 

25.9

 

 

18,831

 

17.7

 

 

(2,181

)

 

(11.6

)

Operating leases

 

6,695

 

10.4

 

 

7,526

 

7.1

 

 

(831

)

 

(11.0

)

Depreciation and amortization

 

4,806

 

7.5

 

 

3,716

 

3.5

 

 

1,090

 

 

29.3

 

Insurance and claims

 

2,815

 

4.4

 

 

2,338

 

2.2

 

 

477

 

 

20.4

 

Fuel expense

 

2,691

 

4.2

 

 

5,084

 

4.8

 

 

(2,393

)

 

(47.1

)

Other operating expenses

 

8,373

 

13.0

 

 

26,704

 

25.1

 

 

(18,331

)

 

(68.6

)

Total operating expenses

 

59,939

 

93.3

 

 

91,162

 

85.7

 

 

(31,223

)

 

(34.3

)

Income from operations

 

4,312

 

6.7

%

 

15,249

 

14.3

%

 

(10,937

)

 

(71.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

Intermodal Operating Statistics

 

 

 

Three Months Ended

 

June 30,

2023

 

June 30,

2022

 

Percent Change

Drayage shipments

 

68,180

 

 

94,986

 

(28.2

)%

Drayage revenue per shipment

$

853

 

$

1,026

 

(16.9

)%

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

June 30,

2023

 

December 31,

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

18,281

 

$

45,822

Accounts receivable, net

 

175,968

 

 

221,028

Other current assets

 

21,538

 

 

37,465

Total current assets

 

215,787

 

 

304,315

 

 

 

 

Property and equipment, net

 

260,663

 

 

249,080

Operating lease right-of-use assets

 

144,847

 

 

141,865

Goodwill

 

356,763

 

 

306,184

Other acquired intangibles, net

 

151,218

 

 

154,801

Other assets

 

55,295

 

 

51,831

Total assets

$

1,184,573

 

$

1,208,076

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

37,085

 

$

54,601

Accrued expenses

 

53,265

 

 

54,291

Other current liabilities

 

12,112

 

 

3,956

Current portion of debt and finance lease obligations

 

13,963

 

 

9,444

Current portion of operating lease liabilities

 

52,801

 

 

47,106

Total current liabilities

 

169,226

 

 

169,398

 

 

 

 

Finance lease obligations, less current portion

 

23,461

 

 

15,844

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

 

119,766

 

 

106,588

Operating lease liabilities, less current portion

 

96,799

 

 

98,865

Other long-term liabilities

 

48,437

 

 

59,044

Deferred income taxes

 

53,275

 

 

51,093

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Preferred stock

 

 

 

Common stock

 

258

 

 

265

Additional paid-in capital

 

277,593

 

 

270,855

Retained earnings

 

395,758

 

 

436,124

Total shareholders’ equity

 

673,609

 

 

707,244

Total liabilities and shareholders’ equity

$

1,184,573

 

$

1,208,076

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three Months Ended

 

June 30,

2023

 

June 30,

2022

Operating activities:

 

 

 

Net income from operations

$

19,951

 

 

$

55,430

 

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

 

 

 

Depreciation and amortization

 

14,513

 

 

 

11,595

 

Share-based compensation expense

 

3,160

 

 

 

3,306

 

Provision for revenue adjustments

 

3,372

 

 

 

1,630

 

Deferred income tax expense

 

325

 

 

 

319

 

Other

 

(132

)

 

 

1,251

 

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

 

 

 

Accounts receivable

 

21,630

 

 

 

(6,473

)

Other receivables

 

 

 

 

3,484

 

Other current and noncurrent assets

 

(299

)

 

 

(9,900

)

Accounts payable and accrued expenses

 

1,053

 

 

 

(10,308

)

Net cash provided by operating activities

 

63,573

 

 

 

50,334

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

1,356

 

 

 

256

 

Purchases of property and equipment

 

(10,786

)

 

 

(8,765

)

Purchases of a business, net of cash acquired

 

(136

)

 

 

(40,433

)

Net cash used in investing activities

 

(9,566

)

 

 

(48,942

)

 

 

 

 

Financing activities:

 

 

 

Repayments of finance lease obligations

 

(1,869

)

 

 

(1,513

)

Payments on credit facility

 

(30,750

)

 

 

(7,875

)

Payment of earn-out liability

 

 

 

 

(91

)

Payments of dividends to shareholders

 

(6,255

)

 

 

(6,492

)

Repurchases and retirement of common stock

 

(29,301

)

 

 

 

Proceeds from common stock issued under employee stock purchase plan

 

421

 

 

 

374

 

Payment of minimum tax withholdings on share-based awards

 

 

 

 

(39

)

Net cash used in financing activities

 

(67,754

)

 

 

(15,636

)

 

 

 

 

Net decrease in cash and cash equivalents

 

(13,747

)

 

 

(14,244

)

 

 

 

 

Cash and cash equivalents at beginning of period

 

32,028

 

 

 

61,630

 

Cash and cash equivalents at end of period

$

18,281

 

 

$

47,386

 

 

 

 

 

 

 

 

 

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Six Months Ended

 

June 30,

2023

 

June 30,

2022

Operating activities:

 

 

 

Net income from operations

$

56,319

 

 

$

98,116

 

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

 

 

 

Depreciation and amortization

 

28,148

 

 

 

22,725

 

Change in fair value of earn-out liability

 

 

 

 

(294

)

Share-based compensation expense

 

6,309

 

 

 

6,067

 

Provision for revenue adjustments

 

5,529

 

 

 

2,934

 

Deferred income tax expense

 

2,182

 

 

 

1,962

 

Other

 

(432

)

 

 

1,383

 

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

 

 

 

Accounts receivable

 

38,299

 

 

 

(36,751

)

Other receivables

 

 

 

 

7,093

 

Other current and noncurrent assets

 

11,123

 

 

 

3,918

 

Accounts payable and accrued expenses

 

(17,911

)

 

 

5,667

 

Net cash provided by operating activities

 

129,566

 

 

 

112,820

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

3,171

 

 

 

767

 

Purchases of property and equipment

 

(17,575

)

 

 

(18,673

)

Purchase of a business, net of cash acquired

 

(56,703

)

 

 

(40,433

)

Net cash used in investing activities

 

(71,107

)

 

 

(58,339

)

 

 

 

 

Financing activities:

 

 

 

Repayments of finance lease obligations

 

(3,987

)

 

 

(2,583

)

Proceeds from credit facility

 

45,000

 

 

 

 

Payments on credit facility

 

(30,750

)

 

 

(8,250

)

Payment of earn-out liability

 

 

 

 

(91

)

Proceeds from issuance of common stock upon stock option exercises

 

 

 

 

206

 

Payments of dividends to shareholders

 

(12,600

)

 

 

(12,994

)

Repurchases and retirement of common stock

 

(79,792

)

 

 

(17,780

)

Proceeds from common stock issued under employee stock purchase plan

 

421

 

 

 

374

 

Payment of minimum tax withholdings on share-based awards

 

(4,292

)

 

 

(3,293

)

Net cash used in financing activities

 

(86,000

)

 

 

(44,411

)

 

 

 

 

Net (decrease) increase in cash and cash equivalents

 

(27,541

)

 

 

10,070

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

45,822

 

 

 

37,316

 

Cash and cash equivalents at end of period

$

18,281

 

 

$

47,386

 

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 six months ended June 30, 2023 and 2022, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), free cash flow, adjusted income from operations, adjusted net income, and adjusted net income per diluted share.

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.

Due to the forward-looking nature of the third quarter 2023 guidance for adjusted net income per diluted share, the Company is unable to reconcile this non-GAAP measure to the most directly comparable GAAP measure because the comparable GAAP measure is not reasonably accessible or reliable due to the inherent difficulty in forecasting and quantifying measures that would be required for such reconciliation.

The following is a reconciliation of net income to EBITDA for the three and six months ended June 30, 2023 and 2022 (in thousands):

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

Net income

 

$

19,951

 

$

55,430

 

$

56,319

 

$

98,116

Interest expense

 

 

2,585

 

 

1,193

 

 

4,940

 

 

1,977

Income tax expense

 

 

7,675

 

 

18,922

 

 

19,461

 

 

32,803

Depreciation and amortization

 

 

14,513

 

 

11,595

 

 

28,148

 

 

22,725

EBITDA

 

$

44,724

 

$

87,140

 

$

108,868

 

$

155,621

 

 

 

 

 

 

 

 

 

The following is a reconciliation of net cash provided by operating activities to free cash flow for the three and six months ended June 30, 2023 and 2022 (in thousands):

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30, 2023

 

June 30, 2022

 

June 30, 2023

 

June 30, 2022

Net cash provided by operating activities

 

$

63,573

 

 

$

50,334

 

 

$

129,566

 

 

$

112,820

 

Proceeds from sale of property and equipment

 

 

1,356

 

 

 

256

 

 

 

3,171

 

 

 

767

 

Purchases of property and equipment

 

 

(10,786

)

 

 

(8,765

)

 

 

(17,575

)

 

 

(18,673

)

Free cash flow

 

$

54,143

 

 

$

41,825

 

 

$

115,162

 

 

$

94,914

 

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 six months ended June 30, 2023 and 2022 (in thousands, except net income per diluted share):

 

 

Three Months Ended June 30, 2023

 

Three Months Ended June 30, 2022

 

 

Income From

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net

Income

 

Net Income

Per Diluted

Share

As Reported

 

$

30,211

 

$

19,951

 

$

0.76

 

$

75,545

 

 

$

55,430

 

 

$

2.04

 

Non-recurring strategic initiatives

 

 

5,500

 

 

3,972

 

 

0.15

 

 

 

 

 

 

 

 

 

As Adjusted

 

$

35,711

 

$

23,923

 

$

0.91

 

$

75,545

 

 

$

55,430

 

 

$

2.04

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 $1,528.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2023

 

Six Months Ended June 30, 2022

 

 

Income From

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net

Income2

 

Net Income

Per Diluted

Share2

As Reported

 

$

80,720

 

$

56,319

 

$

2.13

 

$

132,896

 

 

$

98,116

 

 

$

3.61

 

Non-recurring strategic initiatives

 

 

5,500

 

 

3,972

 

 

0.15

 

 

 

 

 

 

 

 

 

Change in the fair value of the earn-out liability

 

 

 

 

 

 

 

 

(294

)

 

 

(220

)

 

 

(0.01

)

As Adjusted

 

$

86,220

 

$

60,291

 

$

2.28

 

$

132,602

 

 

$

97,896

 

 

$

3.60

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 $1,528.

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 effect of the above item is ($74).

The following information is provided to supplement this press release.

Actual

 

Three Months Ended

June 30, 2023

Net income

 

$

19,951

 

Income allocated to participating securities

 

 

(121

)

Numerator for diluted net income per share - net income

 

$

19,830

 

 

 

 

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

 

 

26,035

 

Diluted net income per share

 

$

0.76

 

 

 

 

Projected

 

Full year 2023

Projected tax rate

 

 

25.7

%

 

 

 

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

 

$

37,000

 

 

 

 

Projected

 

December 31, 2023

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

 

 

26,000

 

Note Regarding Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements included in this press release relate to expectations of the Company as the freight recession abates, expectations regarding the performance of the Company’s LTL services, expectations regarding the impact of the Company’s revenue growth strategies, collaboration with customers and planned network expansion, expectations regarding the Company's third quarter 2023 guidance, including with respect to revenue and net income per diluted share, the future declaration of dividends and, the quarterly and full year 2023 anticipated dividends per share.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the COVID-19 pandemic, our ability to manage our growth and ability to grow, in part, through acquisitions, while being able to successfully integrate such acquisitions, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022.

Any forward-looking statement made by us in this press release is based only on information currently available to us and speaks only as of the date on which it is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise.

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