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Forward Air Corporation Reports Fourth Quarter and Full Year 2023 Results

Less-than-Truckload Volume Trending Positive

Executing Comprehensive Efforts to Integrate Omni Logistics

Continued Strong Commitment to Delivering Exceptional Service to Customers

Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”, “our”, or “us”) today reported financial results for the three and twelve months ended December 31, 2023 as presented in the tables below on a continuing operations basis (Final Mile is being reported as a discontinued operation).

Michael Hance, Interim Chief Executive Officer said, “Execution of our revenue growth strategies in the fourth quarter led to positive volume trends and improved freight quality metrics. While the softer freight conditions persisted throughout the fourth quarter of 2023, we saw momentum in our less-than-truckload line of business with pounds per day growth of +6% over the same period in the prior year and improvement in our freight quality as our weight per shipment increased +11% over the same period in the prior year. A continuation of the challenging market conditions led to decreased customer demand for our intermodal and truckload brokerage services throughout the fourth quarter. The softer demand for our intermodal and truckload brokerage services, partially offset by the positive trends in the less-than-truckload services, resulted in a 16% decline in revenue over the prior year on a consolidated, continuing operations basis, within the guidance range of a decline of 9% to 19%. Adjusted net income per diluted share on a continuing operations basis was $0.81 for the fourth quarter, above the guidance range of $0.78 to $0.80.”

Mr. Hance continued, “On January 25, 2024, we closed on the acquisition of Omni Logistics, positioning the combined entity to be the premier provider of choice for mission-critical freight transportation to a larger customer base with an expanded footprint. As I have gotten to know our new teammates from Omni Logistics, it is clear to me that Forward and Omni share a common DNA focused on the delivery of excellent customer experience. I am excited about what is ahead for our combined company.

We are taking a thoughtful approach to the integration of the two entities aimed at driving measurable value to our customers, creating opportunities for employees and generating long-term value for shareholders. We began executing our comprehensive integration plan promptly after closing on the acquisition with the first meaningful operational cost synergy realized from folding the Omni Logistics linehaul into the Forward linehaul network. We look forward to keeping shareholders updated on our progress.”

Mr. Hance concluded, “While our customer base has expanded, we remain committed to enabling our freight forwarder customers to continue to grow with us. Volumes from that channel remain strong. Our unwavering pledge is to provide a less-than-truckload service that is the best in the industry for damage-free, intact, on-time shipments, making us the most compelling choice for customers with mission-critical freight needs. For the fourth quarter, we are pleased to share our on-time service performance was 98% and our cargo claims ratio was 0.09%. I would like to thank our employees and independent contractors for their remarkable efforts to consistently provide excellent service to our customers.”

Rebecca J. Garbrick, Chief Financial Officer, said, “In the past we provided revenue and net income per diluted share guidance, with updates as deemed necessary. However, we have decided to temporarily discontinue our practice of giving earnings guidance due to the on-going integration of Omni Logistics, which we began executing on three weeks ago. Forward is dedicated to maintaining transparency and fostering open communications with its shareholders. We plan to regularly reevaluate our approach to guidance and to provide updates on key milestones and achievements.”

Continuing Operations

 

Three Months Ended

(in thousands, except per share data)

 

December 31, 2023

 

December 31, 2022

 

Change

 

Percent Change

Operating revenue

 

$

338,428

 

 

$

403,039

 

 

$

(64,611

)

 

(16.0

)%

Income from operations

 

$

3,000

 

 

$

56,330

 

 

$

(53,330

)

 

(94.7

)%

Operating margin

 

 

0.9

%

 

 

14.0

%

 

(1,310) bps

Net income

 

$

(14,721

)

 

$

39,009

 

 

$

(53,730

)

 

(137.7

)%

Net income per diluted share

 

$

(0.58

)

 

$

1.45

 

 

$

(2.03

)

 

(140.0

)%

Cash provided by operating activities

 

$

57,092

 

 

$

57,445

 

 

$

(353

)

 

(0.6

)%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

32,619

 

 

$

58,364

 

 

$

(25,745

)

 

(44.1

)%

Adjusted net income

 

$

20,927

 

 

$

40,469

 

 

$

(19,542

)

 

(48.3

)%

Adjusted net income per diluted share

 

$

0.81

 

 

$

1.51

 

 

$

(0.7

)

 

(46.4

)%

Adjusted EBITDA

 

$

50,198

 

 

$

69,494

 

 

$

(19,296

)

 

(27.8

)%

Free cash flow

 

$

48,913

 

 

$

43,476

 

 

$

5,437

 

 

12.5

%

 

 

 

 

 

 

 

 

 

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, 2023

 

December 31, 2022

 

Change

 

Percent Change

Operating revenue

 

$

1,370,735

 

 

$

1,679,634

 

 

$

(308,899

)

 

(18.4

)%

Income from operations

 

$

88,210

 

 

$

247,591

 

 

$

(159,381

)

 

(64.4

)%

Operating margin

 

 

6.4

%

 

 

14.7

%

 

(830) bps

Net income

 

$

42,803

 

 

$

179,414

 

 

$

(136,611

)

 

(76.1

)%

Net income per diluted share

 

$

1.64

 

 

$

6.63

 

 

$

(4.99

)

 

(75.3

)%

Cash provided by operating activities

 

$

199,212

 

 

$

250,161

 

 

$

(50,949

)

 

(20.4

)%

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Measures: 1

 

 

 

 

 

 

 

 

Adjusted income from operations

 

$

145,700

 

 

$

249,331

 

 

$

(103,631

)

 

(41.6

)%

Adjusted net income

 

$

102,255

 

 

$

180,704

 

 

$

(78,449

)

 

(43.4

)%

Adjusted net income per diluted share

 

$

3.92

 

 

$

6.67

 

 

$

(2.75

)

 

(41.2

)%

Adjusted EBITDA

 

$

203,105

 

 

$

292,177

 

 

$

(89,072

)

 

(30.5

)%

Free cash flow

 

$

172,228

 

 

$

213,279

 

 

$

(41,051

)

 

(19.2

)%

 

 

 

 

 

 

 

 

 

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

The Board of Directors approved a strategy to divest the Final Mile business (“Final Mile”) and the sale of Final Mile was completed on December 20, 2023. Accordingly, the results of operations and cash flows for Final Mile have been presented as a discontinued operation and have been excluded from continuing operations in this release for all periods presented. In addition, Final Mile assets and liabilities were reflected as “held for sale” on the Condensed Consolidated Balance Sheets in the press release for the prior period.

In line with the Company’s prudent approach to capital allocation and the focus on reducing leverage, the Board of Directors has made the decision to suspend Forward’s quarterly dividend while the Company continues to execute on de-risking the capital structure. This change will begin with the first quarter of 2024 dividend that would have been paid in March. The Board of Directors and management will continue to monitor progress and will reevaluate the quarterly dividend as leverage targets are achieved.

Review of Financial Results

Forward Air will hold a conference call to discuss fourth quarter 2023 results on Thursday, February 29, 2024 at 9:00 a.m. ET. 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 (800) 579-2543, Conference ID: FWRDQ423.

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

About Forward Air Corporation

Forward Air is a leading asset-light provider of transportation services across the United States, 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 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. Forward also operates a full portfolio of multimodal solutions, both domestically and internationally, via Omni Logistics. Omni Logistics is a global provider of air, ocean and ground services for mission-critical freight. 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

 

Twelve Months Ended

 

December 31,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

Operating revenue:

 

 

 

 

 

 

 

Expedited Freight

$

279,070

 

 

$

294,646

 

 

$

1,096,958

 

 

$

1,260,121

 

Intermodal

 

59,440

 

 

 

108,446

 

 

 

274,043

 

 

 

419,718

 

Eliminations and other operations

 

(82

)

 

 

(53

)

 

 

(266

)

 

 

(205

)

Operating revenue

 

338,428

 

 

 

403,039

 

 

 

1,370,735

 

 

 

1,679,634

 

Operating expenses:

 

 

 

 

 

 

 

Purchased transportation

 

150,351

 

 

 

165,934

 

 

 

586,195

 

 

 

730,412

 

Salaries, wages and employee benefits

 

71,583

 

 

 

72,220

 

 

 

287,566

 

 

 

302,759

 

Operating leases

 

20,908

 

 

 

22,933

 

 

 

87,413

 

 

 

85,290

 

Depreciation and amortization

 

17,579

 

 

 

11,130

 

 

 

57,405

 

 

 

42,552

 

Insurance and claims

 

11,145

 

 

 

11,881

 

 

 

50,133

 

 

 

47,478

 

Fuel expense

 

5,271

 

 

 

6,557

 

 

 

22,004

 

 

 

26,956

 

Other operating expenses

 

58,591

 

 

 

56,054

 

 

 

191,809

 

 

 

196,596

 

Total operating expenses

 

335,428

 

 

 

346,709

 

 

 

1,282,525

 

 

 

1,432,043

 

Income (loss) from continuing operations

 

 

 

 

 

 

 

Expedited Freight

 

26,745

 

 

 

38,792

 

 

 

116,040

 

 

 

192,583

 

Intermodal

 

5,068

 

 

 

13,869

 

 

 

25,327

 

 

 

56,874

 

Other operations

 

(28,813

)

 

 

3,669

 

 

 

(53,157

)

 

 

(1,866

)

Income from continuing operations

 

3,000

 

 

 

56,330

 

 

 

88,210

 

 

 

247,591

 

Other expense:

 

 

 

 

 

 

 

Interest expense

 

(23,976

)

 

 

(1,617

)

 

 

(31,571

)

 

 

(5,138

)

Other, net

 

 

 

 

 

 

 

 

 

 

 

Total other expense

 

(23,976

)

 

 

(1,617

)

 

 

(31,571

)

 

 

(5,138

)

(Loss) Income before income taxes

 

(20,976

)

 

 

54,713

 

 

 

56,639

 

 

 

242,453

 

Income tax expense

 

(6,255

)

 

 

15,704

 

 

 

13,836

 

 

 

63,039

 

Net (loss) income from continuing operations

 

(14,721

)

 

 

39,009

 

 

 

42,803

 

 

 

179,414

 

Income from discontinued operation, net of tax

 

116,465

 

 

 

3,933

 

 

 

124,548

 

 

 

13,777

 

Net income and comprehensive income

$

101,744

 

 

$

42,942

 

 

$

167,351

 

 

$

193,191

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

Basic net (loss) income per share:

 

 

 

 

 

 

 

Continuing operations

$

(0.58

)

 

$

1.46

 

 

$

1.64

 

 

$

6.66

 

Discontinued operation

 

4.51

 

 

 

0.15

 

 

 

4.78

 

 

 

0.51

 

Net income per basic share1

$

3.94

 

 

$

1.61

 

 

$

6.42

 

 

$

7.17

 

Diluted net (loss) income per share:

 

 

 

 

 

 

 

Continuing operations

$

(0.58

)

 

$

1.45

 

 

$

1.64

 

 

$

6.63

 

Discontinued operation

 

4.51

 

 

 

0.15

 

 

 

4.77

 

 

 

0.51

 

Net income per diluted share1

$

3.93

 

 

$

1.60

 

 

$

6.40

 

 

$

7.14

 

 

 

 

 

 

 

 

 

Dividends per share:

$

0.24

 

 

$

0.24

 

 

$

0.96

 

 

$

0.96

 

 

1 Rounding may impact summation of amounts.

Expedited Freight Segment Information

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31,

2023

 

Percent of

Revenue

 

December 31,

2022

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue:

 

 

 

 

 

 

 

 

 

 

 

Network 1

$

217,279

 

77.9

%

 

$

221,763

 

75.3

%

 

$

(4,484

)

 

(2.0

)%

Truckload

 

38,538

 

 

13.8

 

 

 

50,320

 

 

17.1

 

 

 

(11,782

)

 

(23.4

)

Other

 

23,253

 

 

8.3

 

 

 

22,563

 

 

7.7

 

 

 

690

 

 

3.1

 

Total operating revenue

 

279,070

 

 

100.0

 

 

 

294,646

 

 

100.0

 

 

 

(15,576

)

 

(5.3

)

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

132,359

 

 

47.4

 

 

 

140,772

 

 

47.8

 

 

 

(8,413

)

 

(6.0

)

Salaries, wages and employee benefits

 

56,291

 

 

20.2

 

 

 

57,272

 

 

19.4

 

 

 

(981

)

 

(1.7

)

Operating leases

 

15,396

 

 

5.5

 

 

 

14,596

 

 

5.0

 

 

 

800

 

 

5.5

 

Depreciation and amortization

 

12,328

 

 

4.4

 

 

 

7,192

 

 

2.4

 

 

 

5,136

 

 

71.4

 

Insurance and claims

 

9,438

 

 

3.4

 

 

 

9,326

 

 

3.2

 

 

 

112

 

 

1.2

 

Fuel expense

 

2,906

 

 

1.0

 

 

 

2,762

 

 

0.9

 

 

 

144

 

 

5.2

 

Other operating expenses

 

23,607

 

 

8.5

 

 

 

23,934

 

 

8.1

 

 

 

(327

)

 

(1.4

)

Total operating expenses

 

252,325

 

 

90.4

 

 

 

255,854

 

 

86.8

 

 

 

(3,529

)

 

(1.4

)

Income from operations

$

26,745

 

 

9.6

%

 

$

38,792

 

 

13.2

%

 

$

(12,047

)

 

(31.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

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

Expedited Freight Operating Statistics

 

 

 

 

 

 

 

Three Months Ended

 

December 31,

2023

 

December 31,

2022

 

Percent Change

 

 

 

 

 

 

Business days

 

63

 

 

63

 

%

 

 

 

 

 

 

Tonnage 1,2

 

 

 

 

 

Total pounds

 

689,621

 

 

648,012

 

6.4

 

Pounds per day

 

10,946

 

 

10,286

 

6.4

 

 

 

 

 

 

 

Shipments 1,2

 

 

 

 

 

Total shipments

 

846

 

 

885

 

(4.4

)

Shipments per day

 

13.4

 

 

14.0

 

(4.3

)

 

 

 

 

 

 

Weight per shipment

 

815

 

 

732

 

11.3

 

 

 

 

 

 

 

Revenue per hundredweight 3

$

31.52

 

$

34.68

 

(9.1

)

Revenue per hundredweight, ex fuel 3

$

23.99

 

$

26.07

 

(8.0

)

 

 

 

 

 

 

Revenue per shipment 3

$

256.90

 

$

253.83

 

1.2

 

Revenue per shipment, ex fuel 3

$

195.52

 

$

190.84

 

2.5

 

 

 

 

 

 

 

1 In thousands.

2 Excludes accessorial and Truckload products.

3 Includes intercompany revenue between the Network and Truckload revenue streams.

Intermodal Segment Information

(In thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

December 31,

2023

 

Percent of

Revenue

 

December 31,

2022

 

Percent of

Revenue

 

Change

 

Percent

Change

Operating revenue

$

59,440

 

100.0

%

 

$

108,446

 

100.0

%

 

$

(49,006

)

 

(45.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

Purchased transportation

 

18,073

 

 

30.4

 

 

 

25,215

 

 

23.3

 

 

 

(7,142

)

 

(28.3

)

Salaries, wages and employee benefits

 

15,243

 

 

25.6

 

 

 

18,695

 

 

17.2

 

 

 

(3,452

)

 

(18.5

)

Operating leases

 

5,512

 

 

9.3

 

 

 

8,337

 

 

7.7

 

 

 

(2,825

)

 

(33.9

)

Depreciation and amortization

 

5,251

 

 

8.8

 

 

 

3,938

 

 

3.6

 

 

 

1,313

 

 

33.3

 

Insurance and claims

 

2,398

 

 

4.0

 

 

 

2,448

 

 

2.3

 

 

 

(50

)

 

(2.0

)

Fuel expense

 

2,365

 

 

4.0

 

 

 

3,795

 

 

3.5

 

 

 

(1,430

)

 

(37.7

)

Other operating expenses

 

5,530

 

 

9.3

 

 

 

32,149

 

 

29.6

 

 

 

(26,619

)

 

(82.8

)

Total operating expenses

 

54,372

 

 

91.5

 

 

 

94,577

 

 

87.2

 

 

 

(40,205

)

 

(42.5

)

Income from operations

$

5,068

 

 

8.5

%

 

$

13,869

 

 

12.8

%

 

$

(8,801

)

 

(63.5

)%

Intermodal Operating Statistics

 

 

 

Three Months Ended

 

December 31,

2023

 

December 31,

2022

 

Percent

Change

 

 

 

 

 

 

Drayage shipments

 

65,776

 

 

74,532

 

(11.7

)%

Drayage revenue per shipment

$

821

 

$

1,369

 

(40.0

)%

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

 

December 31,

2023

 

December 31,

2022

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

121,969

 

$

45,822

Restricted cash equivalents

 

39,604

 

 

Accounts receivable, net

 

153,267

 

 

188,229

Other receivables, net

 

5,408

 

 

Other current assets

 

26,780

 

 

35,322

Current assets held for sale

 

 

 

34,942

Total current assets

 

347,028

 

 

304,315

 

 

 

 

Noncurrent restricted cash equivalents

 

1,790,500

 

 

Property and equipment, net

 

258,096

 

 

246,329

Operating lease right-of-use assets

 

111,552

 

 

131,097

Goodwill

 

278,706

 

 

257,987

Other acquired intangibles, net

 

134,789

 

 

115,582

Other assets

 

58,862

 

 

51,739

Noncurrent assets held for sale

 

 

 

101,027

Total assets

$

2,979,533

 

$

1,208,076

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

45,430

 

$

50,094

Accrued expenses

 

62,948

 

 

49,918

Other current liabilities

 

71,727

 

 

3,944

Current portion of debt and finance lease obligations

 

12,645

 

 

9,315

Current portion of operating lease liabilities

 

44,344

 

 

42,266

Current liabilities held for sale

 

 

 

13,861

Total current liabilities

 

237,094

 

 

169,398

 

 

 

 

Finance lease obligations, less current portion

 

26,736

 

 

15,711

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

 

 

 

106,588

Long-term debt held in escrow

 

1,790,500

 

 

Operating lease liabilities, less current portion

 

71,598

 

 

92,903

Other long-term liabilities

 

47,144

 

 

59,044

Deferred income taxes

 

42,200

 

 

51,093

Noncurrent liabilities held for sale

 

 

 

6,095

 

 

 

 

Shareholders’ equity:

 

 

 

Preferred stock

 

 

 

Common stock

 

257

 

 

265

Additional paid-in capital

 

283,684

 

 

270,855

Retained earnings

 

480,320

 

 

436,124

Total shareholders’ equity

 

764,261

 

 

707,244

Total liabilities and shareholders’ equity

$

2,979,533

 

$

1,208,076

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Three Months Ended

 

December 31,

2023

 

December 31,

2022

Operating activities:

 

 

 

Net (loss) income from continuing operations

$

(14,721

)

 

$

39,009

 

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

 

 

 

Depreciation and amortization

 

17,579

 

 

 

11,130

 

Change in fair value of earn-out liability

 

 

 

 

 

Share-based compensation expense

 

2,938

 

 

 

2,417

 

Provision for revenue adjustments

 

1,065

 

 

 

1,888

 

Deferred income tax expense

 

(11,092

)

 

 

5,724

 

Other

 

(135

)

 

 

(1,019

)

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

 

 

 

Accounts receivable

 

9,588

 

 

 

26,077

 

Other receivables

 

(5,408

)

 

 

 

Other current and noncurrent assets

 

27,061

 

 

 

(19,700

)

Accounts payable, accrued expenses and other long-term liabilities

 

30,217

 

 

 

(8,081

)

Net cash provided by operating activities of continuing operations

 

57,092

 

 

 

57,445

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

466

 

 

 

949

 

Purchases of property and equipment

 

(8,645

)

 

 

(14,918

)

Purchase of businesses, net of cash acquired

 

 

 

 

(25,672

)

Net cash used in investing activities of continuing operations

 

(8,179

)

 

 

(39,641

)

 

 

 

 

Financing activities:

 

 

 

Proceeds from credit facility

 

25,000

 

 

 

 

Payments on credit facility

 

(147,375

)

 

 

(375

)

Proceeds from long-term debt held in escrow

 

1,790,500

 

 

 

 

Repayments of finance lease obligations

 

(2,660

)

 

 

(1,876

)

Payment of debt issuance costs

 

 

 

 

 

Proceeds from issuance of common stock upon stock option exercises

 

 

 

 

 

Payments of dividends to shareholders

 

(6,197

)

 

 

(6,404

)

Repurchases and retirement of common stock

 

 

 

 

(14,997

)

Proceeds from common stock issued under employee stock purchase plan

 

379

 

 

 

409

 

Payment of minimum tax withholdings on share-based awards

 

(25

)

 

 

(37

)

Contributions from subsidiary held for sale

 

224,695

 

 

 

4,452

 

Net cash provided by (used in) financing activities of continuing operations

 

1,884,317

 

 

 

(18,828

)

Net increase (decrease) in cash of continuing operations

 

1,933,230

 

 

 

(1,024

)

 

 

 

 

Cash from discontinued operation:

 

 

 

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

 

(35,135

)

 

 

4,831

 

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

 

259,863

 

 

 

(410

)

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

 

(224,728

)

 

 

(4,421

)

Net increase (decrease) in cash and cash equivalents

 

1,933,230

 

 

 

(1,024

)

Cash, cash equivalents, and restricted cash at beginning of period of continuing operations

 

18,843

 

 

 

46,846

 

Cash at beginning of period of discontinued operations

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

1,933,230

 

 

 

(1,024

)

Less: cash at end of period of discontinued operation

 

 

 

 

 

Cash, cash equivalents, and restricted cash at end of period of continuing operations

$

1,952,073

 

 

$

45,822

 

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

 

Year Ended

 

December 31, 2023

 

December 31, 2022

Operating activities:

 

 

 

Net income from continuing operations

$

42,803

 

 

$

179,414

 

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

 

 

 

Depreciation and amortization

 

57,405

 

 

 

42,552

 

Change in fair value of earn-out liability

 

 

 

 

(294

)

Share-based compensation expense

 

11,508

 

 

 

10,670

 

Provision for revenue adjustments

 

5,091

 

 

 

6,426

 

Deferred income tax expense

 

(8,893

)

 

 

7,686

 

Other

 

(1,180

)

 

 

(1,279

)

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

 

 

 

Accounts receivable

 

30,555

 

 

 

(2,588

)

Other receivables

 

(5,408

)

 

 

8,097

 

Other current and noncurrent assets

 

30,670

 

 

 

(13,289

)

Accounts payable, accrued expenses and other long-term liabilities

 

36,661

 

 

 

12,766

 

Net cash provided by operating activities of continuing operations

 

199,212

 

 

 

250,161

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale of property and equipment

 

3,741

 

 

 

2,372

 

Purchases of property and equipment

 

(30,725

)

 

 

(39,254

)

Purchase of businesses, net of cash acquired

 

(56,703

)

 

 

(66,105

)

Net cash used in investing activities of continuing operations

 

(83,687

)

 

 

(102,987

)

 

 

 

 

Financing activities:

 

 

 

Proceeds from credit facility

 

70,000

 

 

 

 

Payments on credit facility

 

(178,500

)

 

 

(49,000

)

Proceeds from long-term debt held in escrow

 

1,790,500

 

 

 

 

Repayments of finance lease obligations

 

(9,500

)

 

 

(6,108

)

Payment of debt issuance costs

 

 

 

 

 

Proceeds from issuance of common stock upon stock option exercises

 

 

 

 

206

 

Payment of earn-out liability

 

 

 

 

(91

)

Payments of dividends to shareholders

 

(24,995

)

 

 

(25,865

)

Repurchases and retirement of common stock

 

(93,811

)

 

 

(62,771

)

Proceeds from common stock issued under employee stock purchase plan

 

800

 

 

 

783

 

Payment of minimum tax withholdings on share-based awards

 

(4,340

)

 

 

(3,330

)

Contributions from subsidiary held for sale

 

240,572

 

 

 

7,508

 

Net cash provided by (used in) financing activities of continuing operations

 

1,790,726

 

 

 

(138,668

)

Net increase in cash and cash equivalents of continuing operations

 

1,906,251

 

 

 

8,506

 

 

 

 

 

Cash from discontinued operation:

 

 

 

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

 

(17,824

)

 

 

8,929

 

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

 

258,525

 

 

 

(1,475

)

Net cash used in financing activities of discontinued operation

 

(240,701

)

 

 

(7,454

)

Net increase in cash and cash equivalents

 

1,906,251

 

 

 

8,506

 

Cash, cash equivalents, and restricted cash at beginning of period of continuing operations

 

45,822

 

 

 

37,316

 

Cash at beginning of period of discontinued operations

 

 

 

 

 

Net increase (decrease) in cash, cash equivalents, and restricted cash

 

1,906,251

 

 

 

8,506

 

Less: cash at end of period of discontinued operations

 

 

 

 

 

Cash, cash equivalents, and restricted cash at end of period of continuing operations

$

1,952,073

 

 

$

45,822

 

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, 2023 and 2022, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA, free cash flow, adjusted income from continuing operations, adjusted net income, and adjusted net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.

The Company believes that EBITDA improves comparability from period to period by removing the impact of its capital structure (interest and financing expenses), asset base (depreciation and amortization) and tax impacts. The Company believes that free cash flow is an important measure of its ability to repay maturing debt or fund other uses of capital that it believes will enhance shareholder value. The Company believes providing adjusted EBITDA, adjusted income from operations, adjusted net income and adjusted net income per diluted share allows investors to compare Company performance consistently over various periods without regard to the impact of unusual, nonrecurring or nonoperational items.

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

The following is a reconciliation of net income to adjusted EBITDA for the three and twelve months ended December 31, 2023 and 2022 (in thousands):

 

 

Three Months Ended

 

Twelve Months Ended

Continuing Operations

 

December 31,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

Net income

 

$

(14,721

)

 

$

39,009

 

$

42,803

 

$

179,414

Interest expense

 

 

23,976

 

 

 

1,617

 

 

 

31,571

 

 

 

5,138

 

Income tax expense

 

 

(6,255

)

 

 

15,704

 

 

 

13,836

 

 

 

63,039

 

Depreciation and amortization

 

 

17,579

 

 

 

11,130

 

 

 

57,405

 

 

 

42,552

 

Reported EBITDA

 

 

20,579

 

 

 

67,460

 

 

 

145,615

 

 

 

290,143

 

Vehicle liability reserve

 

 

 

 

 

1,500

 

 

 

 

 

 

1,500

 

Due diligence, integration and transaction costs

 

 

29,619

 

 

 

534

 

 

 

57,490

 

 

 

534

 

Adjusted EBITDA

 

$

50,198

 

 

$

69,494

 

 

$

203,105

 

 

$

292,177

 

The following is a reconciliation of net cash provided by operating activities to free cash flow for the three and twelve months ended December 31, 2023 and 2022 (in thousands):

 

 

Three Months Ended

 

Twelve Months Ended

Continuing Operations

 

December 31,

2023

 

December 31,

2022

 

December 31,

2023

 

December 31,

2022

Net cash provided by operating activities

 

$

57,092

 

 

$

57,445

 

 

$

199,212

 

 

$

250,161

 

Proceeds from sale of property and equipment

 

 

466

 

 

 

949

 

 

 

3,741

 

 

 

2,372

 

Purchases of property and equipment

 

 

(8,645

)

 

 

(14,918

)

 

 

(30,725

)

 

 

(39,254

)

Free cash flow

 

$

48,913

 

 

$

43,476

 

 

$

172,228

 

 

$

213,279

 

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 twelve months ended December 31, 2023 and 2022 (in thousands, except net income per diluted share):

 

 

Three Months Ended December 31, 2023

 

Three Months Ended December 31, 2022

Continuing Operations

 

Income From

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net

Income2

 

Net Income

Per Diluted

Share2

As Reported

 

$

3,000

 

$

(14,721

)

 

$

(0.58

)

 

$

56,330

 

 

$

39,009

 

 

$

1.45

 

Due diligence, integration and transaction costs

 

 

29,619

 

 

 

20,786

 

 

 

0.81

 

 

 

534

 

 

 

383

 

 

 

0.01

 

Interest expense

 

 

 

 

 

14,862

 

 

 

0.58

 

 

 

 

 

 

 

 

 

 

Vehicle liability reserve

 

 

 

 

 

 

 

 

 

 

 

1,500

 

 

 

1,077

 

 

 

0.04

 

As Adjusted

 

$

32,619

 

 

$

20,927

 

 

$

0.81

 

 

$

58,364

 

 

$

40,469

 

 

$

1.51

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 $15,149.

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 $574.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended December 31, 2023

 

Twelve Months Ended December 31, 2022

Continuing Operations

 

Income From

Operations

 

Net

Income1

 

Net Income

Per Diluted

Share1

 

Income From

Operations

 

Net

Income2

 

Net Income

Per Diluted

Share2

As Reported

 

$

88,210

 

 

$

42,803

 

 

$

1.64

 

 

$

247,591

 

 

$

179,414

 

 

$

6.63

 

Due diligence, integration and transaction costs

 

 

57,490

 

 

 

43,447

 

 

 

1.67

 

 

 

534

 

 

 

396

 

 

 

0.01

 

Interest expense

 

 

 

 

 

16,005

 

 

 

0.62

 

 

 

 

 

 

 

 

 

 

Vehicle liability reserve

 

 

 

 

 

 

 

 

 

 

 

1,500

 

 

 

1,112

 

 

 

0.04

 

Change in the fair value of the earn-out liability

 

 

 

 

 

 

 

 

 

 

 

(294

)

 

 

(218

)

 

 

(0.01

)

As Adjusted

 

$

145,700

 

 

$

102,255

 

 

$

3.92

 

 

$

249,331

 

 

$

180,704

 

 

$

6.67

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 $19,217.

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 $451.

 

Note Regarding Forward-Looking Statements

This press release contains “orward-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: “nticipate,”“ntend,”“lan,”“oal,”“eek,”“elieve,”“roject,”“stimate,”“xpect,”“trategy,”“uture,”“ikely,”“ay,”“hould,”“ill”and similar references to future periods. Forward-looking statements included in this press release relate to expectations regarding customer demand for the Company’ services as well as the performance of the Company’ LTL services; the Company's ongoing commitment to provide excellent service to its customers; ability to achieve the intended benefits of the acquisition of Omni Logistics, including any revenue and cost synergies; expectations regarding the Company's ability to execute on its plan to integrate Omni Logistics in order to generate long-term value for shareholders; expectations regarding the Company's ability to grow its customer base, including the expected volumes from freight forwarder customers; the future expected use of earnings guidance; expectations regarding the Company's revenue growth strategies, including with respect to capital allocation and leverage; and the future declaration of dividends.

Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not rely on any of these forward-looking statements. The following is a list of factors, among others, that could cause actual results to differ materially from those contemplated by the forward-looking statements: economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the Company's ability to achieve the expected strategic, financial and other benefits of the acquisition of Omni Logistics, including the realization of expected synergies and the achievement of deleveraging targets within the expected timeframes or at all, the risk that the businesses will not be integrated successfully or that integration may be more difficult, time-consuming or costly than expected, the risk that operating costs, customer loss, management and employee retention and business disruption (including, without limitation, difficulties in maintaining relationships with employees, customers, clients or suppliers) as a result of the acquisition of Omni Logistics may be greater than expected, continued weakening of the freight environment, future debt and financing levels, our ability to deleverage, including, without limitation, through capital allocation or divestitures of noncore businesses, 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 customerstransportation 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 workerscompensation, 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, and as may be identified in our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

We caution readers that any forward-looking statement made by us in this press release is based only on information currently available to us and they should not place undue reliance on these forward-looking statements, which reflect management's opinion 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 unless required by law.

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