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

GREENEVILLE, Tenn.–(BUSINESS WIRE)–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).

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.

Contacts

Forward Air Corporation

Brandon Hammer, 423-636-7173

[email protected]

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Forward Air Corporation Reports Fourth Quarter 2021 Results

ByVitaliy Dadalyan