Business Wire | Oct 27, 2021 06:30PM EDT

Forward Air Corporation Reports Third Quarter 2021 Results

Oct. 27, 2021

GREENEVILLE, Tenn.--(BUSINESS WIRE)--Oct. 27, 2021--Forward Air Corporation (NASDAQ:FWRD) (the "Company", "we", "our", or "us") today reported financial results for the three and nine months ended September 30, 2021 as presented in the tables below on a continuing operations basis (Pool Distribution was previously reported as a discontinued operation).

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

Tom Schmitt, Chairman, President and CEO, commenting on third quarter results from continuing operations said, "During the months of July and August, we completed a process of cleansing our inefficient freight and replacing with higher quality freight. Our surgical collaboration with customers on selecting, handling, and pricing freight led to the highest ever monthly net income for the month of September with our less-than-truckload line of business reporting record levels in weight per shipment and revenue per shipment. Business momentum combined with the completion of our cleanse process culminated in record quarterly reported income from operations of $42.5 million and adjusted income from operations of $43.4 million. Our record reported net income per diluted share of $1.12 and adjusted net income per diluted share of $1.14 exceeded the high end of our $1.03 to $1.07 guidance range. Our third quarter revenue growth of 26% was slightly below the low end of our guidance range of 28% to 32%."

Mr. Schmitt continued, "I am very encouraged by the results in the month of September, in particular the strong operating margin expansion in the Expedited Freight segment. We expect volumes in the fourth quarter 2021 to exceed volumes for the same period of 2020. Through October, our volumes were strong year-over-year. Our guidance reflects a record full year 2021 revenue and net income per diluted share. We fully expect our momentum to continue into 2022 and 2023. As we continue to execute upon our strategic priorities, our full year 2023 targets include revenue of $2.0 billion to $2.6 billion and net income per diluted share of $6.30 to $6.70."

In closing, Mr. Schmitt said, "In the third quarter, we achieved the highest income from operations and net income per diluted share for a quarter in the history of the Company. I would like to thank all of our teammates and independent contractors for their hard work in helping to achieve this important milestone."

Regarding the Company's fourth quarter 2021 continuing operations guidance, Rebecca J. Garbrick, CFO, said, "We expect our year-over-year revenue growth will be 23% to 27% and net income per diluted share to be between $1.25 to $1.29, compared to reported net income per diluted share of $0.55 and adjusted net income per diluted share of $0.62 in the fourth quarter of 2020. Our full year 2021 net income per diluted share is expected to be between $4.08 to $4.12 and adjusted net income per diluted share to be between $4.30 to $4.34, compared to reported net income per diluted share of $1.89 and adjusted net income per diluted share of $1.99 in 2020."

Continuing Operations Three Months Ended

(in thousands, except per September September Change Percentshare data) 30, 2021 30, 2020 Change

Operating revenue $ 419,625 $ 331,997 $ 87,628 26.4 %

Income from operations $ 42,476 $ 23,510 $ 18,966 80.7 %

Operating margin 10.1 % 7.1 % 300 bps

Net income $ 30,503 $ 16,992 $ 13,511 79.5 %

Net income per diluted $ 1.12 $ 0.61 $ 0.51 83.6 %share

Cash provided by operating $ 42,581 $ 20,564 $ 22,017 107.1 %activities



Non-GAAP Financial Measures: ^1

Adjusted income from $ 43,445 $ 25,810 $ 17,635 68.3 %operations

Adjusted net income $ 31,215 $ 18,752 $ 12,463 66.5 %

Adjusted net income per $ 1.14 $ 0.67 $ 0.47 70.1 %diluted share

EBITDA $ 51,892 $ 32,682 $ 19,210 58.8 %

Free cash flow $ 29,166 $ 18,766 $ 10,400 55.4 %



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

Continuing Operations

Nine Months Ended

(in thousands, except per share data)

September 30, 2021

September 30, 2020

Change

Percent Change

Operating revenue

$

1,202,498

$

919,232

$

283,266

30.8

%

Income from operations

$

107,324

$

53,198

$

54,126

101.7

%

Operating margin

8.9

%

5.8

%

310 bps

Net income

$

77,894

$

37,634

$

40,260

107.0

%

Net income per diluted share

$

2.83

$

1.35

$

1.48

109.6

%

Cash provided by operating activities

$

82,242

$

80,493

$

1,749

2.2

%

Non-GAAP Financial Measures: 1

Adjusted income from operations

$

115,248

$

54,343

$

60,905

112.1

%

Adjusted net income

$

83,837

$

38,498

$

45,339

117.8

%

Adjusted net income per diluted share

$

3.05

$

1.38

$

1.67

121.0

%

EBITDA

$

135,391

$

81,117

$

54,274

66.9

%

Free cash flow

$

61,566

$

65,469

$

(3,903

)

(6.0

)%

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

On October 26, 2021, our Board of Directors declared a quarterly cash dividend of $0.21 per share of common stock. The dividend is payable to shareholders of record at the close of business on November 24, 2021 and is expected to be paid on December 9, 2021. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.84 for the full year 2021, payable in quarterly increments of $0.21 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.

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 third quarter 2021 results on Thursday, October 28, 2021 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) 226-8189, Access Code: 2220892.

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. For more information, visit our website at www.forwardaircorp.com.

Continuing Operations Nine Months Ended

(in thousands, except per September 30, September Change Percentshare data) 2021 30, 2020 Change

Operating revenue $ 1,202,498 $ 919,232 $ 283,266 30.8 %

Income from operations $ 107,324 $ 53,198 $ 54,126 101.7 %

Operating margin 8.9 % 5.8 % 310 bps

Net income $ 77,894 $ 37,634 $ 40,260 107.0 %

Net income per diluted $ 2.83 $ 1.35 $ 1.48 109.6 %share

Cash provided by $ 82,242 $ 80,493 $ 1,749 2.2 %operating activities



Non-GAAP Financial Measures: ^1

Adjusted income from $ 115,248 $ 54,343 $ 60,905 112.1 %operations

Adjusted net income $ 83,837 $ 38,498 $ 45,339 117.8 %

Adjusted net income per $ 3.05 $ 1.38 $ 1.67 121.0 %diluted share

EBITDA $ 135,391 $ 81,117 $ 54,274 66.9 %

Free cash flow $ 61,566 $ 65,469 $ (3,903 ) (6.0 ) %



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

On October 26, 2021, our Board of Directors declared a quarterly cash dividend of $0.21 per share of common stock. The dividend is payable to shareholders of record at the close of business on November 24, 2021 and is expected to be paid on December 9, 2021. This quarterly dividend is made pursuant to a cash dividend policy approved by the Board of Directors, which anticipates a total annual dividend of $0.84 for the full year 2021, payable in quarterly increments of $0.21 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.

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 third quarter 2021 results on Thursday, October 28, 2021 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) 226-8189, Access Code: 2220892.

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. 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 Nine Months Ended

September 30, September 30, September 30, September 30, 2021 2020 2021 2020

Operating revenue:

Expedited Freight $ 341,557 $ 283,514 $ 997,478 $ 772,801

Intermodal 78,173 48,948 205,820 147,836

Eliminations and (105 ) (465 ) (800 ) (1,405 ) other operations

Operating 419,625 331,997 1,202,498 919,232 revenues

Operating expenses:

Purchased 205,474 173,054 605,299 465,721 transportation

Salaries, wagesand employee 84,410 66,927 243,948 200,258 benefits

Operating leases 20,536 17,327 60,073 52,598

Depreciation and 9,416 9,172 28,067 27,919 amortization

Insurance and 9,984 8,671 30,616 26,437 claims

Fuel expense 4,457 2,715 12,218 9,247

Other operating 42,872 30,621 114,953 83,854 expenses

Total operating 377,149 308,487 1,095,174 866,034 expenses

Income (loss)from continuing operations:

Expedited Freight 34,636 23,461 93,854 50,394

Intermodal 8,712 4,837 21,607 12,963

Other Operations (872 ) (4,788 ) (8,137 ) (10,159 )

Income fromcontinuing 42,476 23,510 107,324 53,198 operations

Other expense:

Interest expense (973 ) (1,304 ) (3,461 ) (3,355 )

Total other (973 ) (1,304 ) (3,461 ) (3,355 ) expense

Income before 41,503 22,206 103,863 49,843 income taxes

Income tax 11,000 5,214 25,969 12,209 (benefit) expense

Net income fromcontinuing 30,503 16,992 77,894 37,634 operations

Loss fromdiscontinued (6,967 ) (345 ) (12,500 ) (9,458 ) operation, net oftax

Net income andcomprehensive $ 23,536 $ 16,647 $ 65,394 $ 28,176 income



Net income per share:

Basic net income (loss) per share

Continuing $ 1.12 $ 0.61 $ 2.84 $ 1.35 operations

Discontinued (0.26 ) (0.01 ) (0.46 ) (0.34 ) operation

Net income per $ 0.86 $ 0.60 $ 2.39 $ 1.01 basic share^1



Diluted netincome (loss) per share

Continuing $ 1.12 $ 0.61 $ 2.83 $ 1.35 operations

Discontinued (0.26 ) (0.01 ) (0.46 ) (0.34 ) operation

Net income per $ 0.86 $ 0.60 $ 2.37 $ 1.01 diluted share

Dividends per $ 0.21 $ 0.18 $ 0.63 $ 0.54 share



^1 Rounding mayimpact summation of amounts.

Expedited Freight Segment Information

(In thousands)

(Unaudited)

Three Months Ended

September 30,2021

Percent of Revenue

September 30,2020

Percent of Revenue

Change

Percent Change

Operating revenue:

Network 1

$

207,656

60.8

%

$

169,300

59.7

%

$

38,356

22.7

%

Truckload

53,651

15.7

49,836

17.6

3,815

7.7

Final Mile

71,355

20.9

56,994

20.1

14,361

25.2

Other

8,895

2.6

7,384

2.6

1,511

20.5

Total operating revenue

341,557

100.0

283,514

100.0

58,043

20.5

Operating expenses:

Purchased transportation

182,596

53.5

156,078

55.1

26,518

17.0

Salaries, wages and employee benefits

65,898

19.3

54,091

19.1

11,807

21.8

Operating leases

14,687

4.3

13,438

4.7

1,249

9.3

Depreciation and amortization

6,784

2.0

6,757

2.4

27

0.4

Insurance and claims

8,074

2.4

5,765

2.0

2,309

40.1

Fuel expense

2,225

0.7

1,544

0.5

681

44.1

Other operating expenses

26,657

7.8

22,380

7.9

4,277

19.1

Total operating expenses

306,921

89.9

260,053

91.7

46,868

18.0

Income from operations

$

34,636

10.1

%

$

23,461

8.3

%

$

11,175

47.6

%

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 Segment Information

(In thousands)

(Unaudited)



Three Months Ended

September Percent September Percent Percent 30, of 30, of Change Change 2021 Revenue 2020 Revenue

Operating revenue:

Network ^1 $ 207,656 60.8 % $ 169,300 59.7 % $ 38,356 22.7 %

Truckload 53,651 15.7 49,836 17.6 3,815 7.7

Final Mile 71,355 20.9 56,994 20.1 14,361 25.2

Other 8,895 2.6 7,384 2.6 1,511 20.5

Totaloperating 341,557 100.0 283,514 100.0 58,043 20.5 revenue



Operating expenses:

Purchased 182,596 53.5 156,078 55.1 26,518 17.0 transportation

Salaries,wages and 65,898 19.3 54,091 19.1 11,807 21.8 employeebenefits

Operating 14,687 4.3 13,438 4.7 1,249 9.3 leases

Depreciationand 6,784 2.0 6,757 2.4 27 0.4 amortization

Insurance and 8,074 2.4 5,765 2.0 2,309 40.1 claims

Fuel expense 2,225 0.7 1,544 0.5 681 44.1

Otheroperating 26,657 7.8 22,380 7.9 4,277 19.1 expenses

Totaloperating 306,921 89.9 260,053 91.7 46,868 18.0 expenses

Income from $ 34,636 10.1 % $ 23,461 8.3 % $ 11,175 47.6 %operations



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

Expedited Freight Operating Statistics

Three Months Ended

September 30,2021

September 30,2020

Percent Change

Business days

64

64

-

%

Tonnage 1,2

Total pounds

687,816

636,194

8.1

Pounds per day

10,747

9,941

8.1

Shipments 1,2

Total shipments

845

1,018

(17.0

)

Shipments per day

13.2

15.9

(17.0

)

Weight per shipment

814

625

30.2

Revenue per hundredweight 3

$

29.01

$

26.84

8.1

Revenue per hundredweight, ex fuel 3

$

24.73

$

23.41

5.6

Revenue per shipment 3

$

240.27

$

166.09

44.7

Revenue per shipment, ex fuel 3

$

205.42

$

144.66

42.0

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

46.7

%

51.3

%

(9.0

)

1 In thousands

2 Excludes accessorial, 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

Expedited Freight Operating Statistics



Three Months Ended

September September Percent 30, 30, Change 2021 2020



Business days 64 64 - %



Tonnage ^1,2

Total pounds 687,816 636,194 8.1

Pounds per day 10,747 9,941 8.1



Shipments ^1,2

Total shipments 845 1,018 (17.0 )

Shipments per day 13.2 15.9 (17.0 )



Weight per shipment 814 625 30.2



Revenue per hundredweight ^3 $ 29.01 $ 26.84 8.1

Revenue per hundredweight, ex fuel ^3 $ 24.73 $ 23.41 5.6



Revenue per shipment ^3 $ 240.27 $ 166.09 44.7

Revenue per shipment, ex fuel ^3 $ 205.42 $ 144.66 42.0



Network revenue from door-to-door shipments 46.7 % 51.3 % (9.0 ) as a percentage of network revenue ^3,4



^1 In thousands

^2 Excludes accessorial, Truckload and Final Mile products

^3 Includes intercompany revenue between the Network and Truckload revenuestreams

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

Intermodal Segment Information

(In thousands)

(Unaudited)

Three Months Ended

September 30,2021

Percent of Revenue

September 30,2020

Percent of Revenue

Change

Percent Change

Operating revenue

$

78,173

100.0

%

$

48,948

100.0

%

$

29,225

59.7

%

Operating expenses:

Purchased transportation

22,984

29.4

17,270

35.3

5,714

33.1

Salaries, wages and employee benefits

17,596

22.5

11,637

23.8

5,959

51.2

Operating leases

5,856

7.5

3,932

8.0

1,924

48.9

Depreciation and amortization

2,616

3.3

2,356

4.8

260

11.0

Insurance and claims

2,708

3.5

2,058

4.2

650

31.6

Fuel expense

2,231

2.9

1,171

2.4

1,060

90.5

Other operating expenses

15,470

19.8

5,687

11.6

9,783

172.0

Total operating expenses

69,461

88.9

44,111

90.1

25,350

57.5

Income from operations

$

8,712

11.1

%

$

4,837

9.9

%

$

3,875

80.1

%

Intermodal Segment Information

(In thousands)

(Unaudited)



Three Months Ended

September Percent September Percent Percent 30, of 30, of Change Change 2021 Revenue 2020 Revenue

Operating $ 78,173 100.0 % $ 48,948 100.0 % $ 29,225 59.7 %revenue



Operating expenses:

Purchased 22,984 29.4 17,270 35.3 5,714 33.1 transportation

Salaries,wages and 17,596 22.5 11,637 23.8 5,959 51.2 employeebenefits

Operating 5,856 7.5 3,932 8.0 1,924 48.9 leases

Depreciationand 2,616 3.3 2,356 4.8 260 11.0 amortization

Insurance and 2,708 3.5 2,058 4.2 650 31.6 claims

Fuel expense 2,231 2.9 1,171 2.4 1,060 90.5

Otheroperating 15,470 19.8 5,687 11.6 9,783 172.0 expenses

Totaloperating 69,461 88.9 44,111 90.1 25,350 57.5 expenses

Income from $ 8,712 11.1 % $ 4,837 9.9 % $ 3,875 80.1 %operations



Intermodal Operating Statistics

Three Months Ended

September 30,2021

September 30,2020

Percent Change

Drayage shipments

91,774

74,506

23.2

%

Drayage revenue per shipment

$

723

$

562

28.6

%

Number of locations

29

24

20.8

%

Intermodal Operating Statistics



Three Months Ended

September 30, September 30, Percent Change 2021 2020



Drayage shipments 91,774 74,506 23.2 %

Drayage revenue per shipment $ 723 $ 562 28.6 %

Number of locations 29 24 20.8 %

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

September 30,2021

December 31, 2020

Assets

Current assets:

Cash and cash equivalents

$

51,930

$

40,254

Accounts receivable, net

205,165

156,490

Other receivables

14,218

-

Other current assets

17,948

28,150

Current assets held for sale

-

21,002

Total current assets

289,261

245,896

Property and equipment

396,094

380,519

Less accumulated depreciation and amortization

199,875

190,652

Total property and equipment, net

196,219

189,867

Operating lease right-of-use assets

142,623

123,338

Goodwill

254,776

244,982

Other acquired intangibles, net of accumulated amortization

142,196

145,032

Other assets

45,433

45,181

Noncurrent assets held for sale

-

53,097

Total assets

$

1,070,508

$

1,047,393

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable

$

42,885

$

38,371

Accrued expenses

67,732

51,264

Other current liabilities

-

10,580

Current portion of debt and finance lease obligations

1,841

1,801

Current portion of operating lease liabilities

46,008

43,680

Current liabilities held for sale

-

25,924

Total current liabilities

158,466

171,620

Debt and finance lease obligations, less current portion

161,312

117,408

Operating lease liabilities, less current portion

97,181

80,346

Other long-term liabilities

57,354

54,129

Deferred income taxes

40,659

41,986

Noncurrent liabilities held for sale

-

34,575

Shareholders' equity:

Common stock

270

273

Additional paid-in capital

255,071

242,916

Retained earnings

300,195

304,140

Total shareholders' equity

555,536

547,329

Total liabilities and shareholders' equity

$

1,070,508

$

1,047,393

Forward Air Corporation

Condensed Consolidated Balance Sheets

(In thousands)

(Unaudited)

September 30, December 31, 2021 2020

Assets

Current assets:

Cash and cash equivalents $ 51,930 $ 40,254

Accounts receivable, net 205,165 156,490

Other receivables 14,218 -

Other current assets 17,948 28,150

Current assets held for sale - 21,002

Total current assets 289,261 245,896



Property and equipment 396,094 380,519

Less accumulated depreciation and amortization 199,875 190,652

Total property and equipment, net 196,219 189,867

Operating lease right-of-use assets 142,623 123,338

Goodwill 254,776 244,982

Other acquired intangibles, net of accumulated 142,196 145,032 amortization

Other assets 45,433 45,181

Noncurrent assets held for sale - 53,097

Total assets $ 1,070,508 $ 1,047,393



Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable $ 42,885 $ 38,371

Accrued expenses 67,732 51,264

Other current liabilities - 10,580

Current portion of debt and finance lease 1,841 1,801 obligations

Current portion of operating lease liabilities 46,008 43,680

Current liabilities held for sale - 25,924

Total current liabilities 158,466 171,620



Debt and finance lease obligations, less current 161,312 117,408 portion

Operating lease liabilities, less current portion 97,181 80,346

Other long-term liabilities 57,354 54,129

Deferred income taxes 40,659 41,986

Noncurrent liabilities held for sale - 34,575



Shareholders' equity:

Common stock 270 273

Additional paid-in capital 255,071 242,916

Retained earnings 300,195 304,140

Total shareholders' equity 555,536 547,329

Total liabilities and shareholders' equity $ 1,070,508 $ 1,047,393

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

September 30,2021

September 30,2020

Operating activities:

Net income from continuing operations

$

30,503

$

16,992

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

Depreciation and amortization

9,416

9,172

Change in fair value of earn-out liability

-

493

Share-based compensation expense

2,601

2,345

Provision for revenue adjustments

1,979

1,185

Deferred income tax benefit

(812

)

(351

)

Other

217

17

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

Accounts receivable

1,655

(23,415

)

Other receivables

(727

)

-

Other current and noncurrent assets

1,438

1,283

Accounts payable and accrued expenses

(3,689

)

12,843

Net cash provided by operating activities of continuing operations

42,581

20,564

Investing activities:

Proceeds from sale of property and equipment

1,025

427

Purchases of property and equipment

(14,440

)

(2,225

)

Purchases of a business, net of cash acquired

-

-

Net cash used in investing activities of continuing operations

(13,415

)

(1,798

)

Financing activities:

Repayments of finance lease obligations

(492

)

147

Payments on revolving credit facility

-

(20,000

)

Payment of debt issuance costs

(119

)

-

Payment of earn-out liability

(6,519

)

-

Proceeds from issuance of common stock upon stock option exercises

-

1,901

Payments of dividends to shareholders

(5,705

)

(5,003

)

Repurchases and retirement of common stock

(14,997

)

(29,989

)

Proceeds from common stock issued under employee stock purchase plan

-

-

Payment of minimum tax withholdings on share-based awards

(248

)

(158

)

Contributions from (distributions to) subsidiary held for sale

-

(3,590

)

Net cash used in financing activities from continuing operations

(28,080

)

(56,692

)

Net increase (decrease) in cash of continuing operations

1,086

(37,926

)

Cash from discontinued operation:

Net cash used in operating activities of discontinued operation

-

(3,418

)

Net cash used in investing activities of discontinued operation

-

(172

)

Net cash provided by financing activities of discontinued operation

-

3,590

Net increase (decrease) in cash and cash equivalents

1,086

(37,926

)

Cash and cash equivalents at beginning of period of continuing operations

50,844

80,916

Cash at beginning of period of discontinued operation

-

-

Net increase (decrease) in cash and cash equivalents

1,086

(37,926

)

Less: cash at end of period of discontinued operation

-

-

Cash and cash equivalents at end of period of continuing operations

$

51,930

$

42,990

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Three Months Ended

September September 30, 30, 2021 2020

Operating activities:

Net income from continuing operations $ 30,503 $ 16,992

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

Depreciation and amortization 9,416 9,172

Change in fair value of earn-out liability - 493

Share-based compensation expense 2,601 2,345

Provision for revenue adjustments 1,979 1,185

Deferred income tax benefit (812 ) (351 )

Other 217 17

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

Accounts receivable 1,655 (23,415 )

Other receivables (727 ) -

Other current and noncurrent assets 1,438 1,283

Accounts payable and accrued expenses (3,689 ) 12,843

Net cash provided by operating activities of 42,581 20,564 continuing operations



Investing activities:

Proceeds from sale of property and equipment 1,025 427

Purchases of property and equipment (14,440 ) (2,225 )

Purchases of a business, net of cash acquired - -

Net cash used in investing activities of continuing (13,415 ) (1,798 ) operations



Financing activities:

Repayments of finance lease obligations (492 ) 147

Payments on revolving credit facility - (20,000 )

Payment of debt issuance costs (119 ) -

Payment of earn-out liability (6,519 ) -

Proceeds from issuance of common stock upon stock - 1,901 option exercises

Payments of dividends to shareholders (5,705 ) (5,003 )

Repurchases and retirement of common stock (14,997 ) (29,989 )

Proceeds from common stock issued under employee - - stock purchase plan

Payment of minimum tax withholdings on share-based (248 ) (158 ) awards

Contributions from (distributions to) subsidiary - (3,590 ) held for sale

Net cash used in financing activities from (28,080 ) (56,692 ) continuing operations

Net increase (decrease) in cash of continuing 1,086 (37,926 ) operations



Cash from discontinued operation:

Net cash used in operating activities of - (3,418 ) discontinued operation

Net cash used in investing activities of - (172 ) discontinued operation

Net cash provided by financing activities of - 3,590 discontinued operation

Net increase (decrease) in cash and cash 1,086 (37,926 ) equivalents

Cash and cash equivalents at beginning of period of 50,844 80,916 continuing operations

Cash at beginning of period of discontinued - - operation

Net increase (decrease) in cash and cash 1,086 (37,926 ) equivalents

Less: cash at end of period of discontinued - - operation

Cash and cash equivalents at end of period of $ 51,930 $ 42,990 continuing operations

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September 30,2021

September 30,2020

Operating activities:

Net income from continuing operations

$

77,894

$

37,634

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

Depreciation and amortization

28,067

27,919

Change in fair value of earn-out liability

(385

)

(2,209

)

Share-based compensation expense

8,179

7,852

Provision for revenue adjustments

5,504

2,972

Deferred income tax (benefit) expense

(1,384

)

4,317

Other

406

714

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

Accounts receivable

(49,363

)

(20,436

)

Other receivables

(14,218

)

-

Other current and noncurrent assets

8,184

1,253

Accounts payable and accrued expenses

19,358

20,477

Net cash provided by operating activities of continuing operations

82,242

80,493

Investing activities:

Proceeds from sale of property and equipment

2,339

1,415

Purchases of property and equipment

(23,015

)

(16,439

)

Purchase of a business, net of cash acquired

(22,543

)

(55,931

)

Net cash used in investing activities of continuing operations

(43,219

)

(70,955

)

Financing activities:

Repayments of finance lease obligations

(1,445

)

(529

)

Proceeds from revolving credit facility

45,000

65,000

Payments on revolving credit facility

-

(20,000

)

Payment of debt issuance costs

(119

)

-

Payment of earn-out liability

(6,519

)

(5,284

)

Proceeds from issuance of common stock upon stock option exercises

3,563

1,901

Payments of dividends to shareholders

(17,270

)

(15,090

)

Repurchases and retirement of common stock

(48,989

)

(45,248

)

Proceeds from common stock issued under employee stock purchase plan

388

294

Payment of minimum tax withholdings on share-based awards

(3,074

)

(3,444

)

Contributions from (distributions to) subsidiary held for sale

1,118

(8,897

)

Net cash used in financing activities from continuing operations

(27,347

)

(31,297

)

Net increase (decrease) in cash and cash equivalents of continuing operations

11,676

(21,759

)

Cash from discontinued operation:

Net cash used in operating activities of discontinued operation

(6,902

)

(8,090

)

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

8,020

(807

)

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

(1,118

)

8,897

Net increase (decrease) in cash and cash equivalents

11,676

(21,759

)

Cash and cash equivalents at beginning of period of continuing operations

40,254

64,749

Cash at beginning of period of discontinued operation

-

-

Net increase (decrease) in cash and cash equivalents

11,676

(21,759

)

Less: cash at end of period of discontinued operation

-

-

Cash and cash equivalents at end of period of continuing operations

$

51,930

$

42,990

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 nine months ended September 30, 2021 and 2020, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization ("EBITDA"), free cash flow, and reported income from continuing operations, net income, and net income per diluted share to adjusted income from continuing operations, net income, and net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.

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

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

The following is a reconciliation of net income from continuing operations to EBITDA from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

Nine Months Ended

September September 30, 30, 2021 2020

Operating activities:

Net income from continuing operations $ 77,894 $ 37,634

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

Depreciation and amortization 28,067 27,919

Change in fair value of earn-out liability (385 ) (2,209 )

Share-based compensation expense 8,179 7,852

Provision for revenue adjustments 5,504 2,972

Deferred income tax (benefit) expense (1,384 ) 4,317

Other 406 714

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

Accounts receivable (49,363 ) (20,436 )

Other receivables (14,218 ) -

Other current and noncurrent assets 8,184 1,253

Accounts payable and accrued expenses 19,358 20,477

Net cash provided by operating activities of continuing 82,242 80,493 operations



Investing activities:

Proceeds from sale of property and equipment 2,339 1,415

Purchases of property and equipment (23,015 ) (16,439 )

Purchase of a business, net of cash acquired (22,543 ) (55,931 )

Net cash used in investing activities of continuing (43,219 ) (70,955 )operations



Financing activities:

Repayments of finance lease obligations (1,445 ) (529 )

Proceeds from revolving credit facility 45,000 65,000

Payments on revolving credit facility - (20,000 )

Payment of debt issuance costs (119 ) -

Payment of earn-out liability (6,519 ) (5,284 )

Proceeds from issuance of common stock upon stock 3,563 1,901 option exercises

Payments of dividends to shareholders (17,270 ) (15,090 )

Repurchases and retirement of common stock (48,989 ) (45,248 )

Proceeds from common stock issued under employee stock 388 294 purchase plan

Payment of minimum tax withholdings on share-based (3,074 ) (3,444 )awards

Contributions from (distributions to) subsidiary held 1,118 (8,897 )for sale

Net cash used in financing activities from continuing (27,347 ) (31,297 )operations

Net increase (decrease) in cash and cash equivalents of 11,676 (21,759 )continuing operations



Cash from discontinued operation:

Net cash used in operating activities of discontinued (6,902 ) (8,090 )operation

Net cash provided by (used in) investing activities of 8,020 (807 )discontinued operation

Net cash (used in) provided by financing activities of (1,118 ) 8,897 discontinued operation

Net increase (decrease) in cash and cash equivalents 11,676 (21,759 )

Cash and cash equivalents at beginning of period of 40,254 64,749 continuing operations

Cash at beginning of period of discontinued operation - -

Net increase (decrease) in cash and cash equivalents 11,676 (21,759 )

Less: cash at end of period of discontinued operation - -

Cash and cash equivalents at end of period of $ 51,930 $ 42,990 continuing operations

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 nine months ended September 30, 2021 and 2020, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization ("EBITDA"), free cash flow, and reported income from continuing operations, net income, and net income per diluted share to adjusted income from continuing operations, net income, and net income per diluted share. All non-GAAP financial measures are presented on a continuing operations basis.

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

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

The following is a reconciliation of net income from continuing operations to EBITDA from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended Nine Months Ended

September September September SeptemberContinuing Operations 30, 30, 30, 30, 2021 2020 2021 2020

Net income $ 30,503 $ 16,992 $ 77,894 $ 37,634

Interest expense 973 1,304 3,461 3,355

Income tax expense 11,000 5,214 25,969 12,209

Depreciation and 9,416 9,172 28,067 27,919 amortization

EBITDA $ 51,892 $ 32,682 $ 135,391 $ 81,117



The following is a reconciliation of net cash provided by operating activities of continuing operations to free cash flow from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):

Three Months Ended Nine Months Ended

September September September SeptemberContinuing Operations 30, 30, 30, 30, 2021 2020 2021 2020

Net cash provided by operating $ 42,581 $ 20,564 $ 82,242 $ 80,493 activities

Proceeds from sale of property 1,025 427 2,339 1,415 and equipment

Purchases of property and (14,440 ) (2,225 ) (23,015 ) (16,439 )equipment

Free cash flow $ 29,166 $ 18,766 $ 61,566 $ 65,469

The following is a reconciliation of reported income from continuing operations, net income, and net income per diluted share from continuing operations to adjusted income from continuing operations, net income, and net income per diluted share from continuing operations for the three and nine months ended September 30, 2021 and 2020 (in thousands, except net income per diluted share):

Three Months Ended September 30, Three Months Ended September 30, 2021 2020

Net Net Income Income IncomeContinuing Income From Net Per From Net PerOperations Operations Income^1 Diluted Operations Income^1 Diluted Share^ Share^1 1,2

As Reported $ 42,476 $ 30,503 $ 1.12 $ 23,510 $ 16,992 $ 0.61

Professionalfees for anoperational 969 712 0.03 - - - improvementproject

Reserve for alitigated - - - 2,300 1,760 0.06 contractdispute

As Adjusted $ 43,445 $ 31,215 $ 1.14 $ 25,810 $ 18,752 $ 0.67



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

^2 Rounding may impact summation of amounts.



Nine Months Ended September 30, Nine Months Ended September 30, 2021 2020

Net NetContinuing Income From Net Income Income Net IncomeOperations Operations Income^1 Per From Income^1 Per Diluted Operations Diluted Share^1 Share^1

As Reported $ 107,324 $ 77,894 $ 2.83 $ 53,198 $ 37,634 $ 1.35

Professionalfees for anoperational 969 727 0.03 - - - improvementproject

Professionalfees forcybersecurityand 6,955 5,216 0.19 - - - shareholderengagementactivities

Reserve for alitigated - - - 2,300 1,736 0.06 contractdispute

Change in thefair value of - - - (2,152 ) (1,625 ) (0.06 )the earn-outliability

Severance - - - 997 753 0.03 expenses

As Adjusted $ 115,248 $ 83,837 $ 3.05 $ 54,343 $ 38,498 $ 1.38



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

The following is a reconciliation of targeted net income per diluted share from continuing operations to adjusted targeted net income per diluted share from continuing operations for the year ended December 31, 2021:

Net Income PerContinuing Operations Diluted Share^1

As targeted $ 4.08 - 4.12

Professional fees for an operational improvement project^2 0.03

Professional fees for cybersecurity and shareholder 0.19engagement activities^2

As adjusted targeted $ 4.30 - 4.34

1

Net income per diluted share is after tax.

2

The above reconciliation reflects adjustments to full year 2021 targeted net income per diluted share from continuing operations based on expenses incurred during the nine months ended September 30, 2021. Full year expenses could differ based on future activity.

The following is reconciliation of reported net income per diluted share from continuing operations to adjusted net income per diluted share from continuing operations for the three months and year ended December 31, 2020:

^ Net income per diluted share is after tax.1

The above reconciliation reflects adjustments to full year 2021 targeted net^ income per diluted share from continuing operations based on expenses2 incurred during the nine months ended September 30, 2021. Full year expenses could differ based on future activity.

The following is reconciliation of reported net income per diluted share from continuing operations to adjusted net income per diluted share from continuing operations for the three months and year ended December 31, 2020:

Net Income Per Diluted Share^1

Three Months Year EndedContinuing Operations Ended December 31, December 31, 2020 2020

As reported $ 0.55 $ 1.89

Reserve for a litigated contract dispute - 0.06

Change in the fair value of the earn-out 0.07 0.01 liability

Severance expenses - 0.03

As adjusted $ 0.62 $ 1.99

1

Net income per diluted share is after tax.

The following information is provided to supplement this press release.

^1 Net income per diluted share is after tax.

The following information is provided to supplement this press release.

Three MonthsActual - Continuing Operations Ended September 30, 2021

Net income from continuing operations $ 30,503

Income allocated to participating securities (235)

Numerator for diluted income per share - net income $ 30,268



Weighted-average shares outstanding - diluted 27,144

Diluted net income per share $ 1.12



Projected Full year 2021

Projected tax rate - continuing operations 25.2 %



Projected purchases of property and equipment, net of proceeds $ 39,000 from sale of property and equipment^1

^1 Includes $22,000 for the Columbus, Ohio hub expansion



Projected December 31, 2021

Projected weighted-average shares outstanding - diluted 27,300

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 expected fourth quarter 2021 revenue, revenue growth, net income per diluted share, adjusted net income per diluted share and volume, expectations regarding continued momentum in our business into 2022 and 2023, expectations regarding expansion of operating margins, and the future of 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 COVID-19 pandemic, our ability to manage our growth and ability to grow, in part, through acquisitions, while being able to successfully integrate such acquisitions, our ability to secure terminal facilities in desirable locations at reasonable rates, more limited liquidity than expected which limits our ability to make key investments, the creditworthiness of our customers and their ability to pay for services rendered, our inability to maintain our historical growth rate because of a decreased volume of freight or decreased average revenue per pound of freight moving through our network, the availability and compensation of qualified Leased Capacity Providers and freight handlers as well as contracted, third-party carriers needed to serve our customers' transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers' compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2020.

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

View source version on businesswire.com: https://www.businesswire.com/news/home/20211027006187/en/

CONTACT: Forward Air Corporation Brandon Hammer, 423-636-7173 bhammer@forwardair.com