Forward Air Corporation Reports Fourth Quarter 2020 Results
February 11, 2021 at 17:57 PM EST
Forward Air Corporation (NASDAQ:FWRD) (the “Company”, “we”, “our”, or “us”) today reported financial results for the three and twelve months ended December 31, 2020 as presented in the tables below on a continuing operations basis (Pool Distribution is being reported as a discontinued operation).
Tom Schmitt, Chairman, President and CEO, commenting on fourth quarter results from continuing operations said, “Our growth strategies drove our record fourth quarter revenue, which came in at the high end of our guidance range. Our business momentum improved during the quarter, and through November we were ahead of our internal forecasts. However, as previously disclosed, a December cyber attack temporarily interrupted our operations and impacted our results. Also, considering our strong growth in Final Mile – which has exceeded our expectations – we recorded an increase to an earn-out liability related to a prior acquisition. Excluding the impacts of these two discrete events, we would have exceeded the high end of our net income per diluted share guidance range.”
“Our organic growth has continued into the first quarter”, said Mr. Schmitt. “Through January, our LTL tonnage is up 10.9% and our LTL shipments are up 14.4% year-over-year, which will become even more accretive following our February 1st general rate increase. Volumes in our other modes have also started the year strong.”
“As we drive organic growth, we are also improving our inorganic growth momentum”, continued Mr. Schmitt. “During the fourth quarter, we closed our previously announced acquisitions of CLW Delivery and Value Logistics, which contributed to our Final Mile and Intermodal results. And today we are pleased to announce an agreement in principle to sell the Pool Distribution business to Ten Oaks Group, which is expected to close in the next two weeks for total consideration of $20 million, consisting of an $8 million upfront cash payment and up to a $12 million earn-out. We are also thrilled to announce that we entered into an agreement to purchase substantially all the assets of Proficient Transport for approximately $15 million. Proficient will strengthen our Intermodal footprint in key Midwest and Southern markets and is expected to contribute $23 million of revenue and $3 million of EBITDA on an annualized basis.”
In closing, Mr. Schmitt said, “As we end 2020, we want to welcome CLW Delivery, Value Logistics and Proficient Transport to the Forward Air family. I would also like to thank our employees and independent contractors for their remarkable efforts to serve our customers during such a difficult year.”
Regarding the Company’s first quarter 2021 continuing operations guidance, Michael J. Morris, CFO, said, “We expect first quarter year-over-year revenue growth of 11% to 15%. We expect net income per diluted share to be between $0.55 to $0.59, which includes approximately $0.07 of professional fees related to cyber security and shareholder engagement activities (which will be recorded in Other Operations). This compares to $0.41 in the first quarter of 2020.”
On February 2, 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 March 4, 2021 and is expected to be paid on March 19, 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.
On April 23, 2020, the Board approved a strategy to divest of the Pool Distribution business (“Pool”). 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 press release for all periods presented. In addition, Pool assets and liabilities are reflected as “held for sale” on the Consolidated Balance Sheets in this press release.
Review of Financial Results
Forward Air will hold a conference call to discuss fourth quarter 2020 results on Friday, February 12, 2021 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: 6464581.
A replay of the conference call will be available on the Investor Relations portion of the Company’s website at www.forwardaircorp.com, which the Company will use as a primary mechanism to communicate with investors. Investors are urged to monitor the Investor Relations portion of the Company’s website to easily find or navigate to current and pertinent information about the Company.
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; final mile services, including delivery of heavy-bulky freight; truckload brokerage services, including dedicated fleet services, high-security and temperature-controlled logistics services; 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; and pool distribution services, including high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region. For more information, visit our website at www.forwardaircorp.com.
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 in 2020 and 2019 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, 2020 and 2019, this press release contains the following non-GAAP financial measures: earnings before interest, taxes, depreciation and amortization (“EBITDA”) and free cash flow. 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 stockholder value.
Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s financial results prepared in accordance with GAAP. Non-GAAP financial information does not represent a comprehensive basis of accounting. As required by the Securities and Exchange Act of 1933 and the rules and regulations promulgated thereunder, the Company has included, for the periods indicated, a reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure.
The following is a reconciliation of net income from continuing operations to EBITDA from continuing operations for the three and twelve months ended December 31, 2020 and 2019 (in thousands):
The following is a reconciliation of net cash provided by operating activities of continuing operations to free cash flow from continuing operations for the three and twelve months ended December 31, 2020 and 2019 (in thousands):
The following information is provided to supplement this press release.
Note Regarding Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Forward-looking statements included in this press release relate to the expected organic growth and future performance of the Company, expected 2021 guidance, including first quarterly 2021 revenue growth, first quarter 2021 net income per diluted share, full year 2021 projected tax rate, fully diluted share count (before consideration of future share repurchase), projected capital expenditures, the future declaration of dividends and the quarterly and full year 2021 anticipated dividends per share, the expected consideration received from and the timing of closing of the pending sale of the Company’s Pool Distribution business, and the growth of the Company’s Intermodal business following the acquisition of Proficient Transport.
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: prolonged impact of COVID-19 and actions taken to mitigate those impacts, economic factors such as recessions, inflation, higher interest rates and downturns in customer business cycles, the creditworthiness of our customers and their ability to pay for services rendered, more limited liquidity than expected which limits our ability to make key investments, the availability and compensation of qualified independent owner-operators and freight handlers as well as contracted, third-party carriers needed to serve our customers’ transportation needs, the inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, changes in fuel prices, 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, loss of a major customer, increasing competition and pricing pressure, our ability to secure terminal facilities in desirable locations at reasonable rates, our inability to successfully integrate acquisitions, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental and tax matters, insurance matters, the handling of hazardous materials and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2019.
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.