Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Forward Air Corporation Reports Fourth Quarter and Full Year 2023 Results By: Forward Air Corporation via Business Wire February 28, 2024 at 18:08 PM EST 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 customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022, 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240228837823/en/Contacts Forward Air Corporation Justin Moss, 404-362-8933 jmoss@forwardair.com Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Forward Air Corporation Reports Fourth Quarter and Full Year 2023 Results By: Forward Air Corporation via Business Wire February 28, 2024 at 18:08 PM EST 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 customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022, 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240228837823/en/Contacts Forward Air Corporation Justin Moss, 404-362-8933 jmoss@forwardair.com
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 customers’ transportation needs, our inability to manage our information systems and inability of our information systems to handle an increased volume of freight moving through our network, the occurrence of cybersecurity risks and events, market acceptance of our service offerings, claims for property damage, personal injuries or workers’ compensation, enforcement of and changes in governmental regulations, environmental, tax, insurance and accounting matters, the handling of hazardous materials, changes in fuel prices, loss of a major customer, increasing competition, and pricing pressure, our dependence on our senior management team and the potential effects of changes in employee status, seasonal trends, the occurrence of certain weather events, restrictions in our charter and bylaws and the risks described in our Annual Report on Form 10-K for the year ended December 31, 2022, 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. View source version on businesswire.com: https://www.businesswire.com/news/home/20240228837823/en/
