• DATVF.ATLPHL
    1.638
    -0.014
    -0.8%
  • DATVF.CHIATL
    1.963
    0.087
    4.6%
  • DATVF.DALLAX
    0.897
    -0.106
    -10.6%
  • DATVF.LAXDAL
    1.549
    -0.024
    -1.5%
  • DATVF.SEALAX
    0.976
    0.052
    5.6%
  • DATVF.PHLCHI
    0.939
    0.039
    4.3%
  • DATVF.LAXSEA
    2.034
    -0.050
    -2.4%
  • DATVF.VEU
    1.513
    0.037
    2.5%
  • DATVF.VNU
    1.414
    -0.009
    -0.6%
  • DATVF.VSU
    1.223
    -0.065
    -5%
  • DATVF.VWU
    1.505
    0.001
    0.1%
  • ITVI.USA
    10,157.610
    34.840
    0.3%
  • OTRI.USA
    4.860
    -0.020
    -0.4%
  • OTVI.USA
    10,152.020
    35.380
    0.3%
  • TLT.USA
    2.400
    -0.020
    -0.8%
  • WAIT.USA
    150.000
    0.000
    0%
  • DATVF.ATLPHL
    1.638
    -0.014
    -0.8%
  • DATVF.CHIATL
    1.963
    0.087
    4.6%
  • DATVF.DALLAX
    0.897
    -0.106
    -10.6%
  • DATVF.LAXDAL
    1.549
    -0.024
    -1.5%
  • DATVF.SEALAX
    0.976
    0.052
    5.6%
  • DATVF.PHLCHI
    0.939
    0.039
    4.3%
  • DATVF.LAXSEA
    2.034
    -0.050
    -2.4%
  • DATVF.VEU
    1.513
    0.037
    2.5%
  • DATVF.VNU
    1.414
    -0.009
    -0.6%
  • DATVF.VSU
    1.223
    -0.065
    -5%
  • DATVF.VWU
    1.505
    0.001
    0.1%
  • ITVI.USA
    10,157.610
    34.840
    0.3%
  • OTRI.USA
    4.860
    -0.020
    -0.4%
  • OTVI.USA
    10,152.020
    35.380
    0.3%
  • TLT.USA
    2.400
    -0.020
    -0.8%
  • WAIT.USA
    150.000
    0.000
    0%
Company earningsFinanceLess than TruckloadModesNews

Forward Air’s Q2: Expedited LTL steady as she goes

Forward Air Corporation (NASDAQ: FWRD) reported second-quarter earnings after markets closed July 25. The Greeneville, Tennessee-based trucking company has a business mix of truckload, expedited less-than-truckload services, intermodal and consolidation/warehousing logistics services. 

Forward Air reported diluted earnings per share of $0.78 compared to $0.82 in the year prior. Top-line revenue grew 4.7 percent year-over-year to $345.8 million, but net income dropped 8 percent year-over-year to $22.33 million.

The company offered guidance for the third quarter.

“We expect third-quarter year-on-year revenue growth to be 7 percent to 11 percent,” said Michael J. Morris, Forward Air’s chief financial officer. “We expect net income per diluted share to be between $0.74 and $0.78 in the third quarter of 2019 compared to $0.76 in the third quarter of 2018. This earnings-per-share outlook reflects a $0.03 per-share impact from executive transition expenses.”

After the release, Deutsche Bank transportation analyst Seldon Clarke commented on the vague guidance, which he called a “head-scratcher” because Forward expects high single digit to low double digit revenue growth but no corresponding earnings growth.

“Guidance, however, was a bit of a head-scratcher, in our view, as mgmt. is forecasting a solid acceleration in revenue growth (+7-11% vs. +5% in 2Q) with no improvements in profitability as EPS is expected to be roughly flat yoy after adjusting for executive transition expenses (3c/share),” Clarke wrote. “It’s unclear to us whether this incorporates any incremental charges related to insurance reserves or other one-time items related to its recently announced acquisition of intermodal drayage provider OST.”

EBITDA for the second quarter contracted slightly to $41.2 million from $43.2 million the year before, while free cash flow dropped to $18.6 million compared to $19 million in the second quarter of 2018.

“Our growth strategies drove our record second-quarter revenue, which increased 4.7 percent,” Tom Schmitt, Forward Air’s chairman, president and chief executive officer, said in a statement. “Our operating income grew 5.5 percent before considering the net impact of the $5 million vehicle reserve recorded during the quarter.”

The four business units broken out in Forward Air’s financial reporting are: Expedited LTL (providing expedited regional, inter-regional and national LTL services, including local pickup and delivery, shipment consolidation/deconsolidation, warehousing, final-mile solutions and customs brokerage by utilizing a comprehensive national network of terminals); Intermodal (providing 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); Truckload Premium Services (providing expedited truckload brokerage, dedicated fleet services, as well as high-security and temperature-controlled logistics services); and Pool Distribution (providing high-frequency handling and distribution of time-sensitive products to numerous destinations within a specific geographic region).

Truckload Premium Services was the worst performer among the four units and the only business division that posted lower year-over-year operating revenues. Truckload Premium Services’ operating revenue dropped 5.7 percent to $46.1 million.

Even more tellingly, Truckload Premium Services’ income from operations was slashed by 59 percent to $689,000, down from $1.71 million in the second quarter of 2018.

Expedited LTL, by far the largest part of Forward Air’s business, held up well in a tough freight cycle, growing income by about 1 percent to $26.9 million. Intermodal and Pool Distribution incomes were down just slightly on a year-over-year basis.

Forward Air doesn’t calculate its operating ratios, but by dividing operating expenses by operating revenue, one arrives at a figure of 86.9 percent for the Expedited LTL segment, 70 basis points higher (worse) than the second quarter of 2018. A slightly less efficient operation was the result of lower tonnage and fewer shipments, although the volume drag was slightly offset by a 1.3 percent higher weight per shipment and 5.7 percent higher revenue per hundredweight. 


Denser shipments and higher prices combined for a 6.9 percent improvement in revenue per shipment.

On the other side of the trucking business, Truckload Premium Services posted a 98.4 percent operating ratio on operating revenues of $46.1 million and operating expenses of $45.5 million.

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John Paul Hampstead, Associate Editor

John Paul writes about current events and economics, especially politics, finance, and commodities, and holds a Ph.D. in English literature from the University of Michigan. In previous lives John Paul studied Shakespeare in London and Buddhism in India, but now he focuses on transportation and logistics in the heart of Freight Alley--Chattanooga. He spends his free time with his wife and daughter herding cats, collecting books, and walking alongside the Tennessee River.

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