Forward Air (FWRD) Misses Q4 EPS by 4c, Revenues Beat

Forward Air (NASDAQ: FWRD) reported Q4 EPS of $0.76, $0.04 worse than the analyst estimate of $0.80. Revenue for the quarter came in at $331.4 million versus the consensus estimate of $328.4 million.

Tom Schmitt, President and CEO, commenting on third quarter results said, “Our strong third quarter growth fueled our year-to-date record results. Consolidated revenues grew 11.1% driven by solid revenue management across the portfolio. Consolidated operating income grew 9.9% amid a tight truckload market that drove higher purchased transportation costs for all of our business units. Intermodal generated record quarterly results, as the team capitalized on the benefits of increased volumes and recent acquisitions.”

Commenting on Intermodal’s continued growth, Mr. Schmitt said, “We are pleased to announce the signing of a definitive agreement to acquire substantially all of the assets of Southwest Freight Distributors (“Southwest”) for $16.25 million. Southwest is a Dallas, Texas based premium drayage provider. We expect the transaction will close within a month, and we anticipate Southwest will contribute $20.0 million of revenue and $3.0 million of EBITDA on an annualized basis.”

In closing, Mr. Schmitt said, “I would like to thank Bruce Campbell for the fantastic transition and for developing such an outstanding group of teammates. Together we will make profitable growth a remarkable reality.”

Commenting on the Company’s third quarter results, Michael J. Morris, Senior Vice President and CFO, said, “While our business units continued to generate good growth, our third quarter earnings per share fell short of our $0.77-$0.81 guidance range, driven by $1.4 million of unexpected non-cash charges related to existing vehicular claims.”

Regarding the Company’s fourth quarter guidance, Mr. Morris said, “We expect fourth quarter year-on-year revenue growth to be 11% to 15%. This revenue outlook contemplates our 2018 implementation of ASC 606, Revenue from Contracts with Customers, which now requires that we report fuel surcharge revenue on a gross basis. As such, our growth outlook reflects a comparison to our fourth quarter 2017 revenue which reported fuel surcharge on a net basis. After adjusting the prior year period to reflect fuel surcharge revenueon a gross basis, we expect our year-on-year revenue growth to be 4% to 8%.”

GUIDANCE

Continuing, Mr. Morris said, “We expect net income per diluted share to be between $0.81 and $0.85 in the fourth quarter of 2018 compared to $1.16 in the fourth quarter of 2017 as adjusted following the implementation of ASC 606. Prior period earnings per share would have been $0.63 when excluding a $0.53 benefit related to the fourth quarter 2017 enactment of the Tax Cuts and Jobs Act (“TCJA”).”

For earnings history and earnings-related data on Forward Air (FWRD) click here.

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