What changed in this filing

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Item 1. Financial Statements

2021-08-10 compared with 2021-05-04 · 305 added, 173 removed, 448 unchanged (52% of the section changed)

2 unchanged sentences

Condensed Consolidated Balance Sheets

(Dollars in thousands, except share and per share amounts)

(unaudited and in thousands, except share and per share amounts)

2021 December 31,

45 unchanged sentences

Condensed Consolidated Statements of Comprehensive Income

(Dollars in thousands, except share and per share amounts)

(unaudited and in thousands, except per share amounts)

Three Months Ended

2021 March 31,

Operating revenue $ 362,202 $ 305,557

2021 June 30,

Operating revenues $ 420,671 $ 281,678

Operating expenses:

19 unchanged sentences

Discontinued operation — ( 0.22 )

Net income per share 1

$ 0.40 $ 0.30

Net income per basic share $ 1.12 $ 0.11

Diluted net income (loss) per share

1 unchanged sentence

Discontinued operation — ( 0.22 )

Net income per share $ 0.40 $ 0.30

Net income per diluted share $ 1.11 $ 0.11

Dividends per share $ 0.21 $ 0.18

1 Rounding may impact summation of amounts.

The accompanying notes are an integral part of the condensed consolidated financial statements.

Forward Air Corporation

Condensed Consolidated Statements of Comprehensive Income

(unaudited and in thousands, except per share amounts)

Six Months Ended

2021 June 30,

Operating revenues $ 782,873 $ 587,235

Operating expenses:

Purchased transportation 399,825 292,667

Salaries, wages and employee benefits 159,538 133,331

Operating leases 39,537 35,271

Depreciation and amortization 18,651 18,747

Insurance and claims 20,632 17,766

Fuel expense 7,761 6,532

Other operating expenses 72,081 53,234

Total operating expenses 718,025 557,548

Income from continuing operations 64,848 29,687

Other expense:

Interest expense ( 2,488 ) ( 2,051 )

Total other expense ( 2,488 ) ( 2,051 )

Income before income taxes 62,360 27,636

Income tax expense 14,969 6,995

Net income from continuing operations 47,391 20,641

Loss from discontinued operation, net of tax ( 5,533 ) ( 9,112 )

Net income and comprehensive income $ 41,858 $ 11,529

Basic net income (loss) per share

Continuing operations $ 1.72 $ 0.72

Discontinued operation ( 0.20 ) ( 0.31 )

Net income per basic share $ 1.52 $ 0.41

Diluted net income (loss) per share

Continuing operations $ 1.71 $ 0.72

Discontinued operation ( 0.20 ) ( 0.32 )

Net income per diluted share $ 1.51 $ 0.40

Dividends per share $ 0.42 $ 0.36

The accompanying notes are an integral part of the condensed consolidated financial statements.

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(In thousands)

Three Months Ended

2021 March 31,

(unaudited and in thousands)

Six Months Ended

2021 June 30,

Operating activities:

5 unchanged sentences

Provision for revenue adjustments 3,525 1,787

Deferred income tax expense ( 505 ) 1,225

Deferred income tax (benefit) expense ( 572 ) 4,668

Other 189 697

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

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

Accounts receivable ( 51,018 ) 2,979

11 unchanged sentences

Proceeds from revolving credit facility 45,000 65,000

Payment of earn-out liability — ( 5,284 )

Proceeds from issuance of common stock upon stock option exercises 3,570 —

Payments of dividends to stockholders ( 11,565 ) ( 10,087 )

Repurchases of common stock ( 9,998 ) ( 15,259 )

Repurchases and retirement of common stock ( 33,992 ) ( 15,259 )

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

Payment of minimum tax withholdings on share-based awards ( 2,832 ) ( 3,286 )

Contributions from (distributions to) subsidiary held for sale 1,118 ( 5,307 )

Net cash (used in) provided by financing activities from continuing operations ( 15,741 ) 39,530

Net (decrease) increase in cash and cash equivalents of continuing operations ( 15,858 ) 12,496

Net cash provided by financing activities from continuing operations 733 25,395

Net increase in cash and cash equivalents of continuing operations 10,590 16,167

Cash from discontinued operation:

2 unchanged sentences

Net cash (used in) provided by financing activities of discontinued operation ( 1,118 ) 5,307

Net (decrease) increase in cash and cash equivalents ( 15,858 ) 12,496

Net increase in cash and cash equivalents 10,590 16,167

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

Cash at beginning of period of discontinued operation — —

Net (decrease) increase in cash and cash equivalents ( 15,858 ) 12,496

Net increase in cash and cash equivalents 10,590 16,167

cash at end of period of discontinued operation — —

3 unchanged sentences

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands)

(unaudited and in thousands)

Common Stock Additional Paid-in

10 unchanged sentences

Balance at March 31, 2021 27,318 $ 273 $ 247,678 $ 296,780 $ 544,731

Net income — — — 30,677 30,677

Stock options exercised 26 — 1,416 — 1,416

Common stock issued under employee stock purchase plan 5 — 388 — 388

Share-based compensation expense — — 2,981 — 2,981

Payment of dividends to shareholders — — 3 ( 5,771 ) ( 5,768 )

Payment of minimum tax withholdings on share-based awards ( 1 ) — — ( 82 ) ( 82 )

Repurchases and retirement of common stock ( 252 ) ( 2 ) — ( 23,992 ) ( 23,994 )

Issuance of share-based awards 24 — — — —

Balance at June 30, 2021 27,120 $ 271 $ 252,466 $ 297,612 $ 550,349

Common Stock Additional Paid-in

9 unchanged sentences

Balance at March 31, 2020 27,679 $ 277 $ 230,135 $ 335,429 $ 565,841

Net income — — — 3,155 3,155

Common stock issued under employee stock purchase plan 7 — 295 — 295

Share-based compensation expense — — 2,654 — 2,654

Payment of dividends to shareholders — — 3 ( 5,042 ) ( 5,039 )

Payment of minimum tax withholdings on share-based awards ( 13 ) — — ( 613 ) ( 613 )

Issuance of share-based awards 56 — ( 1 ) — ( 1 )

Balance at June 30, 2020 27,729 $ 277 $ 233,086 $ 332,929 $ 566,292

The accompanying notes are an integral part of the condensed consolidated financial statements.

1 unchanged sentence

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

Description of Business and Basis of Presentation

16 unchanged sentences

Pool offered this service throughout the Mid-Atlantic, Southeast, Midwest and Southwest United States.

Accordingly, the results of operations for Pool have been presented as a discontinued operation in our Consolidated Statements of Comprehensive Income for all period presented.

In addition, the assets and liabilities were presented as held for sale in the Consolidated Balance Sheets for the prior period.

Accordingly, the results of operations for Pool have been presented as a discontinued operation in our Condensed Consolidated Statements of Comprehensive Income for all period presented.

In addition, the assets and liabilities were presented as held for sale in the Condensed Consolidated Balance Sheets for the prior period.

Unless otherwise noted, amounts, percentages and discussion for all periods reflect the results of operations, financial condition and cash flows from our continuing operations.

Revenue Recognition

Revenue is recognized when the Company satisfies the performance obligation by the delivery of a shipment in accordance with contractual agreements, bill of lading (“BOL”) and general tariff provisions.

Revenue is recognized when the Company satisfies the performance obligation by the delivery of a shipment in accordance with contractual agreements, bills of lading (“BOLs”) and general tariff provisions.

The amount of revenue recognized is measured as the consideration the Company expects to receive in exchange for those services pursuant to a contract with a customer.

10 unchanged sentences

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

recognized in each reporting period based on the percentage of total transit time that has been completed at the end of the applicable reporting period.

9 unchanged sentences

As a result, the assets and liabilities of Pool were presented separately under the captions “Current assets held for sale”, “Noncurrent assets held for sale”, “Current liabilities held for sale” and “Noncurrent liabilities held for sale” in the Condensed Consolidated Balance Sheets as of December 31, 2020.

The results of Pool were reclassified to “Loss from discontinued operation, net of tax” in the Condensed Consolidated Statements of Comprehensive Income for three months ended March 31, 2021 and 2020.

The results of Pool were reclassified to “Loss from discontinued operation, net of tax” in the Condensed Consolidated Statements of Comprehensive Income for three and six months ended June 30, 2021 and 2020.

Certain corporate overhead and other costs previously allocated to Pool for segment reporting purposes did not qualify for classification within discontinued operation and have been reallocated to continuing operations.

3 unchanged sentences

The Company will receive payment for the amount earned in the first quarter of 2022, and if elected, the buyer may defer the payment of up to half of the amount earned to first quarter of 2023.

The preliminary estimated fair value of the earn-out asset on the date of sale was $ 6,967 .

The estimated fair value of the earn-out asset on the date of sale was $ 6,967 .

The fair value was based on the estimated eleven-month period of the earnings before interest, taxes, depreciation and amortization and was calculated using a Monte Carlo simulation model.

5 unchanged sentences

Subsequent to the date of sale, the Company will recognize any increases in the carrying value of the earn-out asset when the change is realized and will evaluate the earn-out asset for impairment at each reporting period.

As of March 31, 2021, the Company recorded $ 3,508 in “Other receivables ” and $ 3,459 in “Other assets ” in the Condensed Consolidated Balance Sheets.

The Company concluded there were no indicators of impairment during the three months ended June 30, 2021.

As of June 30, 2021, the Company recorded $ 3,508 in “Other receivables ” and $ 3,459 in “Other assets ” in the Condensed Consolidated Balance Sheets.

Transition Services Agreement

1 unchanged sentence

Under the TSA, the Company performs certain services on an interim basis in order to facilitate the orderly transition of the Pool business.

The effective date of the TSA was February 12, 2021 and will remain in effective until the date all services have been completed, but no more than six months following effective date.

The effective date of the TSA was February 12, 2021 and will remain in effect until the date all services have been completed, but no more than six months following effective date.

The TSA provides the right to extend the term of the TSA with no limit on the number of the mutually agreed upon extensions.

In exchange for the services performed by the Company under the TSA, the Company receives a monthly service charge.

For the three and six

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

three months ended March 31, 2021, the Company recorded $ 171 of the fee received, in “Other operating expenses ” in the Condensed Consolidated Statements of Comprehensive Income, for the services performed under the TSA.

(unaudited and in thousands, except per share data)

June 30, 2021

months ended June 30, 2021, the Company recognized $ 241 and $ 412 , respectively, in “Other operating expenses ” in the Condensed Consolidated Statements of Comprehensive Income, for the services performed under the TSA.

Additionally, under the TSA, the Company remits payments to outside vendors on behalf of TOG FAS Holdings LLC for expenses incurred by the Pool business up to a limit of $ 18,000 .

The Company is reimbursed by TOG FAS Holdings LLC within 60 days from the end of the month in which the payment is remitted.

As of March 31, 2021, the Company recorded a receivable in the amount of $ 13,339 in “Other receivables ” in the Condensed Consolidated Balance Sheets for the reimbursement due to the Company.

As of June 30, 2021, the Company recorded a receivable in the amount of $ 13,491 in “Other receivables ” in the Condensed Consolidated Balance Sheets for the reimbursement due to the Company.

Summarized Discontinued Operation Financial Information

A summary of the results of operations classified as a discontinued operation, net of tax, in the Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020 is as follows:

Three Months Ended

2021 March 31,

Operating revenue $ 17,087 $ 36,952

A summary of the results of operations classified as a discontinued operation, net of tax, in the Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 30, 2021 and 2020 is as follows:

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Operating revenues $ — $ 13,974 $ 17,087 $ 50,926

Operating expenses:

14 unchanged sentences

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

Expedited Freight Acquisition

4 unchanged sentences

The fair value of the earn-out liability was adjusted at each reporting period based on changes in the expected cash flows and related assumptions used in the Monte Carlo simulation model.

During the three months ended March 31, 2021 and 2020, the fair value of the earn-out changed by ($ 48 ) and ($ 594 ), respectively, and the change in fair value was recorded in “Other operating expenses ” in the Condensed Consolidated Statements of Comprehensive Income.

During the three and six months ended June 30, 2021, the fair value of the earn-out changed by ($ 4 ) and ($ 52 ), respectively, and the change in fair value was recorded in “Other operating expenses ” in the Condensed Consolidated Statements of Comprehensive Income.

During the three and six months ended June 30, 2020, the fair value of the earn-out changed by ($ 2,108 ) and ($ 2,702 ), respectively, and the change in fair value was recorded in “Other operating expenses ” in the Condensed Consolidated Statements of Comprehensive Income.

The first one-year period ended in the second quarter of 2020 and the Company paid $ 5,284 based on the terms of the purchase agreement.

The second one-year period will end in the second quarter of 2021.

As of March 31, 2021 and December 31, 2020, the fair value of the earn-out liability was $ 6,817 and $ 6,865 , respectively, which was reflected in “Other current liabilities ” in the Condensed Consolidated Balance Sheets.

The second one-year period ended in the second quarter of 2021 and the Company will remit payment in the third quarter of 2021 based on the terms of purchase agreement.

As of June 30, 2021 and December 31, 2020, the fair value of the earn-out liability was $ 6,813 and $ 6,865 , respectively, which was reflected in “Other current liabilities ” in the Condensed Consolidated Balance Sheets.

In May 2021, the Company acquired certain assets and liabilities of J&P Hall Express Delivery (“J&P”) for $ 7,543 .

J&P is headquartered in Atlanta, Georgia with a second terminal in Albany, Georgia.

The acquisition of J&P supports the Company’s strategic growth plan by expanding pickup and delivery, less than truckload, truckload, less than container load, container freight station warehousing, and airport transfer services across the Southeastern United States.

The acquisition was financed by cash flow from operations.

The results of J&P have been included in the Company’s Condensed Consolidated Financial Statements as of and from the date of acquisition.

The associated goodwill has been included in the Company’s Expedited Freight reportable segment.

Intermodal Acquisition

8 unchanged sentences

The estimated fair value of the earn-out liability on the date of acquisition was $ 829 .

The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using a Monte Carlo simulation model.

The weighted-average assumptions under the Monte Carlo simulation model were as follows:

February 28, 2021

The fair value was based on the estimated one-year performance of the acquired customer revenue and was calculated using the option pricing method.

The weighted-average assumptions used to calculate the estimated fair value of the earn-out under the option pricing method were as follows:

February 28, 2021 June 30, 2021

Risk-free rate 0.1 % 0.1 %

1 unchanged sentence

Revenue volatility 27.3 % 19.7 %

As of March 31, 2021, the fair value of the earn-out liability was $ 815 , which was reflected in “Other current liabilities ” in the Condensed Consolidated Balance Sheets.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

During both the three and six months ended June 30, 2021, the fair value of the earn-out changed by ($ 333 ) and the change in the fair value was recorded in “Other operating expenses ” in the Condensed Consolidated Statements of Comprehensive Income.

As of June 30, 2021, the fair value of the earn-out liability was $ 496 , which was reflected in “Other current liabilities ” in the Condensed Consolidated Balance Sheets.

Fair Value of Assets Acquired and Liabilities Assumed

Assets acquired and liabilities assumed as of the acquisition date are presented in the following table:

Proficient Transport

February 28, 2021

Proficient Transport J&P

February 28, 2021 May 30, 2021

Tangible assets:

Accounts receivable, net $ 3,865

Accounts receivable $ 4,171 $ 1,686

Prepaid expenses and other current assets — 32

Property and equipment 140 934

14 unchanged sentences

Weighted-Average Useful Lives

Customer relationships 8 years

Non-compete agreements 1 year

Proficient Transport J&P

Customer relationships 8 years 12 years

Non-compete agreements 1 year 5 years

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

Goodwill and Other Intangible Assets

Changes in the carrying amount of goodwill during the three months ended March 31, 2021 are summarized as follows (in thousands):

Changes in the carrying amount of goodwill during the six months ended June 30, 2021 are summarized as follows:

Expedited Freight Intermodal Consolidated

Balance as of December 31, 2020 $ 165,268 $ 79,714 $ 244,982

Acquisition — 5,754 5,754

Balance as of March 31, 2021 $ 165,268 $ 85,468 $ 250,736

Acquisitions 3,762 6,249 10,011

Balance as of June 30, 2021 $ 169,030 $ 85,963 $ 254,993

Goodwill is tested for impairment on an annual basis and more often if indications of impairment exist.

The Company conducts its annual impairment analyses as of June 30 each year.

Based on the current macroeconomic conditions, the Company assessed its goodwill and other intangible assets for indications of impairment as of March 31, 2021 and concluded there were no indicators of impairment during the three months ended March 31, 2021.

Based on the current macroeconomic conditions, the Company assessed its goodwill and other intangible assets for indications of impairment as of June 30, 2021.

The Company concluded there were no indicators of impairment during the six months ended June 30, 2021.

Other Intangible Assets

Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2021 are summarized as follows (in thousands):

Changes in the carrying amount of acquired intangible assets during the six months ended June 30, 2021 are summarized as follows:

Gross Carrying Amount

2 unchanged sentences

Balance as of December 31, 2020 $ 228,416 $ 8,125 $ 1,500 $ 238,041

Acquisition 6,060 18 — 6,078

Balance as of March 31, 2021 $ 234,476 $ 8,143 $ 1,500 $ 244,119

Acquisitions 7,640 150 — 7,790

Balance as of June 30, 2021 $ 236,056 $ 8,275 $ 1,500 $ 245,831

Accumulated Amortization

3 unchanged sentences

Amortization expense 6,344 665 — 7,009

Balance as of March 31, 2021 $ 89,034 $ 5,917 $ 1,500 $ 96,451

1 Carrying value as of March 31, 2021 and December 31, 2020 is inclusive of $ 16,501 of accumulated impairment.

Balance as of June 30, 2021 $ 92,274 $ 6,244 $ 1,500 $ 100,018

1 Carrying value as of June 30, 2021 and December 31, 2020 is inclusive of $ 16,501 of accumulated impairment.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

Stock Incentive Plans

The Company recorded shared-based compensation expense as follows for the three months ended March 31, 2021 and 2020 (in thousands):

Three Months Ended

2021 March 31,

Stock Incentive Plan

The Company recorded shared-based compensation expense as follows for the three and six months ended June 30, 2021 and 2020:

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Salaries, wages and employee benefits - continuing operations $ 2,463 $ 2,154 $ 4,732 $ 4,971

1 unchanged sentence

Total share-based compensation expense $ 2,463 $ 2,376 $ 4,748 $ 5,381

Stock Incentive Plan

In May 2016, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 common shares.

As of March 31, 2021, approximately 793 shares remain available for grant under the Omnibus Plan.

In May 2016, the Company adopted the 2016 Omnibus Incentive Compensation Plan (the “Omnibus Plan”) for the issuance of up to 2,000 of common shares to employees.

As of June 30, 2021, approximatel y 797 shares remain available for grant under the Omnibus Plan.

Stock Options

Share-based compensation expense associated with stock options is amortized ratably over the requisite service period.

Share-based compensation expense associated with stock options is amortized ratably over the vesting period.

The Company estimates the fair value of the grants using the Black-Scholes option-pricing model.

Stock option transactions during the three months ended March 31, 2021 on a continuing operations basis were as follows:

Stock option transactions during the six months ended June 30, 2021 on a continuing operations basis were as follows:

Stock Options Weighted-Average Exercise Price

Outstanding as of December 31, 2020 359 $ 55.79

Outstanding as of January 1, 2021 359 $ 55.79

Granted 39 75.05

1 unchanged sentence

Forfeited — —

Outstanding as of March 31, 2021 372 $ 58.06

As of March 31, 2021, the total share-based compensation expense related to unvested stock options net yet recognized was approximately $ 1,250 , and the weighted average period over which it is expected to be recognized is approximately two years .

Stock option transactions during the three months ended March 31, 2021 on a discontinued operation basis were as follows:

Outstanding as of June 30, 2021 346 $ 58.30

As of June 30, 2021, the total share-based compensation expense related to unvested stock options net yet recognized was $ 1,002 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

Stock option transactions during the six months ended June 30, 2021 on a discontinued operation basis were as follows:

Stock Options Weighted-Average Exercise Price

Outstanding at December 31, 2020 14 $ 52.15

Outstanding as of January 1, 2021 14 $ 52.15

Exercised ( 14 ) 52.15

Forfeited — —

Outstanding at March 31, 2021 — $ —

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

Outstanding as of June 30, 2021 — $ —

Restricted Shares

1 unchanged sentence

Share-based compensation expense associated with these awards is amortized ratably over the requisite service period.

Restricted share transactions during the three months ended March 31, 2021 on a continuing operations basis were as follows:

Restricted share transactions during the six months ended June 30, 2021 on a continuing operations basis were as follows:

Restricted Shares Weighted-Average Grant Date Fair Value

Outstanding as of December 31, 2020 213 $ 62.78

Outstanding as of January 1, 2021 210 $ 62.78

Granted 108 75.28

1 unchanged sentence

Forfeited ( 15 ) 69.91

Outstanding as of March 31, 2021 214 $ 69.31

As of March 31, 2021, the total share-based compensation expense related to the restricted shares net yet recognized was approximately $ 13,179 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Restricted share transactions during the three months ended March 31, 2021 on a discontinued operation basis were as follows:

Outstanding as of June 30, 2021 205 $ 69.31

As of June 30, 2021, the total share-based compensation expense related to restricted shares not yet recognized was $ 11,227 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Restricted share transactions during the six months ended June 30, 2021 on a discontinued operation basis were as follows:

Restricted Shares Weighted-Average Grant Date Fair Value

Outstanding as of December 31, 2020 8 $ 60.83

Outstanding as of January 1, 2021 10 $ 61.25

Vested ( 5 ) 60.49

Forfeited ( 5 ) 61.92

Outstanding as of March 31, 2021 — $ —

Outstanding as of June 30, 2021 — $ —

Performance Awards

3 unchanged sentences

Depending on the financial target, the compensation expense is based on the projected assessment of the level of performance that will be achieved.

Performance award transactions during the three months ended March 31, 2021 on a continuing operations basis were as follows assuming target levels of performance:

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

Performance award transactions during the six months ended June 30, 2021 on a continuing operations basis were as follows assuming target levels of performance:

Performance Awards Weighted-Average Grant Date Fair Value

Outstanding as of December 31, 2020 65 $ 67.62

Outstanding as of January 1, 2021 65 $ 67.62

Granted 36 87.33

Earned ( 11 ) 72.30

Forfeited ( 11 ) 70.22

Outstanding as of March 31, 2021 79 $ 75.61

As of March 31, 2021, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company's current projected assessment of the level of performance that will be achieved, was approximately $ 3,652 , and the weighted-average period over which it is expected to be recognized is approximately three years .

Forfeited or unearned ( 11 ) 70.22

Outstanding as June 30, 2021 79 $ 75.61

As of June 30, 2021, the total share-based compensation expense related to unearned performance awards not yet recognized, assuming the Company’s current projected assessment of the level of performance that will be achieved, was $ 4,621 , and the weighted-average period over which it is expected to be recognized is approximately three years .

Employee Stock Purchase Plan

Under the 2005 Employee Stock Purchase Plan (the “ESPP”), the Company is authorized to issue up to a remaining 335 shares of common stock to employees.

As of June 30, 2021, the Company is authorized to issue up to a remaining 330 shares of common stock to employees under the 2005 Employee Stock Purchase Plan (the “ESPP”).

These shares may be issued at a price equal to 90 % of the lesser of the market value on the first day or the last day of each six-month purchase period.

Common stock purchases are paid for through periodic payroll deductions and/or up to two large lump sum contributions.

No shares were issued during the three months ended March 31, 2021.

Employee stock purchase plan activity and related information was as follows on a continuing operations basis:

Six Months Ended

2021 June 30,

Shares purchased by participants under the ESPP 5 6

Average purchase price $ 68.76 $ 44.84

Weighted-average fair value of each purchase right under the ESPP granted ¹ $ 20.99 $ 4.98

Share-based compensation for ESPP shares $ 118 $ 30

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Employee stock purchase plan activity and related information was as follows on a discontinued operation basis:

Six Months Ended

2021 June 30,

Shares purchased by participants under the ESPP — 1

Average purchase price $ — $ 44.84

Weighted-average fair value of each purchase right under the ESPP granted ¹ $ — $ 4.98

Share-based compensation for ESPP shares $ — $ 3

¹ Equal to the discount from the market value of the common stock at the end of each six month purchase period.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

Director Restricted Shares

Under the Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”), approved in May 2007 and further amended in February 2013 and January 2016, up to 360 common shares may be issued.

As of March 31, 2021, approximately 90 shares remain available for grant under the Amended Plan.

Director restricted share transactions during the three months ended March 31, 2021 were as follows:

Under the Amended and Restated Non-Employee Director Stock Plan (the “Amended Plan”), approved in May 2007 and further amended in February 2013 and January 2016, up to 360 of common shares may be issued.

As of June 30, 2021, approximat ely 75 shares remain available for grant under the Amended Plan.

Director restricted share transactions during the six months ended June 30, 2021 were as follows:

Director Restricted Shares Weighted-Average Grant Date Fair Value

Outstanding as of December 31, 2020 24 $ 43

Outstanding as of January 1, 2021 24 $ 42.88

Granted 17 93.39

Vested ( 26 ) 47.12

Forfeited — —

Outstanding as of March 31, 2021 26 $ 47

For the three-months ended March 31, 2021 and 2020, the Company recorded $ 328 and $ 261 , respectively, of share-based compensation expense associated with these grants.

As of March 31, 2021, the total share-based compensation expense related to the restricted shares net yet recognized was approximately $ 256 .

Outstanding as of June 30, 2021 15 $ 93.46

For the three and six months ended June 30, 2021, the Company recorded $ 400 and $ 728 , respectively, of share-based compensation expense associated with these grants.

For the three and six months ended June 30, 2020, the Company recorded $ 245 and $ 506 , respectively, of share-based compensation expense associated with these grants.

As of June 30, 2021, the total share-based compensation expense related to the restricted shares net yet recognized was $ 1,221 , and the weighted-average period over which it is expected to be recognized is approximately less than one year .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

As of both March 31, 2021 and December 31, 2020, the Company had $ 112,500 in borrowings outstanding under the revolving credit facility, $ 18,326 utilized for outstanding letters of credit and $ 94,174 of available borrowing capacity under the revolving credit facility.

The interest rate on the outstanding borrowings under the revolving credit facility was 3.25 % and 2.30 % as of March 31, 2021 and March 31, 2020, respectively.

(unaudited and in thousands, except per share data)

June 30, 2021

As of June 30, 2021, the Company had $ 157,500 in borrowings outstanding under the revolving credit facility, $ 18,326 utilized for outstanding letters of credit and $ 49,174 of available borrowing capacity under the revolving credit facility.

As of December 31, 2020, the Company had $ 112,500 in borrowings outstanding under the revolving credit facility, $ 18,326 utilized for outstanding letters of credit and $ 94,174 of available borrowing capacity under the revolving credit facility.

The interest rate on the outstanding borrowings under the revolving credit facility was 3.25 % as of both June 30, 2021 and June 30, 2020.

In September 2017, the Company entered into a five-year senior unsecured revolving credit facility (the “Facility”) with a maximum aggregate principal amount of $ 150,000 , with a sublimit of $ 30,000 for letters of credit and a sublimit of $ 30,000 for swing line loans.

The maturity date of the Facility is September 29, 2022.

In April 2020, the Company entered into an amendment to the Facility, which increased the maximum aggregate principal amount to $ 225,000 .

In April 2020, the Company entered into the first amendment to the Facility, which increased the maximum aggregate principal amount to $ 225,000 .

The Facility may be increased by up to $ 25,000 to a maximum aggregate principal amount of $ 250,000 pursuant to the terms of the amended credit agreement, subject to the lenders’ agreement to increase their commitments or the addition of new lenders extending such commitments.

Such increases to the Facility may be in the form of additional revolving credit loans, term loans or a combination thereof, and are contingent upon there being no events of default under the Facility.

Under the amended Facility, interest accrues on the amounts outstanding under the credit facility, at the Company’s option, at either (1) London Interbank Offered Rate (“LIBOR ” ) rate, not less than 1.00 %, plus a margin ranging from 2.25 % to 2.75 % based on the Company’s leverage ratio, or (2) base rate, which cannot be less than 3.00 %.

Under the amended Facility, interest accrues on the amounts outstanding under the Facility, at the Company’s option, at either (1) London Interbank Offered Rate (“LIBOR ” ) rate, not less than 1.00 %, plus a margin ranging from 2.25 % to 2.75 % based on the Company’s leverage ratio, or (2) base rate, which cannot be less than 3.00 %.

The base rate is the highest of (i) the federal funds rate, not less than zero , plus 0.50 %, (ii) the administrative agent’s prime rate and (iii) the LIBOR rate, not less than 1.00 %, plus 1.00 %, plus a margin ranging from 0.25 % to 0.75 % based on the Company’s leverage ratio.

2 unchanged sentences

The Company also has to fulfill financial covenants with respect to a leverage ratio and an interest coverage ratio.

As of March 31, 2021, the Company was in compliance with the aforementioned covenants.

In April 2021, the Company borrowed $ 20,000 under the revolving credit facility.

As of June 30, 2021, the Company was in compliance with the aforementioned covenants.

In July 2021, the Company entered into the second amendment to the Facility, which extended the maturity date to July 20, 2026 and changed the interest rate options available under the Facility.

Under the amended Facility, interest accrues on the amounts outstanding under the Facility at the Company ’s option, at either (1) Bloomberg Short-Term Bank Yield Index rate (the “BSBY Rate ”), which cannot be less than zero , plus a margin ranging from 1.25 % to 1.75 % based on the Company ’s leverage ratio, or (2) the base rate, which cannot be less than 2.00 %.

The base rate is the highest of (i) the federal funds rate, which cannot be less than zero , plus 0.50 %, (ii) the administrative agent ’s prime rate and (iii) the BSBY Rate, which cannot be less than zero , plus 1.00 %, plus a margin ranging from 0.00 % to 0.50 % based on the Company ’s leverage ratio.

In addition, under the second amendment, the Facility may be increased by up to $ 75,000 to a maximum aggregate principal amount of $ 300,000 pursuant to the terms of the amended credit agreement, subject to the l enders’ agreement to increase their commitments or the addition of new lenders extending such commitments.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

Net Income (Loss) Per Share

A reconciliation of net income attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income per share during the three months ended March 31, 2021 and 2020 is as follows:

Three Months Ended

2021 March 31,

A reconciliation of net income attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income per share during the three and six months ended June 30, 2021 and 2020 is as follows:

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Net income and comprehensive income from continuing operations $ 30,677 $ 9,225 $ 47,391 $ 20,641

10 unchanged sentences

Discontinued operation — ( 0.22 ) ( 0.20 ) ( 0.31 )

Net income per share 1

$ 0.40 $ 0.30

Net income per basic share $ 1.12 $ 0.11 $ 1.52 $ 0.41

Diluted net income (loss) per share:

1 unchanged sentence

Discontinued operation — ( 0.22 ) ( 0.20 ) ( 0.32 )

Net income per share $ 0.40 $ 0.30

1 Rounding may impact summation of amounts.

Net income per diluted share $ 1.11 $ 0.11 $ 1.51 $ 0.40

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

The number of shares that were not included in the calculation of net income per diluted share because to do so would have been anti-dilutive for the three months ended March 31, 2021 and 2020 are as follows:

2021 March 31,

(unaudited and in thousands, except per share data)

June 30, 2021

The number of shares that were not included in the calculation of net income per diluted share because to do so would have been anti-dilutive for the three and six months ended June 30, 2021 and 2020 are as follows:

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Anti-dilutive stock options — 268 39 218

2 unchanged sentences

Total anti-dilutive shares — 463 54 342

For the three months ended March 31, 2021, the Company recorded income tax expense of $ 4,845 and $ 3,504 , respectively, for continuing operations.

The effective tax rate of 22.5 % for the three months ended March 31, 2021 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

The effective tax rate of 23.5 % for the three months ended March 31, 2020 varied from the statutory United States federal income tax rate of 21% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards and a refund for Tennessee tax credits.

As of both March 31, 2021 and December 31, 2020, the Company had $ 544 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

For the six months ended June 30, 2021 and 2020, the Company recorded income tax expense of $ 14,969 and $ 6,995 , respectively, for continuing operations.

The effective tax rate of 24.0 % for the six months ended June 30, 2021 varied from the statutory United States federal income tax rate of 21.0% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards.

The effective tax rate of 25.3 % for the six months ended June 30, 2020 varied from the statutory United States federal income tax rate of 21% primarily due to the effect of state income taxes, net of the federal benefit, and non-deductible executive compensation, partially offset by excess tax benefits realized on share-based awards and a refund for Tennessee tax credits.

As of both June 30, 2021 and December 31, 2020, the Company had $ 544 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

The Company accrues interest and penalties related to unrecognized tax benefits in its provision for income taxes.

As of both March 31, 2021 and December 31, 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 168 .

As of both June 30, 2021 and December 31, 2020, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 168 .

With a few exceptions, the Company is no longer subject to U.S.

20 unchanged sentences

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

As previously discussed in Note 4, Acquisitions, the fair value of the earn-out liability was determined using a Monte-Carlo simulation model.

The significant inputs used in the model are derived from a combination of observable and unobservable market data.

Observable inputs used in the Monte Carlo simulation model include the risk-free rate and the revenue volatility while unobservable inputs used in the Monte Carlo simulation model include the revenue discount rate and the estimated revenue projections.

Assets and liabilities measured at fair value on a recurring basis as of March 31, 2021 and December 31, 2020 are summarized below:

As of March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

As previously discussed in Note 4, Acquisitions, the estimated fair value of the earn-out liability was determined using either the Monte-Carlo simulation model or the option pricing method.

The significant inputs used to calculate the estimated fair value are derived from a combination of observable and unobservable market data.

Observable inputs used in either the Monte Carlo simulation model or the option pricing method include the risk-free rate and the revenue volatility while unobservable inputs include the revenue discount rate and the estimated revenue projections.

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2021 and December 31, 2020 are summarized below:

As of June 30, 2021

Level 1 Level 2 Level 3 Total

5 unchanged sentences

The carrying amount of long-term debt under the Company’s credit facility approximate fair value based on the borrowing rates currently available to the Company for a loan with similar terms and average maturity.

As of March 31, 2021, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 6,892 , compared to its carrying value of $ 6,652 .

As of June 30, 2021, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 6,192 , compared to its carrying value of $ 6,168 .

As of December 31, 2020, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 7,009 , compared to its carrying value of $ 6,811 .

1 unchanged sentence

Cash Dividends

During the first quarter of 2021 and the fourth quarter of 2020, the Company’s Board of Directors declared and the Company has paid a quarterly cash dividend of $ 0.21 per share of common stock.

On April 26, 2021, the Company's Board of Directors declared a quarterly cash dividend of $ 0.21 per common share that will be paid in second quarter of 2021.

During the second quarter of 2021, first quarter of 2021 and the fourth quarter of 2020, the Company’s Board of Directors declared and the Company has paid a quarterly cash dividend of $ 0.21 per share of common stock.

On July 27, 2021, the Company's Board of Directors declared a quarterly cash dividend of $ 0.21 per common share that will be paid in third quarter of 2021.

Share Repurchase Program

4 unchanged sentences

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

During the three months ended March 31, 2021, the Company repurchased through open market transactions 114 shares of common stock for $ 9,997 , or $ 87.89 per share, and during the three months ended March 31, 2020, the Company repurchased 268 shares of common stock for $ 15,259 , or $ 56.93 per share.

(unaudited and in thousands, except per share data)

June 30, 2021

During the six months ended June 30, 2021, the Company repurchased through open market transactions 366 shares of common stock for $ 33,992 , or $ 92.76 per share, and during the six months ended June 30, 2020, the Company repurchased 268 shares of common stock for $ 15,259 , or $ 56.93 per share.

All shares received were retired upon receipt, and the excess of the purchase price over the par value per share was recorded to “Retained Earnings ” in the Condensed Consolidated Balance Sheets.

As of March 31, 2021, the remaining shares to be repurchased under the 2019 Repurchase Plan were approximately 3,254 shares.

As of June 30, 2021, the remaining shares to be repurchased under the 2019 Repurchase Plan were approximately 3,002 shares.

Commitments and Contingencies

Contingencies

The Company is party to various legal claims and actions incidental to its business.

The Company believes none of these claims or actions, either individually or in the aggregate, is material to its business or financial statements as a whole, including its results of operations and financial condition.

The Company is liable for claims related to vehicle liability, workers’ compensation, property damage and employee medical benefits.

Insurance coverage provides the Company with primary and excess coverage, which the Company believes is sufficient to protect the Company from catastrophic claims.

The Company is party to various legal claims and actions incidental to its business, including claims related to vehicle liability, workers’ compensation, property damage and employee medical benefits.

We accrue for the uninsured portion of contingent losses from these and other pending claims when it is both probable that a liability has been incurred and the amount of loss can be reasonably estimated.

Based on the knowledge of the facts, management believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on our condensed consolidated financial statements.

Moreover, the results of complex legal proceedings are difficult to predict, and the Company’s view of these matters may change in the future as the litigation and related events unfold.

Insurance coverage provides the Company with primary and excess coverage for claims related to vehicle liability, workers’ compensation, property damage and employee medical benefits.

For vehicle liability, the Company retains a portion of the risk.

18 unchanged sentences

Insurance coverage in excess of the self-insured retention limit is an important part of the Company’s risk management process.

The Company believes the recorded reserves are sufficient for all incurred claims up to the self-insured retention limits, including an estimate for claims incurred but not reported.

Since the ultimate resolution of outstanding claims as well as claims incurred but not reported is uncertain, it is possible that the reserves recorded for these losses could change materially in the near term.

However, an estimate cannot be made of the range of additional loss that is at least reasonably possible.

The Company believes the recorded reserves are sufficient for all incurred claims up to the self-insured retention

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

(unaudited and in thousands, except per share data)

June 30, 2021

limits, including an estimate for claims incurred but not reported.

However, an estimate cannot be made of the range of additional loss that is at least reasonably possible.

Segment Reporting

5 unchanged sentences

Shared assets are not allocated to each segment, but rather the shared assets, such as trailers, are allocated to the Expedited Freight segment.

Corporate includes revenues and expenses as well as assets that are not attributable to any of the Company’s reportable segments.

The accounting policies applied to each segment are the same as those described in the Summary of Significant Accounting Policies as disclosed in Note 1 to the Annual Report on Form 10-K for the year ended December 31, 2020, except for certain self-insurance loss reserves related to vehicle liability and workers’ compensation.

Each segment is allocated an insurance premium and deductible that corresponds to the self-insured retention limit for that particular segment.

Any self-insurance loss exposure beyond the deductible allocated to each segment is recorded in Eliminations & Other.

Segment results from operations for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended March 31, 2021

Expedited Freight Intermodal Eliminations & Other Consolidated

Any self-insurance loss exposure beyond the deductible allocated to each segment is recorded in Corporate.

Segment results from operations for the three and six months ended June 30, 2021 and 2020 are as follows:

Three Months Ended June 30, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

External revenues $ 351,551 $ 69,120 $ — $ — $ 420,671

4 unchanged sentences

Purchases of property and equipment 5,724 156 — — 5,880

Three Months Ended March 31, 2020

Expedited Freight Intermodal Eliminations & Other Consolidated

Three Months Ended June 30, 2020

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

External revenues $ 235,417 $ 46,420 $ — $ — $ 281,837

4 unchanged sentences

Purchases of property and equipment 11,545 18 — — 11,563

As of March 31, 2021 $ 934,602 $ 204,178 $ ( 122,879 ) $ 1,015,901

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

Six Months Ended June 30, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

External revenues $ 655,308 $ 127,622 $ — $ — $ 782,930

Intersegment revenues 613 25 — ( 695 ) ( 57 )

Depreciation 9,982 1,634 26 — 11,642

Amortization 3,595 3,414 — — 7,009

Income (loss) from continuing operations 59,218 12,895 ( 7,265 ) — 64,848

Purchases of property and equipment 8,136 439 — — 8,575

Six Months Ended June 30, 2020

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

External revenues $ 488,560 $ 98,875 $ — $ — $ 587,435

Intersegment revenues 727 13 — ( 940 ) ( 200 )

Depreciation 9,916 2,134 43 — 12,093

Amortization 3,519 3,135 — — 6,654

Income (loss) from continuing operations 26,933 8,126 ( 5,372 ) — 29,687

Purchases of property and equipment 13,950 264 — — 14,214

As of June 30, 2021 $ 767,222 $ 209,266 $ 105,459 $ ( 106 ) $ 1,081,841

As of December 31, 2020 905,081 221,963 47,641 ( 201,391 ) 973,294

A reconciliation from the segment information to the consolidated balances for revenues and total assets is set forth below:

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Intersegment revenues - continuing operations $ — $ ( 159 ) $ ( 57 ) $ ( 200 )

Intersegment revenues - discontinued operation — 159 57 200

Consolidated intersegment revenues $ — $ — $ — $ —

June 30, 2021 December 31, 2020

Segment assets - continuing operations $ 1,081,841 $ 973,294

Current assets held for sale — 21,002

Noncurrent assets held for sale — 53,097

Consolidated total assets $ 1,081,841 $ 1,047,393

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(In thousands, except per share data)

March 31, 2021

Revenue from the individual services within the Expedited Freight segment for the three months ended March 31, 2021 and 2020 are as follows:

Three Months Ended

2021 March 31,

Expedited Freight revenue:

(unaudited and in thousands, except per share data)

June 30, 2021

Revenue from the individual services within the Expedited Freight segment for the three and six months ended June 30, 2021 and 2020 are as follows:

Three Months Ended Six Months Ended

2021 June 30,

2020 June 30,

2021 June 30,

Expedited Freight revenues:

Network $ 210,088 $ 134,173 $ 388,715 $ 286,182

3 unchanged sentences

Total $ 351,735 $ 235,658 $ 655,921 $ 489,287

Subsequent Event

On April 28, 2021, the Company entered into an agreement to acquire certain assets and liabilities of J&P Hall Express Delivery (“J&P”) for $ 7,400 .

J&P, headquartered in Atlanta, Georgia with a second terminal in Albany, Georgia, offers a portfolio of transportation services including less than truckload, truckload, less than container load, container freight station warehousing, and airport transfers across the Southeastern United States.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements