What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-11-08 compared with 2021-08-10 · 218 added, 175 removed, 578 unchanged (40% of the section changed)

3 unchanged sentences

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

September 30,

2021 December 31,

47 unchanged sentences

Three Months Ended

2021 June 30,

September 30,

2021 September 30,

Operating revenues $ 419,625 $ 331,997

30 unchanged sentences

(unaudited and in thousands, except per share amounts)

Six Months Ended

2021 June 30,

Nine Months Ended

September 30,

2021 September 30,

Operating revenues $ 1,202,498 $ 919,232

21 unchanged sentences

Net income per basic share 1

$ 2.39 $ 1.01

Diluted net income (loss) per share

3 unchanged sentences

Dividends per share $ 0.63 $ 0.54

1 Rounding may impact summation of amounts.

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

2 unchanged sentences

(unaudited and in thousands)

Six Months Ended

2021 June 30,

Nine Months Ended

September 30,

2021 September 30,

Operating activities:

21 unchanged sentences

Proceeds from revolving credit facility 45,000 65,000

Payments on revolving credit facility — ( 20,000 )

Payment of debt issuance costs ( 119 ) —

Payment of earn-out liability ( 6,519 ) ( 5,284 )

Proceeds from issuance of common stock upon stock option exercises 3,563 1,901

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

Payments of dividends to shareholders ( 17,270 ) ( 15,090 )

Repurchases and retirement of common stock ( 48,989 ) ( 45,248 )

2 unchanged sentences

Contributions from (distributions to) subsidiary held for sale 1,118 ( 8,897 )

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

Net cash used in financing activities from continuing operations ( 27,347 ) ( 31,297 )

Net increase (decrease) in cash and cash equivalents of continuing operations 11,676 ( 21,759 )

Cash from discontinued operation:

2 unchanged sentences

Net cash (used in) provided by financing activities of discontinued operation ( 1,118 ) 8,897

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

Net increase (decrease) in cash and cash equivalents 11,676 ( 21,759 )

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

Cash at beginning of period of discontinued operation — —

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

Net increase (decrease) in cash and cash equivalents 11,676 ( 21,759 )

cash at end of period of discontinued operation — —

25 unchanged sentences

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

Net income — — — 23,536 23,536

Share-based compensation expense — — 2,601 — 2,601

Payment of dividends to shareholders — — 4 ( 5,709 ) ( 5,705 )

Payment of minimum tax withholdings on share-based awards ( 3 ) — — ( 248 ) ( 248 )

Repurchases and retirement of common stock ( 169 ) ( 1 ) — ( 14,996 ) ( 14,997 )

Issuance of share-based awards 10 — — — —

Balance at September 30, 2021 26,958 $ 270 $ 255,071 $ 300,195 $ 555,536

Common Stock Additional Paid-in

16 unchanged sentences

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

Net income — — — 16,647 16,647

Stock options exercised 42 1 1,901 — 1,902

Share-based compensation expense — — 2,507 — 2,507

Payment of dividends to shareholders — — 3 ( 5,008 ) ( 5,005 )

Payment of minimum tax withholdings on share-based awards ( 3 ) — — ( 158 ) ( 158 )

Repurchases and retirement of common stock ( 519 ) ( 5 ) — ( 29,984 ) ( 29,989 )

Issuance of share-based awards 9 — — — —

Balance at September 30, 2020 27,258 $ 273 $ 237,497 $ 314,426 $ 552,196

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

2 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2021

September 30, 2021

Description of Business and Basis of Presentation

4 unchanged sentences

The Company conducts business in the United States and Canada.

The Expedited Freight segment operates a comprehensive national network to provide expedited regional, inter-regional and national less-than-truckload (“LTL ” ) services.

Expedited Freight offers customers local pick-up and delivery and other services including final mile, truckload, shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

The Expedited Freight segment provides expedited regional, inter-regional and national less-than-truckload (“LTL ” ), truckload and final mile services.

Expedited Freight also offers customers local pick-up and delivery and other services including shipment consolidation and deconsolidation, warehousing, customs brokerage and other handling.

The Intermodal segment provides first- and last-mile high value intermodal container drayage services both to and from seaports and railheads.

Intermodal also offers dedicated contract and container freight station (“CFS ” ) warehouse and handling services.

The condensed consolidated financial statements of the Company have been prepared in accordance with United States generally accepted accounting principles (“U.S.

GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position, results of operations, and cash flows at the dates and for the periods presented.

The condensed consolidated financial statements of the Company have been prepared in conformity with U.S.

generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the Securities and Exchange Commission.

These condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Results for interim periods are not necessarily indicative of the results for the year.

The Board approved a strategy to divest the Pool Distribution business (“Pool ” ) on April 23, 2020, and the sale of Pool was completed on February 12, 2021.

On April 23, 2020, the Board of Directors (the “Board ”) of the Company approved a strategy to divest of the Pool Distribution business (“Pool ” ), and the sale of Pool was completed on February 12, 2021.

Pool provided high-frequency handling and distribution of time sensitive product to numerous destinations within a specific geographic region.

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 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.

As a result of the strategy to divest of Pool, the results of operations for Pool are presented as a discontinued operation in the Condensed Consolidated Statements of Comprehensive Income for all periods presented.

In addition, assets and liabilities were reflected as “Assets and liabilities 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 the Company’s continuing operations.

Revenue Recognition

9 unchanged sentences

For delivery of shipments with a pick-up date in one reporting period and a delivery date in another reporting period, the Company recognizes revenue based on relative transit time in each reporting period.

A portion of the total revenue to be billed to the customer after completion of a delivery is

A portion of the total revenue to be billed to the customer after completion of a delivery is recognized in each reporting period based on the percentage of total transit time that has been completed at the end of the

Forward Air Corporation

1 unchanged sentence

(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.

September 30, 2021

applicable reporting period.

Upon delivery of a shipment or related service, customers are billed according to the applicable payment terms.

Related services are a separate performance obligation and include accessorial charges such as terminal handling, storage, equipment rentals and customs brokerage.

Revenue is classified based on the line of business as the Company believes this best depicts the nature, timing and amount of revenue and cash flows.

Revenue is classified based on the line of business as the Company believes that best depicts the nature, timing and amount of revenue and cash flows.

For all lines of business, the Company records revenue on a gross basis as it is the principal in the transaction as the Company has discretion to determine the amount of consideration.

5 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 and six months ended June 30, 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 nine months ended September 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.

These costs were reclassified to the eliminations and other column in the segment reconciliation in Note 13, Segment Reporting .

These costs were reclassified to the eliminations column in the segment reconciliation in Note 13, Segment Reporting .

On February 12, 2021, the Company completed the sale of the Pool business for $ 8,000 in cash and up to a $ 12,000 earn-out based on earnings before interest, taxes, depreciation and amortization.

The sale agreement for Pool included an earn-out based on the achievement of certain earnings before interest, taxes, depreciation and amortization attainment over an eleven-month period, beginning February 1, 2021.

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

5 unchanged sentences

Asset volatility 55.0 %

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.

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.

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

The financial performance of the Pool business significantly deteriorated during the three months ended September 30, 2021.

As a result, an evaluation of the earn-out asset for impairment was completed, which included a review of revised forecasts, updated strategic operating decisions and current market conditions.

The revised forecasts indicated an impairment of the entire earn-out asset was necessary as of September 30, 2021.

A non-cash charge of $ 6,967 was recorded as an “Impairment charge ” in the summarized discontinued operation financial information for the three and nine months ended September 30, 2021.

Transition Services Agreement

On February 12, 2021, the Company entered into a Transition Services Agreement (“TSA ” ) with TOG FAS Holdings LLC, the buyer of the Pool business.

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 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

Under the TSA, the Company performed 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 remained in effect until the date all services were completed, but no more than six months following the effective date.

The TSA provided 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 received a monthly service charge.

For the three and nine months ended September 30, 2021, the Company recognized $ 229 and $ 641 , respectively, in “Other operating expenses ” in the

Forward Air Corporation

1 unchanged sentence

(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 .

September 30, 2021

Condensed Consolidated Statements of Comprehensive Income, for the services performed under the TSA.

The TSA ended in October 2021 when all services were completed.

Additionally, under the TSA, the Company remitted 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 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.

As of September 30, 2021, the Company recorded a receivable in the amount o f $ 14,218 in “Other receivables ” in the Condensed Consolidated Balance Sheets for the reimbursement due to the Company.

The Company evaluates the collectability of the receivable at least quarterly and if the Company is aware of the inability of TOG FAS Holdings LLC to meet its financial obligations to the Company, the Company will record a specific reserve in order to reduce the receivable to the amount the Company reasonably believes will be collected.

The Company believes collectibility of the receivable is probable as of September 30, 2021.

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 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,

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 nine months ended September 30, 2021 and 2020 is as follows:

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Operating revenues $ — $ 37,521 $ 17,087 $ 88,447

7 unchanged sentences

Other operating expenses — 4,467 2,087 12,309

Impairment charge 6,967 — 6,967 —

Total operating expenses 6,967 38,053 27,498 101,141

4 unchanged sentences

Loss from discontinued operation, net of tax $ ( 6,967 ) $ ( 345 ) $ ( 12,500 ) $ ( 9,458 )

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2021

Expedited Freight Acquisition

3 unchanged sentences

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

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 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 fair value of the earn-out liability

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2021

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 and nine months ended September 30, 2021, the fair value of the earn-out changed by zero 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 nine months ended September 30, 2020, the fair value of the earn-out changed by $ 493 and ($ 2,209 ), 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 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.

The second one-year period ended in the second quarter of 2021 and the Company paid $ 6,813 in the third quarter of 2021 based on the terms of the purchase agreement.

As of December 31, 2020, the fair value of the earn -out liability was $ 6,865 , 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 .

16 unchanged sentences

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

February 28, 2021 September 30, 2021

Risk-free rate 0.1 % 0.1 %

4 unchanged sentences

(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.

September 30, 2021

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

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

Fair Value of Assets Acquired and Liabilities Assumed

27 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2021

September 30, 2021

Goodwill and Other Intangible Assets

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

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

Expedited Freight Intermodal Consolidated

1 unchanged sentence

Acquisitions 3,545 6,249 9,794

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

Balance as of September 30, 2021 $ 168,813 $ 85,963 $ 254,776

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 June 30, 2021.

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

Based on the current macroeconomic conditions, the Company assessed its goodwill and other intangible assets for indications of impairment as of September 30, 2021 and concluded there were no indicators of impairment during the three months ended September 30, 2021.

Other Intangible Assets

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

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

Gross Carrying Amount

3 unchanged sentences

Acquisitions 7,640 150 — 7,790

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

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

Accumulated Amortization

3 unchanged sentences

Amortization expense 9,652 974 — 10,626

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.

Balance as of September 30, 2021 $ 95,582 $ 6,553 $ 1,500 $ 103,635

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

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2021

September 30, 2021

Stock Incentive Plans

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,

The Company recorded share-based compensation expense as follows for the three and nine months ended September 30, 2021 and 2020:

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Salaries, wages and employee benefits - continuing operations $ 2,283 $ 2,085 $ 7,015 $ 7,056

2 unchanged sentences

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.

As of September 30, 2021, appro ximately 799 shares remain available for grant under the Omnibus Plan.

Stock Options

1 unchanged sentence

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

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

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

Stock Options Weighted-Average Exercise Price

3 unchanged sentences

Forfeited — —

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:

Outstanding as of September 30, 2021 346 $ 58.30

As of September 30, 2021, the total share-based compensation expense related to unvested stock options not yet recognized was $ 800 , and the weighted-average period over which it is expected to be recognized is approximately two years .

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

Stock Options Weighted-Average Exercise Price

2 unchanged sentences

Forfeited — —

Outstanding as of June 30, 2021 — $ —

Outstanding as of September 30, 2021 — $ —

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 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 six months ended June 30, 2021 on a continuing operations basis were as follows:

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

Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 17 ) 69.78

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:

Outstanding as of September 30, 2021 194 $ 69.84

As of September 30, 2021, the total share-based compensation expense related to restricted shares not yet recognized was $ 9,495 , and the weighted-average period over which it is expected to be recognized is approximately two years .

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

Restricted Shares Weighted-Average Grant Date Fair Value

2 unchanged sentences

Forfeited ( 5 ) 61.92

Outstanding as of June 30, 2021 — $ —

Outstanding as of September 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.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(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 award transactions during the nine months ended September 30, 2021 on a continuing operations basis were as follows assuming target levels of performance:

Performance Awards Weighted-Average Grant Date Fair Value

3 unchanged sentences

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 .

Outstanding as of September 30, 2021 79 $ 75.61

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

September 30, 2021

As of September 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 $ 4,120 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Employee Stock Purchase Plan

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”).

As of September 30, 2021, the Company is authorized to issue up to a re maining 330 share s 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.

1 unchanged sentence

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

Six Months Ended

2021 June 30,

Nine Months Ended

September 30,

2021 September 30,

Shares purchased by participants under the ESPP 5 6

1 unchanged sentence

Weighted-average fair value of each purchase right under the ESPP granted¹ $ 20.99 $ 4.98

Share-based compensation for ESPP shares $ 118 $ 30

Share-based compensation expense for ESPP $ 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,

Nine Months Ended

September 30,

2021 September 30,

Shares purchased by participants under the ESPP — 1

1 unchanged sentence

Weighted-average fair value of each purchase right under the ESPP granted¹ $ — $ 4.98

Share-based compensation for ESPP shares $ — $ 3

Share-based compensation expense for ESPP $ — $ 3

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

2 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2021

September 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 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:

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

Director restricted share transactions during the nine months ended September 30, 2021 were as follows:

Director Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited — —

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 .

Outstanding as of September 30, 2021 15 $ 93.46

For the three and nine months ended September 30, 2021, the Company recorded $ 318 and $ 1,046 , respectively, of share-based compensation expense associated with these grants.

For the three and nine months ended September 30, 2020, the Company recorded $ 260 and $ 766 , respectively, of share-based compensation expense associated with these grants.

As of September 30, 2021, the total share-based compensation expense related to the restricted shares not yet recognized was $ 875 , and the weighted-average period over which it is expected to be recognized is approximately less than one year .

Forward Air Corporation

1 unchanged sentence

(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.

September 30, 2021

As of September 30, 2021, the Company had $ 157,500 in borrowings outstanding under the revolving credit facility, $ 17,326 utilized for outstanding letters of credit and $ 50,174 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.

The interest rate on the outstanding borrowings under the revolving credit facility was 1.35 % and 3.27 % as of September 30, 2021 and September 30, 2020 respectively.

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.

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

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 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.

Interest is payable in arrears for each loan that is based on the LIBOR rate on the last day of the interest period applicable to each loan, and interest is payable in arrears on loans not based on the LIBOR rate on the last day of each quarter.

The Facility contains covenants that, among other things, restrict the ability of the Company, without the approval of the required lenders, to engage in certain mergers, consolidations, asset sales, dividends and stock repurchases, investments, and other transactions or to incur liens or indebtedness in excess of agreed thresholds, as set forth in the credit agreement.

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

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

The Facility could have been 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.

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 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.

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.

Interest is payable in arrears for each loan that is based on the BSBY rate on the last day of the interest period applicable to each loan, and interest is payable in arrears on loans not based on the BSBY rate on the last day of each quarter.

Previously, under the Facility, interest accrued 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 was 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.

Interest was payable in arrears for each loan that was based on the LIBOR rate on the last day of the interest period applicable to each loan, and interest was payable in arrears on loans not based on the LIBOR rate on the last day of each quarter.

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

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

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2021

September 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 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,

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 nine months ended September 30, 2021 and 2020 is as follows:

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Net income and comprehensive income from continuing operations $ 30,503 $ 16,992 $ 77,894 $ 37,634

11 unchanged sentences

Net income per basic share 1

$ 0.86 $ 0.60 $ 2.39 $ 1.01

Diluted net income (loss) per share:

2 unchanged sentences

Net income per diluted share $ 0.86 $ 0.60 $ 2.37 $ 1.01

1 Rounding may impact summation of amounts.

Forward Air Corporation

1 unchanged sentence

(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,

September 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 nine months ended September 30, 2021 and 2020 are as follows:

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Anti-dilutive stock options 39 219 39 219

2 unchanged sentences

Total anti-dilutive shares 39 242 39 350

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.

For the nine months ended September 30, 2021 and 2020, the Company recorded income tax expense of $ 25,969 and $ 12,209 , respectively, for continuing operations.

The effective tax rate of 25.0 % for the nine months ended September 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 24.5 % for the nine months ended September 30, 2020 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 and a refund for Tennessee tax credits.

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

As of both September 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.

federal, state and local, or Canadian examinations by tax authorities for years before 2013.

The sale of Pool resulted in a capital loss in the amount of $ 2,426 .

The capital loss expires in 2026.

The sale of Pool resulted in a capital loss in the amount of $ 4,195 , which expires in 2026.

The Company concluded that it was more likely than not the capital loss carryforward will not be realized and therefore, established a valuation allowance of $ 4,195 to reserve against its capital loss carryforward.

13 unchanged sentences

and model-derived valuations in which all significant inputs are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

• Level 3 - Model-derived valuations in which one or more significant inputs are unobservable.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2021

September 30, 2021

• Level 3 - Model-derived valuations in which one or more significant inputs are unobservable.

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.

1 unchanged sentence

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

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

As of September 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 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 September 30, 2021, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 5,895 , compared to its carrying value of $ 5,834 .

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 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.

During the third quarter of 2021, 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 October 26, 2021, the Company's Board of Directors declared a quarterly cash dividend of $ 0.21 per common share that will be paid in the fourth quarter of 2021.

Share Repurchase Program

5 unchanged sentences

(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.

September 30, 2021

During the nine months ended September 30, 2021, the Company repurchased through open market transactions 535 shares of common stock for $ 48,989 , or $ 91.46 per share, and during the nine months ended September 30, 2020, the Company repurchased 787 shares of common stock for $ 45,248 , or $ 57.53 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 June 30, 2021, the remaining shares to be repurchased under the 2019 Repurchase Plan were approximately 3,002 shares.

As of September 30, 2021, the remaining shares to be repurchased under the 2019 Repurchase Plan were approximately 2,833 shares.

Commitments and Contingencies

15 unchanged sentences

10/1/2021 to 10/1/2022

LTL and Truckload businesses $ 5,000 Policy Term Aggregate³ $ 5,000 to $ 10,000

LTL and Truckload businesses 4

$ 2,500 Policy Term Aggregate³ $ 5,000 to $ 10,000

10/1/2021 to 10/1/2022

4 unchanged sentences

³ During the Policy Term, the Company is responsible for damages and defense within the stated Layer up to the stated, aggregate amount of Company Risk Retention before insurance will respond.

4 Intermodal is also included in this Layer, damages for which would contribute to the aggregate risk retention.

Also, from time to time, when brokering freight, the Company may face claims for the “negligent selection” of outside, contracted carriers that are involved in accidents, and the Company maintains third-party liability insurance coverage with a $ 100 deductible per occurrence for most of its brokered services.

1 unchanged sentence

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

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

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

June 30, 2021

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.

September 30, 2021

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.

10 unchanged sentences

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

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

Three Months Ended September 30, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

Purchases of property and equipment 13,769 671 — — 14,440

Three Months Ended June 30, 2020

Three Months Ended September 30, 2020

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

8 unchanged sentences

(unaudited and in thousands, except per share data)

June 30, 2021

Six Months Ended June 30, 2021

September 30, 2021

Nine Months Ended September 30, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

Purchases of property and equipment 21,905 1,110 — — 23,015

Six Months Ended June 30, 2020

Nine Months Ended September 30, 2020

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

Purchases of property and equipment 15,987 452 — — 16,439

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

As of September 30, 2021 $ 750,775 $ 212,203 $ 107,327 $ 203 $ 1,070,508

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,

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Intersegment revenues - continuing operations $ — $ 32 $ ( 57 ) $ ( 168 )

1 unchanged sentence

Consolidated intersegment revenues $ — $ — $ — $ —

June 30, 2021 December 31, 2020

September 30, 2021 December 31, 2020

Segment assets - continuing operations $ 1,070,508 $ 973,294

5 unchanged sentences

(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,

September 30, 2021

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

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

Expedited Freight revenues:

4 unchanged sentences

Total $ 341,557 $ 283,514 $ 997,478 $ 772,801

Subsequent Event

On November 1, 2021, the Company entered into an agreement to acquire certain assets and liabilities of BarOle Trucking, Inc.

(“BarOle”) for $ 35,436 .

BarOle provides additional capacity and resources to meet customer demands in the intermodal market, and extends the service footprint to the Minneapolis-Saint Paul, Minnesota area.

In addition, BarOle has a larger terminal location, which allows for further expansion in the future.

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