What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2022-05-09 compared with 2021-11-08 · 202 added, 374 removed, 422 unchanged (58% of the section changed)

3 unchanged sentences

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

September 30,

2022 December 31,

5 unchanged sentences

Other current assets 22,468 29,309

Current assets held for sale — 21,002

Total current assets 325,252 282,807

Property and equipment 396,094 380,519

Less accumulated depreciation and amortization 199,875 190,652

Total property and equipment, net 196,219 189,867

Property and equipment, net of accumulated depreciation and amortization of $ 206,980 in 2022 and $ 200,867 in 2021

224,060 219,095

Operating lease right-of-use assets 153,337 148,198

3 unchanged sentences

Other assets 47,880 46,254

Noncurrent assets held for sale — 53,097

Total assets $ 1,166,806 $ 1,117,823

6 unchanged sentences

Current portion of operating lease liabilities 48,499 47,532

Current liabilities held for sale — 25,924

Total current liabilities 187,944 164,692

Long-term debt and finance lease obligations, less current portion and debt issuance costs 161,312 117,408

Finance lease obligations, less current portion 8,767 9,571

Long-term debt, less current portion and debt issuance costs 155,125 155,466

Operating lease liabilities, less current portion 105,773 101,409

1 unchanged sentence

Deferred income taxes 45,050 43,407

Noncurrent liabilities held for sale — 34,575

Shareholders’ equity:

14 unchanged sentences

Three Months Ended

September 30,

2021 September 30,

Operating revenues $ 419,625 $ 331,997

Operating expenses:

Purchased transportation 205,474 173,054

Salaries, wages and employee benefits 84,410 66,927

Operating leases 20,536 17,327

Depreciation and amortization 9,416 9,172

Insurance and claims 9,984 8,671

Fuel expense 4,457 2,715

Other operating expenses 42,872 30,621

Total operating expenses 377,149 308,487

Income from continuing operations 42,476 23,510

Other expense:

Interest expense ( 973 ) ( 1,304 )

Total other expense ( 973 ) ( 1,304 )

Income before income taxes 41,503 22,206

Income tax expense 11,000 5,214

Net income from continuing operations 30,503 16,992

Loss from discontinued operation, net of tax ( 6,967 ) ( 345 )

Net income and comprehensive income $ 23,536 $ 16,647

Basic net income (loss) per share

Continuing operations $ 1.12 $ 0.61

Discontinued operation ( 0.26 ) ( 0.01 )

Net income per basic share $ 0.86 $ 0.60

Diluted net income (loss) per share

Continuing operations $ 1.12 $ 0.61

Discontinued operation ( 0.26 ) ( 0.01 )

Net income per diluted share $ 0.86 $ 0.60

Dividends per share $ 0.21 $ 0.18

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)

Nine Months Ended

September 30,

2021 September 30,

2022 March 31,

Operating revenues $ 466,961 $ 362,202

21 unchanged sentences

Net income per basic share $ 1.57 $ 0.40

$ 2.39 $ 1.01

Diluted net income (loss) per share

3 unchanged sentences

Dividends per share $ 0.24 $ 0.21

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)

Nine Months Ended

September 30,

2021 September 30,

Three Months Ended

2022 March 31,

Operating activities:

5 unchanged sentences

Provision for revenue adjustments 1,304 1,777

Deferred income tax (benefit) expense ( 1,384 ) 4,317

Other 406 714

Deferred income tax expense (benefit) 1,643 ( 505 )

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

7 unchanged sentences

Purchases of property and equipment ( 9,908 ) ( 2,695 )

Purchase of a business, net of cash acquired ( 23,053 ) ( 55,931 )

Purchases of a business, net of cash acquired — ( 15,000 )

Net cash used in investing activities of continuing operations ( 9,397 ) ( 17,030 )

1 unchanged sentence

Repayments of finance lease obligations ( 1,070 ) ( 467 )

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 )

Payments on credit facility ( 375 ) —

Proceeds from issuance of common stock upon stock option exercises 206 2,147

1 unchanged sentence

Repurchases and retirement of common stock ( 17,780 ) ( 9,998 )

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

Payment of minimum tax withholdings on share-based awards ( 3,254 ) ( 2,744 )

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

Contributions from subsidiary held for sale — 1,118

Net cash used in financing activities from continuing operations ( 28,775 ) ( 15,741 )

2 unchanged sentences

Net cash used in operating activities of discontinued operation — ( 6,902 )

Net cash provided by (used in) investing activities of discontinued operation 8,020 ( 807 )

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

Net cash provided by investing activities of discontinued operation — 8,020

Net cash used in financing activities of discontinued operation — ( 1,118 )

Net increase (decrease) in cash and cash equivalents 24,314 ( 15,858 )

20 unchanged sentences

Balance at March 31, 2022 26,862 $ 269 $ 261,444 $ 350,058 $ 611,771

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

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

3 unchanged sentences

Net income — — — 11,181 11,181

Share-based compensation expense — — 3,266 — 3,266

Payment of dividends to shareholders — — 2 ( 5,052 ) ( 5,050 )

Payment of minimum tax withholdings on share-based awards ( 42 ) — — ( 2,672 ) ( 2,672 )

Repurchases and retirement of common stock ( 268 ) ( 3 ) — ( 15,256 ) ( 15,259 )

Issuance of share-based awards 139 1 ( 2 ) — ( 1 )

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

Net income — — — 16,647 16,647

Stock options exercised 40 — 2,147 — 2,147

4 unchanged sentences

Issuance of share-based awards 111 1 ( 1 ) — —

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

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

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

2 unchanged sentences

(unaudited and in thousands, except per share data)

September 30, 2021

March 31, 2022

Description of Business and Basis of Presentation

8 unchanged sentences

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

The Company’s condensed consolidated financial statements include Forward Air Corporation and it's wholly-owned subsidiaries.

Intercompany accounts and transactions have been eliminated in consolidation.

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

5 unchanged sentences

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

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.

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

Unless otherwise noted, amounts, percentages and discussion for the prior period reflect the results of operations, financial condition and cash flows from the Company’s continuing operations.

Refer to Note 3, Discontinued Operation , for further discussion.

Revenue Recognition

8 unchanged sentences

The determination of the transit period and how much of it has been completed as of a given reporting date may require the Company to make judgments that impact the timing of revenue recognized.

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

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

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

applicable reporting period.

March 31, 2022

time in each reporting period.

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

4 unchanged sentences

These factors, discretion in the amount of consideration and the selection of drivers and other vendors, support revenue recognized on a gross basis.

Discontinued Operation and Held for Sale

As previously disclosed, on April 23, 2020, the Company made a decision to divest of Pool.

The Pool business met the criteria for held for sale classification.

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 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 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 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.

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

February 12, 2021

Counterparty credit spread 1.2 %

Earnings before interest, taxes, depreciation and amortization discount rate 15.0 %

Asset volatility 55.0 %

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.

Discontinued Operation

As previously disclosed, on April 23, 2020, the Company made a decision to divest of Pool and the sale was completed on February 12, 2021.

As a result, the results of Pool were classified to “Loss from discontinued operation, net of tax” in the Condensed Consolidated Statements of Comprehensive Income for three months ended March 31, 2021.

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

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

Transition Services Agreement

4 unchanged sentences

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

For the three months ended March 31, 2021, the Company recognized $ 171 in “Other operating expenses ” in the 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 was reimbursed by TOG FAS Holdings LLC within 60 days from the end of the month in the payment was remitted.

As of March 31, 2022 and December 31, 2021, the Company recorded a receivable in the amount of $ 4,488 and $ 8,097 respectively, in “Other receivables ” in the Condensed Consolidated Balance Sheets for the reimbursement due to the Company.

The Company evaluates the collectability of the receivables 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 March 31, 2022.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

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 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.

March 31, 2022

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 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

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 is as follows:

Operating revenue $ 17,087

Operating expenses:

6 unchanged sentences

Other operating expenses 2,087

Impairment charge 6,967 — 6,967 —

Total operating expenses 20,531

4 unchanged sentences

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

Expedited Freight Acquisition

As part of the Company’s strategy to expand final mile pickup and delivery operations, in April 2019, the Company acquired certain assets and liabilities of FSA Network, Inc., doing business as FSA Logistix (“FSA”), for $ 27,000 and a potential earn-out of up to $ 15,000 .

The purchase agreement for FSA included an earn-out up to $ 15,000 based on the achievement of certain revenue milestones over two one-year periods, beginning May 1, 2019.

The estimated fair value of the earn-out liability on the date of acquisition was $ 11,803 .

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

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 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 .

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

Intermodal Acquisitions

In February 2021, the Company acquired certain assets and liabilities of Proficient Transport Incorporated and Proficient Trucking, Inc.

(together “Proficient Transport ” ) for $ 15,510 and a potential earn-out up to $ 2,000 .

Proficient Transport is an intermodal drayage company headquartered in Chicago, Illinois.

The acquisition of Proficient Transport supports the Company’s strategic growth plan by expanding the intermodal footprint in Georgia, Illinois, North Carolina, and Texas, and introduces a new location in Ohio.

The acquisition was financed by cash flows from operations.

The results of Proficient Transport 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 Intermodal reportable segment.

(together “Proficient Transport ” ) for $ 16,339 and a potential earn-out of up to $ 2,000 .

The purchase agreement for Proficient Transport included an earn-out up to $ 2,000 based on the achievement of certain revenue milestones over a one-year period, beginning March 1, 2021.

1 unchanged sentence

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 September 30, 2021

Risk-free rate 0.1 % 0.1 %

Revenue discount rate 8.3 % 8.3 %

Revenue volatility 27.3 % 19.7 %

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 option pricing method.

During the three months ended March 31, 2022 and 2021, the fair value of the earn-out changed by ($ 294 ) and ($ — ) respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income.

As of March 31, 2022 and December 31, 2021, the fair value of the earn-out liability was $ 91 and $ 385 respectively, which was reflected in “Other current liabilities” in the Condensed Consolidated Balance Sheets.

In November 2021, the Company acquired certain assets and liabilities of BarOle Trucking, Inc.

( “BarOle”) for $ 35,436 .

BarOle is an intermodal drayage company headquartered in Roseville, Minnesota.

The acquisition of 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.

The acquisition was financed by cash flows from operations.

The results of BarOle 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 Intermodal reportable segment.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

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.

March 31, 2022

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 J&P

February 28, 2021 May 30, 2021

Assets acquired and liabilities assumed as of the acquisition date for BarOle are summarized in the following table:

November 30, 2021

Tangible assets:

Accounts receivable $ 2,481

Prepaid expenses and other current assets — 32

Property and equipment 6,464

Other assets 24 3

Total tangible assets 8,945

9 unchanged sentences

Net assets acquired $ 35,436

The fair value of the assets acquired and liabilities assumed are preliminary based on the information available as of the acquisition date through the date of this filing.

The weighted-average useful life of acquired intangible assets as of the acquisition date are summarized in the following table:

Weighted-Average Useful Lives

Proficient Transport J&P

Customer relationships 8 years 12 years

Non-compete agreements 1 year 5 years

The preliminary purchase price for BarOle has been allocated to assets acquired and liabilities assumed based on the the Company’s best estimates and assumptions using the information available as of the acquisition date through the date of this filing.

The provisional measurements of identifiable assets and liabilities, and the resulting goodwill related to these acquisitions are subject to adjustments in subsequent periods as the Company finalizes its purchase price allocation, including the third-party valuations.

The Company expects to finalize the valuation as soon as practicable, but no later than one year from the acquisition date.

The estimated useful life of acquired intangible assets as of the acquisition date for BarOle are summarized in the following table:

Estimated Useful Lives

Customer relationships 8 years

Non-compete agreements 5 years

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

Goodwill and Other Intangible Assets

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

March 31, 2022

Goodwill and Intangible Assets

Changes in the carrying amount of goodwill during the three months ended March 31, 2022 are summarized as follows:

Expedited Freight Intermodal Consolidated

Balance as of December 31, 2021 $ 169,288 $ 97,464 $ 266,752

Acquisitions 3,545 6,249 9,794

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

Acquisition adjustment — ( 1,113 ) ( 1,113 )

Balance as of March 31, 2022 $ 169,288 $ 96,351 $ 265,639

The Company ’ s accumulated goodwill impairment is $ 25,686 related to impairment charges the Company recorded during 2016 pertaining to its TLS reporting unit.

The TLS reporting unit operates within the Expedited Freight reportable segment.

As of March 31, 2022, approximately $ 186,495 of goodwill is deductible for tax purposes.

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 September 30, 2021 and concluded there were no indicators of impairment during the three months ended September 30, 2021.

There have been no indicators of impairment during the three months ended March 31, 2022.

Other Intangible Assets

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

Changes in the carrying amount of acquired intangible assets during the three months ended March 31, 2022 are summarized as follows:

Gross Carrying Amount

2 unchanged sentences

Balance as of December 31, 2021 $ 251,377 $ 9,176 $ 1,500 $ 262,053

Acquisitions 7,640 150 — 7,790

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

Acquisition — — — —

Balance as of March 31, 2022 $ 251,377 $ 9,176 $ 1,500 $ 262,053

Accumulated Amortization

3 unchanged sentences

Amortization expense 3,782 296 — 4,078

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.

Balance as of March 31, 2022 $ 102,876 $ 7,039 $ 1,500 $ 111,415

1 Carrying value as of March 31, 2022 and December 31, 2021 is inclusive of $ 16,501 of accumulated impairment.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

March 31, 2022

Stock Incentive Plans

Stock Incentive Plan

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,

The Company recorded share-based compensation expense as follows for the three months ended March 31, 2022 and 2021:

Three Months Ended

2022 March 31,

Salaries, wages and employee benefits - continuing operations $ 2,422 $ 2,269

1 unchanged sentence

Total share-based compensation expense $ 2,422 $ 2,285

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 September 30, 2021, appro ximately 799 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 common shares to employees.

As of March 31, 2022, appro ximately 649 shares remain available for grant under the Omnibus Plan.

Stock Options

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

Certain executives are eligible to receive grants of stock options.

Stock options vest over a three-year period from the date of grant.

Share-based compensation expense associated with these awards 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 nine months ended September 30, 2021 on a continuing operations basis were as follows:

Stock option transactions during the three months ended March 31, 2022 on a continuing operations basis were as follows:

Stock Options Weighted-Average Exercise Price

3 unchanged sentences

Forfeited — —

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

Outstanding as of January 1, 2021 14 $ 52.15

Exercised ( 14 ) 52.15

Forfeited — —

Outstanding as of September 30, 2021 — $ —

Outstanding as of March 31 403 $ 65.95

As of March 31, 2022, the total share-based compensation expense related to unvested stock options not yet recognized was $ 2,343 , and the weighted-average period over which it is expected to be recognized is approximately three years .

Restricted Shares

The Company’s primary long-term incentive plan is a restricted share award plan that entitles employees to receive a share of the Company’s common stock subject to vesting requirements based on continued employment.

Shares granted under the restricted share award plan are restricted from sale or transfer until vesting, and the restrictions lapse in three equal installments beginning one year after the date of grant.

Dividends are paid in cash on a current basis throughout the vesting period.

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

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

Restricted Shares

Restricted shares are restricted from sale or transfer until vesting, and restrictions lapse in three equal installments beginning one year after the date of grant.

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

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

March 31, 2022

Restricted share transactions on a continuing operations basis during the three months ended March 31, 2022 were as follows:

Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 3 ) 87.11

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

Outstanding as of January 1, 2021 10 $ 61.25

Vested ( 5 ) 60.49

Forfeited ( 5 ) 61.92

Outstanding as of September 30, 2021 — $ —

Outstanding as of March 31 176 $ 86.70

As of March 31, 2022, the total share-based compensation expense related to restricted shares not yet recognized was $ 14,051 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Performance Awards

Performance awards are based on achieving certain financial targets, such as targets for earnings before interest, taxes, depreciation and amortization, and the Company’s total shareholder return as compared to the total shareholder return of a selected peer group, as determined by the Company’s Board of Directors.

Performance targets are set at the beginning of each three-year measurement period.

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

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

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

The Company estimates the fair value of the grants with a financial target based on the Company’s total shareholder return using a Monte Carlo simulation model.

Performance award transactions during the three months ended March 31, 2022 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 ( 7 ) 59.41

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 .

Outstanding as of March 31 79 $ 87.69

As of March 31, 2022, 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 $ 4,949 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Employee Stock Purchase Plan

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.

Under the 2005 Employee Stock Purchase Plan (the “ESPP”), the Company is authorized to issue up to a remaining 323 shares of common stock to employees.

These shares may be issued at a price equal to 90 % of the lesser of the market value on th e 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.

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

Nine Months Ended

September 30,

2021 September 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 granted¹ $ 20.99 $ 4.98

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:

Nine Months Ended

September 30,

2021 September 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 granted¹ $ — $ 4.98

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.

No shares were issued during the three months ended March 31, 2022.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

March 31, 2022

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 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:

As of March 31, 2022, approxim ately 75 shares re main available for grant under the Amended Plan.

Under the Amended Plan, each non-employee director receives an annual grant of restricted shares of the Company’s common stock.

The restricted shares vest on the either of (a) the day immediately prior to the first annual shareholder meeting that occurs after the grant date or (b) one year after the grant date.

Director restricted share transactions during the three months ended March 31, 2022 were as follows:

Director Restricted Shares Weighted-Average Grant Date Fair Value

Outstanding as of January 1 15 $ 93.46

Granted 17 93.39

Vested ( 26 ) 47.12

Forfeited — —

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 .

Outstanding as of March 31 15 $ 93.46

For the three months ended March 31, 2022 and 2021, the Company recorded $ 339 and $ 328 , respectively, of share-based compensation expense associated with these grants.

As of March 31, 2022, the total share-based compensation expense related to the restricted shares not yet recognized was $ 188 , and the weighted-average period over which it is expected to be recognized is approximately less than one year .

Long-term debt consisted of the following as of March 31, 2022 and December 31, 2021:

March 31, 2022 December 31, 2021

Credit facility, expires 2026 $ 157,125 $ 157,500

Debt issuance costs ( 505 ) ( 534 )

156,620 156,966

Current portion of long-term debt ( 1,495 ) ( 1,500 )

Total long-term debt, less current portion $ 155,125 $ 155,466

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

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 1.35 % and 3.27 % as of September 30, 2021 and September 30, 2020 respectively.

March 31, 2022

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.

3 unchanged sentences

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.

In December 2021, the Company entered into the third amendment to the Facility, which increased the amount available for borrowing under the Facility to $ 450,000 , consisting of a $ 300,000 revolving line of credit and a term loan of $ 150,000 .

In connection with the third amendment, the Company borrowed $ 150,000 under the term loan and simultaneously repaid $ 150,000 on the revolving line of credit from the borrowings received.

Under the third amendment, the Facility may be increased by up to $ 75,000 to a maximum aggregate principal amount of $ 525,000 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.

As of both March 31, 2022 and December 31, 2021, the Company had $ 272,466 of available borrowing capacity under the Facility.

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 March 31, 2022, the Company was in compliance with the aforementioned covenants.

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.

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.

Interest is payable in arrears for each loan that is based on the BSBY rate on the last day o f 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.

The weighted average interest rate on the outstanding borrowings under the revolving credit facility was 1.44 % and 3.25 % for the three months ended March 31, 2022, and 2021, respectively.

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 %.

1 unchanged sentence

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.

Letters of Credit

The Company has an arrangement under the Facility to issue letters of credit, which guarantee the Company’s obligations for potential claims exposure for insurance coverage.

As of both March 31, 2022 and December 31, 2021, outstanding letters of credit totaled $ 20,034 .

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

March 31, 2022

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 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,

Basic net income (loss) per common share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during each period.

Restricted shares have non-forfeitable rights to dividends and as a result, are considered participating securities for purposes of computing net income (loss) per common share pursuant to the two-class method.

Diluted net income (loss) per common share assumes the exercise of outstanding stock options and the vesting of performance share awards using the treasury stock method when the effects of such assumptions are dilutive.

A reconciliation of net income (loss) attributable to Forward Air and weighted-average common shares outstanding for purposes of calculating basic and diluted net income (loss) per share during the three months ended March 31, 2022 and 2021 is as follows:

Three Months Ended

2022 March 31,

Net income and comprehensive income from continuing operations $ 42,686 $ 16,714

1 unchanged sentence

Net income attributable to Forward Air $ 42,686 $ 11,181

Income allocated to participating securities from continuing operations ( 248 ) ( 101 )

Loss allocated to participating securities from discontinued operation — —

Income allocated to participating securities ( 248 ) ( 101 )

17 unchanged sentences

(unaudited and in thousands, except per share data)

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,

March 31, 2022

The number of shares that were not included in the calculation of net income (loss) per diluted share because to do so would have been anti-dilutive for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended

2022 March 31,

Anti-dilutive stock options 64 25

2 unchanged sentences

Total anti-dilutive shares 78 29

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

For the three months ended March 31, 2022 and 2021, the Company recorded income tax expense of $ 13,881 and $ 4,845 , respectively, for continuing operations.

The effective tax rate of 24.5 % for the three months ended March 31, 2022 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 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 Company recognizes income tax benefits from uncertain tax positions where the realization of the ultimate benefit is uncertain.

As of both March 31, 2022 and December 31, 2021, the Company had $ 241 of unrecognized income tax benefits, all of which would affect the Company’s effective tax rate if recognized.

As of both March 31, 2022 and December 31, 2021, the Company had accrued interest and penalties related to unrecognized tax benefits of $ 88 .

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

2 unchanged sentences

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 $ 4,230 to reserve against its capital loss carryforward.

The Company also maintains a valuation allowance to reserve against its state net operating loss carryforwards.

The Company also maintains a valuation allowance to reserve against its state net operating loss carryforwards of $ 395 .

A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not be realized.

2 unchanged sentences

The Company believes it is more likely than not that it will realize its remaining net deferred tax assets, net of the valuation allowance, in future years.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

Fair Value of Financial Instruments

7 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.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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.

As previously discussed in Note 4, Acquisitions, the estimated fair value of the earn-out liability was determined using 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 September 30, 2021 and December 31, 2020 are summarized below:

As of September 30, 2021

Observable inputs used in 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 March 31, 2022 and December 31, 2021 are summarized below:

As of March 31, 2022

Level 1 Level 2 Level 3 Total

3 unchanged sentences

Earn-out liability $ — $ — $ 385 $ 385

Cash and cash equivalents, accounts receivable, and accounts payable are valued at their carrying amounts in the Company’s Condensed Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments.

Cash and cash equivalents, accounts receivable, other receivables, and accounts payable are valued at their carrying amounts in the Company’s Condensed Consolidated Balance Sheets, due to the immediate or short-term maturity of these financial instruments.

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 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 March 31, 2022, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 13,203 , compared to its carrying value of $ 13,341 .

As of December 31, 2021, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 14,312 , compared to its carrying value of $ 14,159 .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

Shareholders’ Equity

Cash Dividends

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.

During the first quarter of 2022, the Board declared and the Company has paid a quarterly cash dividend of $ 0.24 per common share.

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

On April 25, 2022, the Board declared a quarterly cash dividend of $ 0.24 per common share that will be paid in the second quarter of 2022.

Share Repurchase Program

On July 21, 2016, the Company’s Board of Directors approved a stock repurchase program for up to 3,000 shares of the Company’s common stock (the “2016 Repurchase Plan ” ).

On February 5, 2019, the Board of Directors canceled the Company’s 2016 Repurchase Plan and approved a revised stock repurchase plan authorizing up to 5,000 shares of the Company’s common stock (the “2019 Repurchase Plan”).

On February 5, 2019, the Board approved a stock repurchase plan authorizing the repurchase of up to 5,000 shares of the Company’s common stock (the “2019 Repurchase Plan”).

The 2019 Repurchase Plan expires when the shares authorized for repurchase are exhausted or the 2019 Repurchase Plan is canceled.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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.

During the three months ended March 31, 2022, the Company repurchased through open market transactions 176 shares of common stock for $ 17,780 , or an average of $ 100.86 per share, and during the three months ended March 31, 2021, the Company repurchased through open market transactions 114 shares of common stock for $ 9,997 , or an average of $ 87.89 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 September 30, 2021, the remaining shares to be repurchased under the 2019 Repurchase Plan were approximately 2,833 shares.

As of March 31, 2022, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 2,657 shares.

Commitments and Contingencies

1 unchanged sentence

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.

The Company accrues 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, the Company believes the resolution of claims and pending litigation, taking into account existing reserves, will not have a material adverse effect on its 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.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

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

6 unchanged sentences

10/1/2021 to 10/1/2022

LTL and Truckload businesses $ 6,000 Policy Term Aggregate³ $ 3,000 to $ 5,000

LTL business $ 6,000 Policy Term Aggregate³ $ 3,000 to $ 5,000

10/1/2021 to 10/1/2022

LTL and Truckload businesses 4

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

LTL, Truckload and Intermodal businesses $ 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 accrues for the costs of the uninsured portion of pending claims within the self-insured retention based on the nature and severity of individual claims and historical claims development trends.

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

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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.

However, estimating the number and severity of claims, as well as related judgment or settlement amounts is inherently difficult, and the Company may fail to establish sufficient insurance reserves and adequately estimate for future insurance claims.

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.

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

Segment Reporting

9 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 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

External revenues $ 341,461 $ 78,164 $ — $ — $ 419,625

Intersegment revenues 96 9 — ( 105 ) —

Depreciation 4,942 841 16 — 5,799

Amortization 1,842 1,775 — — 3,617

Income (loss) from continuing operations 34,636 8,712 ( 872 ) — 42,476

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

Three Months Ended September 30, 2020

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

External revenues $ 283,025 $ 48,940 $ — $ — $ 331,965

Intersegment revenues 489 8 — ( 465 ) 32

Depreciation 4,981 789 36 — 5,806

Amortization 1,799 1,567 — — 3,366

Income (loss) from continuing operations 23,461 4,837 ( 4,788 ) — 23,510

Purchases of property and equipment 2,037 188 — — 2,225

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

September 30, 2021

Nine Months Ended September 30, 2021

March 31, 2022

Segment results from operations for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended March 31, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

Purchases of property and equipment 8,956 952 — — 9,908

Nine Months Ended September 30, 2020

Three Months Ended March 31, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

Purchases of property and equipment 2,411 284 — — 2,695

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

As of March 31, 2022 $ 802,613 $ 251,030 $ 113,184 $ ( 21 ) $ 1,166,806

As of December 31, 2021 777,987 249,467 90,588 ( 219 ) 1,117,823

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

Three Months Ended Nine Months Ended

September 30,

2021 September 30,

2020 September 30,

2021 September 30,

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

Three Months Ended

2022 March 31,

Intersegment revenues - continuing operations $ — $ 169

1 unchanged sentence

Consolidated intersegment revenues $ — $ —

September 30, 2021 December 31, 2020

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

Current assets held for sale — 21,002

Noncurrent assets held for sale — 53,097

Consolidated total assets $ 1,070,508 $ 1,047,393

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

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,

March 31, 2022

Revenue from the individual services within the Expedited Freight segment for the three months ended March 31, 2022 and 2021 are as follows:

Three Months Ended

2022 March 31,

Expedited Freight revenues:

5 unchanged sentences

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.

On May 06, 2022, the Company entered into an agreement to acquire certain assets and liabilities of Edgmon Trucking, LLC (“Edgmon”) for $ 40,000 .

Edgmon, headquartered in Kent, Washington, operates a terminal in Kent and a yard in Seattle, servicing both the Port of Seattle and the Port of Tacoma.

The acquisition of Edgmon marks the Company’s first Intermodal location on the West Coast, a key area of expansion in the Intermodal strategic growth plan.

The transaction is expected to close in the second quarter of 2022.

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