What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-09 · 256 added, 143 removed, 481 unchanged (45% of the section changed)

8 unchanged sentences

246,006 208,085

Other receivables 4,488 8,097

Other receivables, less allowance of $ 900 in 2022 and $ — in 2021

Other current assets 22,260 29,309

37 unchanged sentences

Three Months Ended

2022 March 31,

2022 June 30,

Operating revenues $ 515,219 $ 420,671

28 unchanged sentences

Forward Air Corporation

Condensed Consolidated Statements of Comprehensive Income

(unaudited and in thousands, except per share amounts)

Six Months Ended

2022 June 30,

Operating revenues $ 982,180 $ 782,873

Operating expenses:

Purchased transportation 464,322 399,825

Salaries, wages and employee benefits 172,439 159,538

Operating leases 46,132 39,537

Depreciation and amortization 22,725 18,651

Insurance and claims 25,164 20,632

Fuel expense 14,179 7,761

Other operating expenses 104,323 72,081

Total operating expenses 849,284 718,025

Income from continuing operations 132,896 64,848

Other expense:

Interest expense ( 1,977 ) ( 2,488 )

Total other expense ( 1,977 ) ( 2,488 )

Income before income taxes 130,919 62,360

Income tax expense 32,803 14,969

Net income from continuing operations 98,116 47,391

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

Net income and comprehensive income $ 98,116 $ 41,858

Basic net income (loss) per share

Continuing operations $ 3.63 $ 1.72

Discontinued operation — ( 0.20 )

Net income per basic share $ 3.63 $ 1.52

Diluted net income (loss) per share

Continuing operations $ 3.61 $ 1.71

Discontinued operation — ( 0.20 )

Net income per diluted share $ 3.61 $ 1.51

Dividends per share $ 0.48 $ 0.42

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

Forward Air Corporation

Condensed Consolidated Statements of Cash Flows

(unaudited and in thousands)

Three Months Ended

2022 March 31,

Six Months Ended

2022 June 30,

Operating activities:

6 unchanged sentences

Deferred income tax expense (benefit) 1,962 ( 572 )

Other 1,383 189

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

2 unchanged sentences

Other current and noncurrent assets 3,918 6,746

Accounts payable and accrued expenses 15,975 21,326

Accounts payable, accrued expenses and other long-term liabilities 5,667 23,047

Net cash provided by operating activities of continuing operations 112,820 39,661

6 unchanged sentences

Repayments of finance lease obligations ( 2,583 ) ( 954 )

Proceeds from credit facility — 45,000

Payments on credit facility ( 8,250 ) —

Payment of earn-out liability ( 91 ) —

Proceeds from issuance of common stock upon stock option exercises 206 3,570

1 unchanged sentence

Repurchases and retirement of common stock ( 17,780 ) ( 33,992 )

Proceeds from common stock issued under employee stock purchase plan 374 388

Payment of minimum tax withholdings on share-based awards ( 3,293 ) ( 2,832 )

Contributions from subsidiary held for sale — 1,118

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

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

Net cash (used in) provided by financing activities from continuing operations ( 44,411 ) 733

Net increase in cash and cash equivalents of continuing operations 10,070 10,590

Cash from discontinued operation:

2 unchanged sentences

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

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

Net increase in cash and cash equivalents 10,070 10,590

Cash and cash equivalents at beginning of period of continuing operations 37,316 40,254

Cash at beginning of period of discontinued operation — —

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

Net increase in cash and cash equivalents 10,070 10,590

cash at end of period of discontinued operation — —

16 unchanged sentences

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

Net income — — — 55,430 55,430

Common stock issued under employee stock purchase plan 5 — 374 — 374

Share-based compensation expense — — 3,306 — 3,306

Payment of dividends to shareholders — — 5 ( 6,497 ) ( 6,492 )

Payment of minimum tax withholdings on share-based awards ( 1 ) — — ( 39 ) ( 39 )

Issuance of share-based awards 14 — — — —

Balance at June 30, 2022 26,880 $ 269 $ 265,129 $ 398,952 $ 664,350

Common Stock Additional Paid-in

10 unchanged sentences

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

Net income — — — 30,677 30,677

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

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

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

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

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

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

Issuance of share-based awards 24 — — — —

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

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

2 unchanged sentences

(unaudited and in thousands, except per share data)

March 31, 2022

June 30, 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.

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

Intercompany accounts and transactions have been eliminated in consolidation.

4 unchanged sentences

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

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.

On April 23, 2020, the Board of Directors (the “Board ”) of the Company approved a strategy to divest 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.

16 unchanged sentences

(unaudited and in thousands, except per share data)

March 31, 2022

June 30, 2022

time in each reporting period.

8 unchanged sentences

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.

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 and six months ended June 30, 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.

6 unchanged sentences

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

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.

For the three and six 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.

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

1 unchanged sentence

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.

As of June 30, 2022 and December 31, 2021, the Company recorded a net receivable in the amount of $ 104 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.

As of June 30, 2022, the Company recorded a specific reserve in the amount of $ 900 in order to reduce the receivable to the amount the Company reasonably believes will be collected.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

March 31, 2022

June 30, 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 months ended March 31, 2021 is as follows:

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 is as follows:

Three Months Ended

June 30, 2021 Six Months Ended June 30, 2021

Operating revenue $ — $ 17,087

20 unchanged sentences

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

During the three and six months ended June 30, 2022, the fair value of the earn-out changed by $ — and ($ 294 ) respectively, and the change in fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income.

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 fair value was recorded in “Other operating expenses” in the Condensed Consolidated Statements of Comprehensive Income .

The one-year period ended in the first quarter of 2022 and the Company paid $ 91 in the second quarter of 2022 based on the terms of the purchase agreement.

As of December 31, 2021, the fair value of the earn-out liability was $ 385 , which was reflected in “Other cur rent liabilities” in the Condensed Consolidated Balance Sheets.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

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

6 unchanged sentences

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

In May 2022, the Company acquired certain assets and liabilities of Edgmon Trucking, LLC (“Edgmon”) for $ 40,433 and a potential earn-out of up to $ 5,000 .

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 acquisition was financed by cash flows from operations.

The results of Edgmon 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.

The purchase agreement for Edgmon included an earn-out up to $ 5,000 based on the achievement of certain profit contribution milestones over a nineteen month period, beginning May 30, 2022.

An estimated fair value of the earn-out liability on the date of acquisition is in process and is excluded from the preliminary purchase price.

As the Company finalizes the valuation of the preliminary purchase price, the fair value will based on the estimated nineteen month profit contribution of the acquired operations and will be calculated using the option pricing method.

Fair Value of Assets Acquired and Liabilities Assumed

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

November 30, 2021

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

BarOle Edgmon

November 30, 2021 May 30, 2022

Tangible assets:

12 unchanged sentences

Net assets acquired $ 35,436 $ 40,433

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 preliminary purchase price for BarOle and Edgmon has been allocated to assets acquired and liabilities assumed based on 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

During the six months ended June 30, 2022, the Company recorded measurement period adjustments to the provisional amounts initially recorded for acquired property and equipment and acquired customer relationships and non-compete agreements related to the BarOle acquisition.

The measurement period adjustments resulted in a $ 1,113 increase to acquired property and equipment and a combined $ 4,955 decrease to acquired customer relationships and non-compete

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

March 31, 2022

June 30, 2022

agreements, with a corresponding net increase to goodwill.

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

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

Estimated Useful Lives

BarOle Edgmon

Customer relationships 8 years 7 years

Non-compete agreements 5 years 5 years

Goodwill and Intangible Assets

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

Changes in the carrying amount of goodwill during the six months ended June 30, 2022 are summarized as follows:

Expedited Freight Intermodal Consolidated

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

Acquisition — 17,003 17,003

Acquisition adjustment — 3,842 3,842

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

Balance as of June 30, 2022 $ 169,288 $ 118,309 $ 287,597

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.

As of June 30, 2022, approximately $ 208,454 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.

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

The results of the Company’s goodwill impairment analyses conducted as of June 30, 2022 indicated that no reduction in the carrying amount of the goodwill was required.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

Other Intangible Assets

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

Changes in the carrying amount of acquired intangible assets during the six months ended June 30, 2022 are summarized as follows:

Gross Carrying Amount

3 unchanged sentences

Acquisition 17,950 465 — 18,415

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

Acquisition adjustment ( 4,254 ) ( 701 ) — ( 4,955 )

Balance as of June 30, 2022 $ 265,073 $ 8,940 $ 1,500 $ 275,513

Accumulated Amortization

3 unchanged sentences

Amortization expense 7,513 448 — 7,961

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

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

Balance as of June 30, 2022 $ 106,606 $ 7,191 $ 1,500 $ 115,297

1 Carrying value as of June 30, 2022 and December 31, 2021 is inclusive of $ 16,501 of accumulated impairment.

Stock Incentive Plans

Stock Incentive Plan

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,

The Company recorded share-based compensation expense as follows for the three and six months ended June 30, 2022 and 2021:

Three Months Ended Six Months Ended

2022 June 30,

2021 June 30,

2022 June 30,

Salaries, wages and employee benefits - continuing operations $ 2,884 $ 2,463 $ 5,306 $ 4,732

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 common shares to employees.

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

As of June 30, 2022, appro ximately 687 s hares remain available for grant under the Omnibus Plan.

Stock Options

3 unchanged sentences

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

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

Stock option transactions during the six months ended June 30, 2022 on a continuing operations basis were as follows:

Stock Options Weighted-Average Exercise Price

3 unchanged sentences

Forfeited ( 6 ) 106.29

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 .

Outstanding as of June 30 397 $ 65.32

As of June 30, 2022, the total share-based compensation expense related to unvested stock options not yet recognized was $ 1,931 , and the weighted-average period over which it is expected to be recognized is approximately two 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.

The Company’s primary long-term incentive plan is a restricted share award plan that entitles employees to receive shares 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.

1 unchanged sentence

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

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

Restricted share transactions during the six months ended June 30, 2022 on a continuing operations basis were as follows:

Restricted Shares Weighted-Average Grant Date Fair Value

3 unchanged sentences

Forfeited ( 17 ) 81.91

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 .

Outstanding as of June 30 162 $ 87.46

As of June 30, 2022, the total share-based compensation expense related to restricted shares not yet recognized was $ 11,417 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Performance Awards

4 unchanged sentences

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:

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

Performance award transactions during the six months ended June 30, 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 ( 16 ) 74.79

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 .

Outstanding as of June 30 70 $ 87.74

As of June 30, 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 $ 4,070 , and the weighted-average period over which it is expected to be recognized is approximately two years .

Employee Stock Purchase Plan

2 unchanged sentences

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

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

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

Six Months Ended

2022 June 30,

Shares purchased by participants under the ESPP 5 5

Average purchase price $ 82.76 $ 68.76

Weighted-average fair value of each purchase right under the ESPP granted¹ $ 9.20 $ 20.99

Share-based compensation expense for ESPP $ 42 $ 118

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

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

As of June 30, 2022, approxim ately 60 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:

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

Director restricted share transactions during the six months ended June 30, 2022 were as follows:

Director Restricted Shares Weighted-Average Grant Date Fair Value

Outstanding as of January 1 15 $ 93.46

Granted 15 93.70

Vested ( 15 ) 93.46

Forfeited — —

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

Outstanding as of June 30 15 $ 93.70

For the three and six months ended June 30, 2022, the Company recorded $ 380 and $ 719 , respectively, of share-based compensation expense associated with these grants.

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.

As of June 30, 2022, the total share-based compensation expense related to the restricted shares not yet recognized was $ 1,187 , and the weighted-average period over which it is expected to be recognized is approximately less than one year .

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

Long-term debt consisted of the following as of June 30, 2022 and December 31, 2021:

2022 December 31,

Credit facility, expires 2026 $ 149,250 $ 157,500

3 unchanged sentences

Total long-term debt, less current portion $ 147,279 $ 155,466

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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.

7 unchanged sentences

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.

As of June 30, 2022 and December 31, 2021, the Company had $ 279,966 and $ 272,466 respectively, 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 %.

As of June 30, 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 Ra te”), 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 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.

The interest rate on the outstanding borrowings under the Facility was 2.14 % as of June 30, 2022 and 3.25 % as of June 30, 2021.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

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 %.

3 unchanged sentences

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

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

March 31, 2022

As of both June 30, 2022 and December 31, 2021, outstanding letters of credit totaled $ 20,034 .

Net Income (Loss) Per Share

2 unchanged sentences

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,

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

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 and six months ended June 30, 2022 and 2021 is as follows:

Three Months Ended Six Months Ended

2022 June 30,

2021 June 30,

2022 June 30,

Net income and comprehensive income from continuing operations $ 55,430 $ 30,677 $ 98,116 $ 47,391

13 unchanged sentences

Net income per basic share $ 2.05 $ 1.12 $ 3.63 $ 1.52

$ 1.57 $ 0.40

Diluted net income (loss) per share:

2 unchanged sentences

Net income per diluted share $ 2.04 $ 1.11 $ 3.61 $ 1.51

1 Rounding may impact summation of amounts.

Forward Air Corporation

1 unchanged sentence

(unaudited and in thousands, except per share data)

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,

June 30, 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 and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended Six Months Ended

2022 June 30,

2021 June 30,

2022 June 30,

Anti-dilutive stock options 57 — 57 39

2 unchanged sentences

Total anti-dilutive shares 70 — 70 54

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.

For the six months ended June 30, 2022 and 2021, the Company recorded income tax expense of $ 32,803 and $ 14,969 , respectively, for continuing operations.

The effective tax rate of 25.1 % for the six months ended June 30, 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 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 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 .

As of both June 30, 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 June 30, 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.

7 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

8 unchanged sentences

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

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

1 unchanged sentence

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

Assets and liabilities measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021 are summarized below:

As of June 30, 2022

Level 1 Level 2 Level 3 Total

4 unchanged sentences

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 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 .

The carrying amount of long-term debt under the Company’s credit facility approximates 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, 2022, the estimated fair value of the Company’s finance lease obligation, based on current borrowing rates, was $ 16,386 , compared to its carrying value of $ 16,769 .

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

During the first and second quarters 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.

On July 26, 2022, the Board declared a quarterly cash dividend of $ 0.24 per common share that will be paid in the third quarter of 2022.

Share Repurchase Program

1 unchanged sentence

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

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.

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

During the six months ended June 30, 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 six months ended June 30, 2021, the Company repurchased through open market transactions 366 shares of common stock for $ 33,992 , or an average of $ 92.76 per share.

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

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

As of June 30, 2022, the remaining shares permitted to be repurchased under the 2019 Repurchase Plan were approximately 2,657 shares.

Commitments and Contingencies

5 unchanged sentences

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.

19 unchanged sentences

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.

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

but not reported.

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.

15 unchanged sentences

(unaudited and in thousands, except per share data)

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

June 30, 2022

Segment results from operations for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended June 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

Purchases of property and equipment 8,765 — — — 8,765

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

5 unchanged sentences

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

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

Six Months Ended June 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

External revenues $ 785,340 $ 196,840 $ — $ — $ 982,180

Intersegment revenues 108 11 — ( 119 ) —

Depreciation 11,679 2,984 101 — 14,764

Amortization 3,619 4,342 — — 7,961

Income (loss) from continuing operations 110,787 26,395 ( 4,286 ) — 132,896

Purchases of property and equipment 17,721 952 — — 18,673

Six Months Ended June 30, 2021

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

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

Intersegment revenues 613 25 — ( 695 ) ( 57 )

Depreciation 9,982 1,634 26 — 11,642

Amortization 3,595 3,414 — — 7,009

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

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

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

June 30, 2022

Expedited Freight Intermodal Corporate Eliminations Consolidated - Continuing Operations

As of June 30, 2022 $ 798,352 $ 300,035 $ 98,764 $ ( 8 ) $ 1,197,143

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 is set forth below:

Three Months Ended

2022 March 31,

Three Months Ended Six Months Ended

2022 June 30,

2021 June 30,

2022 June 30,

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

1 unchanged sentence

Consolidated intersegment revenues $ — $ — $ — $ —

Forward Air Corporation

Notes to Condensed Consolidated Financial Statements

(unaudited and in thousands, except per share data)

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,

Revenue from the individual services within the Expedited Freight segment for the three and six months ended June 30, 2022 and 2021 are as follows:

Three Months Ended Six Months Ended

2022 June 30,

2021 June 30,

2022 June 30,

Expedited Freight revenues:

4 unchanged sentences

Total $ 408,857 $ 351,735 $ 785,448 $ 655,921

Subsequent Event

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