Acquisition Costs Cut Into Forward Air Income

Freight transportation provider Forward Air Corp.'s first quarter profit fell more than 50% from a year earlier on 20% higher revenue, thanks partly to costs related to buying Towne Air.

Net income was $4.8 million compared to $10.2 million in the first quarter of 2014, or 16 cents per diluted share compared to 33 cents for the Tennessee-based operation. Revenue totaled $205.9 million compared to $171.6 million for the same quarter in 2014.

According to the company, the first quarter 2015 results include about $11.8 million in one-time deal and integration costs from the acquisition of the trucking operation Towne Air in February. Forward Air’s prior year results include close to $1 million of deal costs associated with the purchase of Central States Trucking in January 2014.

Accounting for these costs, the company says, adjusted net income for the period was $12.1 million compared to $10.8 million a year ago, and adjusted income per diluted share was 40 cents compared to 35 cents a year ago.

“With just over three weeks of Towne revenues represented in the quarter, our revenues increased approximately 20% as compared to the first quarter of 2014," said Rodney L. Bell, senior vice president and CFO. “We estimate that approximately $10 million of the $34.4 million increase in year-over-year revenue is attributable to Towne."

The companyt expects second quarter revenues will increase between 27% and 31% over a year earlier. "Without regard to additional costs of integration we expect income per diluted share to be between 59 cents and 63 cents per share. This compares to 55 cents per share in the second quarter of 2014," Bell said.