Monday, July 20, 2009

Forward Air reports weak earnings after the close (FWRD)

Alphaninja - We will not be in the economic "recovery" stage with numbers like these.

Trucking and logistics outfit Forward Air (FWRD) reported dismal results after the close. What struck me was not that revenue was down 18%, but the company's apparent inability (or refusal) to cut costs along with the revenue drop.

From the release:

Bruce A. Campbell, Chairman, President, and CEO, said “As expected, the challenging freight environment resulting from the global economic recession persisted throughout the second quarter. However, during the quarter, volumes in our core airport-to-airport business showed signs of stabilization. Our second quarter tonnage declined on a year-over-year basis but slightly less than the decline we experienced in the first quarter. During the quarter, our yield was severely impacted by the intense pricing pressure which began for us near the end of the first quarter as well as a difficult prior year fuel surcharge comparison.”

Commenting further, Mr. Campbell said, “During this severe economic downturn, our goal, in our airport to airport operations, has been and continues to be aggressive and effective management of our expenses to the current business levels without jeopardizing the superior earnings power of the model. Thus far, we have been successful in that regard while generating respectable profits and cash flows given the conditions.”

Expect a lot of questions on that rather murky statement on tomorrow's conference call. I don't know how one can say they were diligent on costs with numbers like these:

I'd also like to see a company be more proactive on cost containment than these guys are. They also are not "assuming" any further declines in the operating environment - a position I hope they're right about but am not confident they've researched enough.

Commenting further Mr. Bell said, “Assuming no further material deterioration in the environment, for the third quarter of 2009, we anticipate a year-over-year decline in revenue in the range of 15 to 20% and expect income per diluted share to be between $0.08 and $0.14 per share

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