Investor Presentation February 2019 NASDAQ:FWRD www.ForwardAirCorp.com
Forward Looking Statements Disclosure Today’s presentation and discussion will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “expects,” “anticipates,” “intends,” “estimates,” or similar expressions are intended to identify these forward-looking statements. These statements, which include statements regarding our growth opportunities in LTL, Intermodal and adjacent modes, our plans regarding growth management and safety, future technology investments and expectations to pay dividends and execute share repurchases are based on Forward Air’s current plans and expectations and involve risks and uncertainties that could cause future activities and results of operations to be materially different from those set forth in the forward-looking statements. For further information, please refer to Forward Air’s reports and filings with the Securities and Exchange Commission. To supplement the financial measures prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), we have included the following non-GAAP financial information in this presentation: adjusted revenue, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating income, adjusted operating margin, adjusted income taxes, adjusted net income, adjusted EPS and free cash flow. The reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the Appendix to this presentation. Because these non-GAAP financial measures exclude certain items as described herein, they may not be indicative of the results that the Company expects to recognize for future periods. As a result, these non-GAAP financial measures should be considered in addition to, and not a substitute for, financial information prepared in accordance with GAAP. 2
History Origins: Expedited Ground Alternative to Airline Linehaul 1981 – Landair Services “Time definite Truckload services for the air cargo industry” • Asset-based Truckload • Asset-light LTL 1990 – Forward Air Operations “Scheduled LTL services to air freight forwarders, air cargo carriers & airlines” of Landair Services • 1.2M lbs/week 1993 – Landair IPO 1998 – Forward Air Separation “Largest and most comprehensive surface transportation network for (Landair spin-off) deferred air freight” • 17.3M lbs/week Organic Growth + M&A 2015 – Towne Air Freight “Leading provider of time -definite surface transportation and related logistics Acquisition services to the North American expedited ground freight market” 2018 “Asset - light freight and logistics company” • Expedited LTL: 50.2M lbs/week 3
Asset-Light Freight & Logistics Company 2018 Revenue = $1.3 Billion E XPEDITED LTL T RUCKLOAD P REMIUM S ERVICES • Comprehensive national network • Expedited Truckload brokerage • Provides expedited regional, inter-regional • Dedicated fleet services and national LTL services • Offers local pick-up and delivery, • Maximum security and temperature- warehousing and other services controlled logistics services • Growing e-commerce, 3PL, D2D and final • Long-haul, regional and local services mile solutions I NTERMODAL P OOL D ISTRIBUTION • High value intermodal container drayage • Customized consolidation, final-mile handling and distribution of time-sensitive • Warehousing and other value-added products services • DC bypass, flow through, direct-to-store and • Regional linehaul reverse logistics services • Growing footprint from M&A and greenfield • Expanding beyond retail into new verticals startups 4
Shareholder Value Creation Recently Celebrated Our 25 th IPO Anniversary with Superior Returns 25 Years: 11/16/93 to 11/16/18 Total Return * Price Change Forward Air Total 1,658% 1,922% Annualized 12.1% 12.8% Dow Jones Total 585% 1,126% Annualized 8.0% 10.5% * Assumes dividends reinvested in underlying security 5
Revenue Growth Double-Digit Revenue Growth This Decade * Note: Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010 to 2013 * Non-GAAP adjustment, see appendix Organic as well as acquisitive growth Expanded existing services and introduced new offerings (e.g., Intermodal) 6
Operating Income Growth Double-Digit Operating Income Growth This Decade * * Note: Impact of ASC 606 (Revenue from Contracts with Customers) estimated for 2010 to 2013 * Non-GAAP adjustment, see appendix Organic as well as acquisitive growth Expedited LTL key contributor; Intermodal growing rapidly 7
Business Model Our Business Model Enables Our Growth Key Attributes • Premium Solutions: expedited, time-definite, service-sensitive, etc. Benefits from secular growth in time-sensitive applications, such as e-commerce • Wholesale Provider: Freight Forwarders, Airlines, 3PLs, etc. Expands our reach as we serve our customers’ customer • Asset-Light: Utilize independent owner-operators and third-party carriers Provides strong cash flow to finance expansion of capabilities and modes 8
Growth Opportunities Think “Parcel for the Big Stuff” LTL • E-commerce • B2B Door-to-Door • B2C Final Mile (Heavy Bulky) Intermodal • Network expansion • M&A • Value-Added (CFS, Dedicated, etc.) Adjacent Modes • Expedited Truckload • Pool Distribution (Scheduled B2B Final Mile) Delivering Peace of Mind When It Really Matters Most 9
Expedited LTL Network 10
Intermodal Network 11
Pool Distribution Network 12
Strong Foundation Strengthening Our Foundation for Growth • Implementing data-driven pricing analysis to drive profitable growth Growth Management •Uncovering “untapped upside” • Establishing next generation HR (e.g., employee advisory board) People • Enhancing owner-operator recruiting (e.g., survivor-style driver contests) • Establishing goal to be world class Safety • Enhancing safety mindset • Improving operational systems & customer visibility IT • Implementing better data management to drive decisions • Building on strong operational culture Culture & Purpose • Expanding our mission beyond our legacy 13
Management Team • As of September 1, 2018 Tom Schmitt • Previous: Schenker AG, Purolator, FedEx President and CEO • 18 years with Forward Air Glenn Adelaar • Previous: Sabre, American Airlines SVP, Information Systems • 1 year with Forward Air Matt Casey • Previous: Forest City Technologies, Panther Premium Logistics SVP, Safety • 11 years with Forward Air Roger Gellis • Previous: Velocity Express, FedEx SVP, Pool Distribution • 12 years with Forward Air Michael Hance • Previous: Baker, Donelson, Bearman, Caldwell & Berkowitz PLC Chief Legal Officer • 18 years with Forward Air Matthew Jewell • Previous: Austin & Sparks, PC President, Intermodal • 4 years with Forward Air Kyle Mitchin • Previous: Panther Premium Logistics SVP, Human Resources • 2 years with Forward Air Mike Morris • Previous: XPO/Con-way CFO & Treasurer • 22 years with Forward Air Chris Ruble • Previous: FedEx COO, Expedited Services 14
How High is Up? How Might Our “Victory Article” Read? Forward Air – An American Icon Taking Off “The same way people think parcel when their package matters most, they think Forward Air LTL and Truckload for the heavy stuff .” “Largest and best Intermodal business in North America by any metric.” “Industry safety leader. Fleet owners increasingly using Forward Air’s training programs.” “Recognized as a pragmatic adopter of leading technologies. Most recently implemented platooning on selected long haul lanes.” “Back -to- back appearances as one of America’s Best Employers” Hypothetical future magazine article provided for illustrative purposes only 15
Financial Overview
2018 Results • 2018 was a record year across every major financial metric ($000s except per share) 2017 2018 % Change Revenue 1,169,346 1,320,886 13.0% Operating Income 108,757 122,031 12.2% Net Income 87,255 92,051 5.5% EPS $2.89 $3.12 8.0% EBITDA 149,081 164,212 10.1% Free Cash Flow 67,539 117,319 73.7% 17
Financial Overview • Goal to deliver superior returns to shareholders through profitable organic growth and disciplined acquisitions • Commitment to return capital to shareholders through dividends and share repurchases 2016 2017 2018 Revenue $ 1,030 M $ 1,169 M $ 1,321 M Operating Income $ 102 M $ 109 M $ 122 M * Operating Margin 9.9% * 9.3% 9.2% * EPS $ 2.08 $ 2.89 $ 3.12 * EBITDA $ 140 M $ 150 M $ 164 M * EBITDA Margin 13.6% 12.8% 12.4% ROIC (w/o Goodwill & Intang.) ‡ 24.5% 26.2% 32.2% ROIC (w/Goodwill & Intang.) ‡ 12.2% 13.4% 16.4% Capital to Shareholders $ 56 M $ 67 M $ 85 M Debt / Adjusted EBITDA 0.2 x 0.3 x 0.3 x ‡ ROIC is calculated as Non Operating Profit After Tax (adjusted for the amortization of intangibles) divided by Operating Invested Capital * Non-GAAP adjustment, see appendix 18
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