Forward Air Says Accident Claims Will Drive Earnings Down 15 Percent

Forward Air Corp. (NASDAQ: FWRD), an expedited less-than-truckload carrier, lowered its second quarter 2019 earnings expectation due to a $5 million accident claim reserve recorded in the quarter.

In an 8-k filing with the Securities and Exchange Commission, the company announced that it anticipates second quarter 2019 earnings per share to be 15 percent below the low-end of its previous guidance range of $0.81 to $0.85 per share.

The company's current consensus earnings per share estimate sits at $0.83 according to NASDAQ.

FWRD recorded the $5 million reserve in June 2019 for "pending vehicular claims." "The claims underlying this reserve are still developing and may further impact the Company's results," according to the filing.

FWRD self-insures the first $7.5 million per claim until it meets a $6 million aggregate deductible for claims between $3 and $5 million and a $2.5 million aggregate deductible for claims between $5 and $10.0 million.

Self-insurance retention programs are commonly employed by large, well-capitalized carriers as a means to mitigate rising insurance expenses.

Often, analysts will exclude "one-off" expenses that are believed to be extraordinary, one-time or non-recurring in nature, like a large insurance claim.

J.B. Hunt (NASDAQ: JBHT) will be the first company to announce its second quarter earnings on July 15, 2019.

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