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Forward Air Sees $7.5M Ransomware Attack Impact

February 8, 2021

As previously disclosed, on December 15, 2020, Forward Air detected a ransomware incident impacting its operational and information technology systems. The Company’s internal security teams, supplemented by leading cyber defense firms, took active steps to assess, contain and remediate this incident.

While the Company’s systems recovery efforts are completed and the Company’s operations are fully functional, the incident did result in a loss of revenue as well as incremental costs for the month of December which will adversely impact the Company’s fourth quarter 2020 results.

The Company estimates that its fourth quarter year-over-year revenue growth from continuing operations will be approximately 9.5%, which is at the high end of its 6% to 10% guidance range. The Company expects to achieve this result despite losing an estimated $7.5 million of LTL revenue as a result of the incident (primarily because of the Company’s need to temporarily suspend its electronic data interfaces with its customers).

The Company also estimates that its fourth quarter net income per diluted share from continuing operations will be approximately $0.53 to $0.55, which is below the Company’s $0.71 to $0.75 guidance range. Relative to this guidance, the Company estimates that the impact of lost revenue and incremental expenses related to the incident was approximately $0.19 (which consists of the following approximate impacts: $0.11 for Expedited Freight, $0.04 for Intermodal and $0.04 for Other Operations). Additionally, as a result of the Company’s significant organic growth in Final Mile revenue, the Company increased an Expedited Freight earn-out liability related to its previous acquisition of FSA Logistix which reduced net income per diluted share by approximately $0.06. Adjusting for these impacts, the Company expects it would have exceeded the high end of its net income per diluted share
guidance range.

To continue investing in service enhancements, the Company implemented a six percent general rate increase on February 1, 2021, which also includes changes to the Company’s accessorial and surcharge schedule.

Since the Company is currently in its quiet period prior to its release of earnings results for the fourth quarter of 2020, the Company’s management team will not be discussing its fourth quarter financial performance, including the information discussed in this Current Report, until its fourth quarter earnings call which is scheduled to occur on February 12, 2021 at 9:00 a.m. EDT.

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