Knight Transportation Reports Second Quarter 2014 Revenue and Earnings
PHOENIX–(BUSINESS WIRE)–Knight Transportation, Inc. (NYSE: KNX), one of North America’s
largest and most diversified truckload transportation companies, today
reported revenue and net income for the second quarter ended June 30,
2014.
Key financial highlights for the second quarter and first half of 2014
and 2013 were as follows:
(dollars in thousands, except per share data) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2014 | 2013 | % Diff | 2014 | 2013 | % Diff | |||||||||||||||
Total revenue | $264,155 | $244,783 | 7.9% | $513,318 | $480,183 | 6.9% | ||||||||||||||
Revenue, excluding trucking fuel surcharge | $218,908 | $200,104 | 9.4% | $424,504 | $389,704 | 8.9% | ||||||||||||||
Operating income | $38,899 | $31,925 | 21.8% | $70,149 | $57,469 | 22.1% | ||||||||||||||
Net income | $25,761 | $18,939 | 36.0% | $44,824 | $34,122 | 31.4% | ||||||||||||||
Earnings per diluted share | $0.31 | $0.24 | 33.5% | $0.55 | $0.43 | 29.1% |
The company previously announced a quarterly cash dividend of $0.06 per
share to shareholders of record on June 6, 2014, which was paid on June
27, 2014.
Kevin Knight, Chairman and Chief Executive Officer, commented on the
quarter, ”We are pleased with our positive results as we continued to
grow our revenue and improve our operating margin. During the second
quarter, overall demand remained strong while capacity appeared to
tighten. Both our trucking and logistics segments increased revenue and
operating income meaningfully, when compared to the same quarter last
year. In our trucking business, revenue per tractor increased 6.0%, year
over year, with a 5.6% improvement in revenue per loaded mile, a 3.1%
increase in our length of haul, a 140 basis point improvement in our
non-paid empty mile percentage, and a 1.1% decrease in miles per
tractor. In our logistics business, revenue growth was strong and gross
margin percentage improved. We are encouraged by the positive momentum
from our results over the past several quarters and feel well positioned
for future growth and success by providing capacity to our customers,
quality careers to our driving associates, and superior returns to our
shareholders.”
The following chart reflects the financial performance of our trucking
(asset based) and our logistics (non-asset based) businesses for the
second quarter of 2014 and 2013.
(dollars in thousands, except operating ratio) | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||
2014 | 2013 | Diff | 2014 | 2013 | Diff | |||||||||||||||
Trucking (Asset based) | ||||||||||||||||||||
Revenue, excluding trucking fuel surcharge | $171,021 | $160,956 | 6.3% | $332,848 | $318,659 | 4.5% | ||||||||||||||
Operating Income | $35,856 | $29,403 | 21.9% | $64,977 | $52,637 | 23.4% | ||||||||||||||
Operating Ratio(1) | 79.0% | 81.7% | -270 bps | 80.5% | 83.5% | -300 bps | ||||||||||||||
Logistics (Non-asset based) | ||||||||||||||||||||
Revenue | $47,887 | $39,148 | 22.3% | $91,656 | $71,045 | 29.0% | ||||||||||||||
Operating Income | $3,043 | $2,522 | 20.7% | $5,172 | $4,832 | 7.0% | ||||||||||||||
Operating Ratio(1) | 93.6% | 93.6% | Flat | 94.4% | 93.2% | 120 bps | ||||||||||||||
Consolidated | ||||||||||||||||||||
Revenue, excluding trucking fuel surcharge | $218,908 | $200,104 | 9.4% | $424,504 | $389,704 | 8.9% | ||||||||||||||
Operating Income | $38,899 | $31,925 | 21.8% | $70,149 | $57,469 | 22.1% | ||||||||||||||
Operating Ratio(1) | 82.2% | 84.0% | -180 bps | 83.5% | 85.3% | -180 bps | ||||||||||||||
(1)Operating ratio is defined in our trucking segment |
In the second quarter, the operating ratio of our trucking segment
improved to 79.0% from 81.7% in the same quarter last year. In the
second quarter, operating income in our trucking segment improved 21.9%
while our revenue, excluding trucking fuel surcharge, grew 6.3%. We
continue to see positive results from our efforts to improve yield and
drive operational efficiencies. Our dedicated business has also
experienced meaningful revenue and earnings growth as we have seen an
increase in opportunities to expand our dedicated fleet over the last
several quarters. The used equipment market also remained strong and has
led to an improved gain on sale of revenue equipment. Although the
relationship between customer demand and industry wide supply of
available trucks was favorable to the truckload carriers, the industry
continues to be faced with multiple challenges that have led to higher
costs, including rising driver pay, increased regulation, additional
maintenance cost associated with the 2010 EPA emission engines, and
rising equipment cost. We continue to intensify our cost control efforts
in order to manage these inflationary pressures.
Our brokerage business increased revenue 64.1%, increased gross margin
69.5%, and increased operating income 53.1%, when compared to the same
quarter last year. Our brokerage business continues to show meaningful
growth as we continue to add additional headcount to enable us to source
more capacity and to offer more solutions to our customers. Our
intermodal business improved its operating ratio 470 basis points
sequentially from the first quarter of 2014 and has now returned to
operating profitably.
Developing and retaining high quality driving associates remains a
significant challenge to the industry. Despite a strong freight
environment, the current driver supply situation has been a headwind for
adding additional capacity. Our driver development and training programs
remain a primary focus area for our management team, and we feel well
positioned to continue to make progress in the coming quarters.
The DOE national average diesel fuel price increased 1.6% when compared
to the second quarter last year. Fuel remains a major cost focus for us
as we continue our work towards cost effective, industry leading fuel
economy while at the same time reducing the environmental impact of our
operations.
Our tractor fleet remains one of the most modern fleets in the industry
with an average age of 1.8 years. The used equipment market remained
strong during the quarter and resulted in gain on sale of revenue
equipment in the second quarter of 2014 of $4.6 million, compared to
$1.6 million in the second quarter of 2013.
We have returned $78.8 million to our shareholders in the form of
quarterly dividends over the two years ended June 30, 2014. We ended the
quarter with $15.4 million of long term debt, and $605.0 million of
shareholders’ equity. Our year-to-date 2014 net capital expenditures
were $61.3 million while our cash flow from operations was $77.9 million.
In the second quarter of 2014 Knight Transportation formed a new entity,
Kold Trans, LLC (Kold Trans). Kold Trans is a full truckload
temperature-controlled transportation company created to be attractive
to professional drivers while providing high quality consistent service
to our customers. We hired a former CEO of a large
temperature-controlled truckload transportation company to lead and grow
this business. Kold Trans will be marketed and operated separately from
our Knight Refrigerated business. Through Kold Trans, we plan to provide
additional refrigerated capacity to the market through a fleet of new
trucks as well as our network of third-party carriers through our
truckload brokerage.
Kevin Knight, Chairman and Chief Executive Officer, commented, ”We are
excited about the growth opportunities we have with the creation of Kold
Trans. We feel that the recent strength in the North American freight
market, the tightening capacity, and our experienced leadership team
will enable us to provide much needed capacity for our customers and
generate meaningful returns for our stakeholders.”
The company will hold a conference call on July 23, 2014, at 4:30 PM
EDT, to further discuss its results of operations for the quarter ended
June 30, 2014. The dial in number for this conference call is
1-855-733-9163. Slides to accompany this call will be posted on the
company’s website and will be available to download prior to the
scheduled conference time. To view the presentation, please visit http://investor.knighttrans.com/events,
”Second Quarter 2014 Conference Call Presentation.”
Knight Transportation, Inc. is a provider of multiple truckload
transportation and logistics services using a nationwide network of
service centers in the U.S. to serve customers throughout North America.
In addition to operating one of the country’s largest tractor fleets,
Knight also contracts with third-party equipment providers to provide a
broad range of truckload services to its customers while creating
quality driving jobs for our driving associates and successful business
opportunities for owner-operators.
INCOME STATEMENT DATA: | Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
(Unaudited, in thousands, except per share amounts) | ||||||||||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||||||||
REVENUE: | ||||||||||||||||||||||
Revenue, before fuel surcharge | $ | 218,908 | $ | 200,104 | $ | 424,504 | $ | 389,704 | ||||||||||||||
Fuel surcharge | 45,247 | 44,679 | 88,814 | 90,479 | ||||||||||||||||||
TOTAL REVENUE | 264,155 | 244,783 | 513,318 | 480,183 | ||||||||||||||||||
OPERATING EXPENSES: | ||||||||||||||||||||||
Salaries, wages and benefits | 64,750 | 56,807 | 125,483 | 114,461 | ||||||||||||||||||
Fuel expense – gross | 52,192 | 52,739 | 104,201 | 108,432 | ||||||||||||||||||
Operations and maintenance | 17,156 | 15,919 | 34,176 | 31,828 | ||||||||||||||||||
Insurance and claims | 7,462 | 7,295 | 14,885 | 14,450 | ||||||||||||||||||
Operating taxes and licenses | 3,861 | 3,985 | 7,926 | 7,893 | ||||||||||||||||||
Communications | 1,178 | 1,200 | 2,457 | 2,372 | ||||||||||||||||||
Depreciation and amortization | 21,951 | 21,089 | 43,738 | 42,597 | ||||||||||||||||||
Purchased transportation | 56,319 | 49,883 | 108,288 | 92,675 | ||||||||||||||||||
Miscellaneous operating expenses | 387 | 3,941 | 2,015 | 8,006 | ||||||||||||||||||
225,256 | 212,858 | 443,169 | 422,714 | |||||||||||||||||||
Income From Operations | 38,899 | 31,925 | 70,149 | 57,469 | ||||||||||||||||||
Interest income | 109 | 96 | 222 | 205 | ||||||||||||||||||
Interest expense | (87 | ) | (77 | ) | (204 | ) | (219 | ) | ||||||||||||||
Other income (expense) | 2,591 | (168 | ) | 3,457 | 53 | |||||||||||||||||
Income before income taxes | 41,512 | 31,776 | 73,624 | 57,508 | ||||||||||||||||||
INCOME TAXES | 15,496 | 12,712 | 28,276 | 23,010 | ||||||||||||||||||
Net Income | 26,016 | 19,064 | 45,348 | 34,498 | ||||||||||||||||||
Net income attributable to noncontrolling interest | (255 | ) | (125 | ) | (524 | ) | (376 | ) | ||||||||||||||
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION | $ | 25,761 | $ | 18,939 | $ | 44,824 | $ | 34,122 | ||||||||||||||
Basic Earnings Per Share | $ | 0.32 | $ | 0.24 | $ | 0.56 | $ | 0.43 | ||||||||||||||
Diluted Earnings Per Share | $ | 0.31 | $ | 0.24 | $ | 0.55 | $ | 0.43 | ||||||||||||||
Weighted Average Shares Outstanding – Basic | 80,864 | 79,954 | 80,684 | 79,898 | ||||||||||||||||||
Weighted Average Shares Outstanding – Diluted | 81,835 | 80,296 | 81,596 | 80,209 | ||||||||||||||||||
BALANCE SHEET DATA: | ||||||||||||||||||||||
06/30/14 |
12/31/13 |
|||||||||||||||||||||
ASSETS | (Unaudited, in thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | 103 | $ | 992 | ||||||||||||||||||
Trade receivables, net of allowance for doubtful accounts | 121,903 | 116,391 | ||||||||||||||||||||
Notes receivable, net of allowance for doubtful accounts | 775 | 774 | ||||||||||||||||||||
Related party notes and interest receivable | 0 | 748 | ||||||||||||||||||||
Prepaid expenses | 13,750 | 15,026 | ||||||||||||||||||||
Assets held for sale | 10,500 | 16,476 | ||||||||||||||||||||
Other current assets | 11,611 | 11,066 | ||||||||||||||||||||
Current deferred tax assets | 3,942 | 3,359 | ||||||||||||||||||||
Total Current Assets | 162,584 | 164,832 | ||||||||||||||||||||
Property and equipment, net | 621,367 | 591,791 | ||||||||||||||||||||
Notes receivable, long-term | 3,991 | 4,047 | ||||||||||||||||||||
Goodwill | 10,247 | 10,257 | ||||||||||||||||||||
Other assets and restricted cash | 40,593 | 36,194 | ||||||||||||||||||||
Total Long-term Assets | 676,198 | 642,289 | ||||||||||||||||||||
Total Assets | $ | 838,782 | $ | 807,121 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||||||||||
Accounts payable | $ | 19,394 | $ | 14,354 | ||||||||||||||||||
Accrued payroll and purchased transportation | 17,156 | 13,864 | ||||||||||||||||||||
Accrued liabilities | 18,140 | 19,062 | ||||||||||||||||||||
Claims accrual – current portion | 16,888 | 15,616 | ||||||||||||||||||||
Dividend payable – current portion | 181 | 168 | ||||||||||||||||||||
Total Current Liabilities | 71,759 | 63,064 | ||||||||||||||||||||
Claims accrual – long-term portion | 9,668 | 8,889 | ||||||||||||||||||||
Long-term dividend payable and other liabilities | 2,407 | 2,486 | ||||||||||||||||||||
Deferred tax liabilities | 133,472 | 140,149 | ||||||||||||||||||||
Long-term debt | 15,362 | 38,000 | ||||||||||||||||||||
Total Long-term Liabilities | 160,909 | 189,524 | ||||||||||||||||||||
Total Liabilities | 232,668 | 252,588 | ||||||||||||||||||||
Common stock | 810 | 802 | ||||||||||||||||||||
Additional paid-in capital | 164,485 | 150,858 | ||||||||||||||||||||
Accumulated other comprehensive income | 8,118 | 4,582 | ||||||||||||||||||||
Retained earnings | 431,573 | 397,346 | ||||||||||||||||||||
Total Knight Transportation Shareholders’ Equity | 604,986 | 553,588 | ||||||||||||||||||||
Noncontrolling interest | 1,128 | 945 | ||||||||||||||||||||
Total Shareholders’ Equity | 606,114 | 554,533 | ||||||||||||||||||||
Total Liabilities and Shareholders’ Equity | $ | 838,782 | $ | 807,121 | ||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||
2014 |
2013 |
2014 |
2013 |
|||||||||||||||||
(Unaudited) | (Unaudited) | |||||||||||||||||||
OPERATING STATISTICS | % | % | ||||||||||||||||||
Change | Change | |||||||||||||||||||
Average Revenue Per Tractor* | $42,938 | $40,523 | 6.0% | $83,546 | $79,069 | 5.7% | ||||||||||||||
Non-paid Empty Mile Percent | 9.4% | 10.8% | -13.0% | 9.5% | 10.9% | -12.8% | ||||||||||||||
Average Length of Haul | 497 | 482 | 3.1% | 499 | 481 | 3.7% | ||||||||||||||
Operating Ratio** | 82.2% | 84.0% | 83.5% | 85.3% | ||||||||||||||||
Average Tractors – Total | 3,983 | 3,963 | 3,984 | 4,020 | ||||||||||||||||
Average Trailers – Total | 9,046 | 9,393 | 9,054 | 9,439 | ||||||||||||||||
Net Capital Expenditures (in thousands) | $55,632 | $19,580 | $61,358 | $17,822 | ||||||||||||||||
Cash Flow From Operations (in thousands) | $41,365 | $31,935 | $77,852 | $72,257 | ||||||||||||||||
* Includes asset segment revenue excluding fuel surcharge. | ||||||||||||||||||||
** Operating ratio as reported in this press release is based upon |
This press release contains forward-looking statements within the |