Knight Transportation Reports Second Quarter 2014 Revenue and Earnings
PHOENIX, Jul 23, 2014 (BUSINESS WIRE) — Knight Transportation, Inc. KNX, -0.03% , 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:
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.
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.
SOURCE: Knight Transportation, Inc.
Knight Transportation, Inc.
David A. Jackson, President
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Adam W. Miller, CFO
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