Knight Transportation Posts Record Revenue and Net Income for the First Quarter of 2007

Category:

Wednesday, April 18, 2007 4:00 pm EDT

Dateline:

PHOENIX

Public Company Information:

NYSE:
KNX

PHOENIX--(BUSINESS WIRE)--Knight Transportation, Inc. (NYSE: KNX) announced today its financial results for the quarter ended March 31, 2007.

For the quarter, total revenue increased 11.7%, to $166.5 million from $149.1 million for the same quarter of 2006. Revenue, before fuel surcharge, increased 12.0%, to $144.8 million from $129.3 million for the same quarter of 2006. Net income increased 5.0%, to $16.6 million from $15.8 million for the same period of 2006. Net income per diluted share increased to $0.19 from $0.18 for the same period of 2006.

The company previously announced a cash dividend of $.02 per share to shareholders of record on March 9, 2007, which was paid on March 30, 2007.

Chairman and Chief Executive Officer, Kevin P. Knight, offered the following comments, This quarter represented the 49th consecutive quarter, since going public, that Knight Transportation generated higher year-over-year operating income. Our net income, as a percentage of revenue before fuel surcharge, for this quarter was 11.5%, which represented the third highest first quarter in our history as a public company. Our operating ratio was 81.2%, which represented our third best first quarter operating ratio in our history.

We are pleased with our double-digit revenue growth considering the current challenging freight environment. Our growth was accomplished through a combination of continued fleet expansion, our asset purchase of Roads West Transportation during the fourth quarter of 2006, and increased revenue per mile. Also our brokerage line of business continues to expand.

"For the quarter, average revenue per loaded mile, before fuel surcharge, increased 4.0%, while non-revenue miles increased by 90 basis points with a 36 mile shorter average length of haul. Average miles per tractor decreased 4.8% as compared to the same period of 2006. The decrease in utilization is attributed primarily to a less robust freight environment and a shortened length of haul.

"Our service center growth continues in 2007 with the addition of four new service centers to date; one dry-van, one refrigerated and two brokerage centers. Our combined network is now 35 service centers strong, which includes 25 dry-van, 4 refrigerated and 6 brokerage centers located throughout the United States. Going forward, we intend to continue to execute our business model of leading growth and profitability, by continuing to grow existing service centers and also new openings. This will not be easy in the current environment, particularly if freight demand remains soft. We also plan to continue to evaluate the market for acquisition opportunities that make sense within our disciplined operating framework. Our base expectation for the medium to longer term is to grow our fleet between 10% and 15% annually and continue to grow our brokerage business. We will evaluate that base goal and may adjust it up or down periodically based on factors such as freight demand, driver availability, and acquisitions.

"Our constant efforts to reduce operating costs helped to minimize the overall impact of expense increases relating to driver compensation, prices of revenue equipment, higher cost for ultra low sulfur diesel fuel, and declining fuel efficiency due to emissions control regulations.

Overall our average tractors increased by 389 to 3,679, an increase of 11.8% from the same period of 2006. For the quarter, we invested $18.9 million in net capital expenditures. At March 31, 2007, our balance sheet reflected $20.2 million in cash and cash equivalents, zero debt, and $442.2 million in shareholders equity.

The Company will hold a conference call on April 19, 4 p.m. ET, to further discuss its results of operations for the quarter ended March 31, 2007. The dial in number for this conference call is 1-866-244-4630.

Knight Transportation, Inc. is a truckload carrier offering dry van, refrigerated, and brokerage services to customers through a network of service centers located throughout the United States. As Your Hometown National Carrier, Knight strives to offer customers and drivers personal service and attention through each service center, while offering integrated freight transportation nationwide and beyond through the scale of one of North Americas largest trucking companies. The principal types of freight we transport include consumer staples, retail, paper products, packaging/plastics, manufacturing, and import/export commodities.

INCOME STATEMENT DATA:

Three Months Ended
March 31,

(Unaudited, in thousands,
except per share amounts)

 
2007  2006 
REVENUE:

  Revenue, before fuel surcharge

$ 144,825  $ 129,339 

  Fuel surcharge

21,709  19,713 
TOTAL REVENUE 166,534  149,052 
 
OPERATING EXPENSES:

  Salaries, wages and benefits

48,840  43,201 

  Fuel expense - gross

39,634  36,022 

  Operations and maintenance

9,272  9,427 

  Insurance and claims

8,006  5,754 

  Operating taxes and licenses

3,557  3,251 

  Communications

1,418  1,310 

  Depreciation and amortization

15,931  14,600 

  Lease expense - revenue equipment

106  109 

  Purchased transportation

10,732  7,907 

  Miscellaneous operating expenses

1,784  1,373 
139,280  122,954 

  Income From Operations

27,254  26,098 
 

  Other income

188 

  Interest income

182  284 
370  284 
 

  Income Before Income Taxes

27,624  26,382 
INCOME TAXES 11,005  10,550 
 
NET INCOME $ 16,619  $ 15,832 
Net Income Per Share

    - Basic

$ 0.19  $ 0.18 

    - Diluted

$ 0.19  $ 0.18 
Weighted Average Shares Outstanding

    - Basic

86,173  85,752 

    - Diluted

87,167  87,260 
 
 
BALANCE SHEET DATA: 3/31/2007  12/31/2006 

 

(Unaudited, in thousands)

ASSETS

Cash and cash equivalents $ 20,150  $ 1,582 
Accounts receivable, net 82,206  85,350 
Notes receivable, net 267  341 
Other current assets 15,384  16,613 
Prepaid expenses 9,126  8,342 
Deferred tax asset

9,117 

8,759 

  Total Current Assets

136,250 

120,987 
 
Property and equipment, net 433,693  433,828 
Notes receivable, long-term 308  348 
Goodwill

10,268 

10,256 

Intangible assets, net

284 

300 

Other assets and restricted cash 4,836  4,500 
 

  Total Assets

$ 585,639 

$ 570,219 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 2,864  $ 13,077 
Accrued payroll 7,987  7,411 
Accrued liabilities 22,991  15,184 
Claims accrual 25,371  25,926 

  Total Current Liabilities

59,213  61,598 
 
Deferred Income Taxes 84,240  82,526 
 

  Total Liabilities

143,453  144,124 
 
Common stock 862  861 
Additional paid-in capital 95,809  94,220 
Retained earnings

345,515 

331,014 

  Total Shareholders' Equity

442,186 

426,095 
 

  Total Liabilities and Shareholders' Equity

$ 585,639 

$ 570,219 

Three Months Ended March 31,

 

2007 

2006 

(Unaudited) (Unaudited)
 

 

%

OPERATING STATISTICS

Change
 

Average Revenue Per Loaded Mile(a)

$1.735  $1.668  4.0%
 

Average Revenue Per Total Mile(a)

$1.507  $1.464  2.9%
 
Empty Mile Factor 13.1% 12.2% 7.4%
 
Average Miles Per Tractor 25,212  26,490  -4.8%
 
Average Length of Haul 537  573  -6.3%
 

Operating Ratio(b)

81.2% 79.8%
 
Average Tractors - Total 3,679  3,290  11.8%
 
Tractors - End of Quarter:

  Company

3,522  3,097 

  Owner - Operator

238  228 
3,760  3,325 
 
Trailers - End of Quarter 8,663  7,966 
 
Net Capital Expenditures (in thousands) $18,935  $27,168 
 
Cash Flow From Operations (in thousands) $38,036  $39,279 

(a) Excludes fuel surcharge.

(b) Operating ratio as reported in this press release is based upon total operating expenses, net of fuel surcharge, as a percentage of revenue, before fuel surcharge. Revenue from fuel surcharge is available on the accompanying statements of income. We measure our revenue, before fuel surcharge, and our operating expenses, net of fuel surcharge, because we believe that eliminating this sometimes volatile source of revenue affords a more consistent basis for comparing our results of operations from period to period.

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. These statements generally may be identified by their use of terms or phrases such as "expects," "estimates," "anticipates," "projects," "believes," "plans," "intends," "may," "will," "should," "could," "potential," "continue," "future," and terms or phrases of similar substance. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Accordingly, actual results may differ from those set forth in the forward-looking statements. Readers should review and consider the factors that may affect future results and other disclosures by the Company in its press releases, stockholder reports, Annual Report on Form 10-K, and other filings with the Securities Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

Contact:

Knight Transportation, Inc., Phoenix
Dave Jackson, 602-269-2000