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 fourth quarter ended December 31, 2013.

Key financial highlights for the fourth quarter and full year of 2013 and 2012 were as follows:

    Three Months Ended Dec. 31,     Twelve Months Ended Dec. 31,
(dollars in thousands, except per share data) (dollars in thousands, except per share data)
2013   2012   % Diff 2013   2012   % Diff
Total revenue $ 249,716 $ 242,303 3.1 % $ 969,237 $ 936,036 3.5 %
Revenue, excluding trucking fuel surcharge $ 206,300 $ 195,164 5.7 % $ 791,851 $ 752,151 5.3 %
Operating income $ 32,165 $ 28,564 12.6 % $ 113,909 $

108,267

(1)

 5.2 %
Net income $ 20,101 $ 17,698 13.6 % $ 69,282 $

64,117

(1)

 8.1 %
Earnings per diluted share $ 0.25 $ 0.22 12.7 % $ 0.86 $

0.80

(1)

 7.6 %
       

(1) The 1st quarter of 2012 included a $4.0 million non-cash charge ($3.9 million after tax) for stock option acceleration. Excluding the effect of this non-cash charge, 2012 year-to-date operating income would have been $112.2 million, net income would have been $68.0 million, and diluted earnings per share would have been $0.85.

The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on December 6, 2013, which was paid on December 23, 2013.

Kevin Knight, Chairman and Chief Executive Officer, commented on the quarter, ''We were pleased with our ability to grow revenue while simultaneously improving our operating margin. We believe this is a result of improved freight demand and meaningful progress on several internal initiatives focused on improving production, recruiting and developing driving associates, providing industry-leading service, and intensifying our cost control efforts. Our revenue per tractor improved 3.2%, year over year, as a result of a 3.4% improvement in revenue per total mile with a 1.3% decrease in our length of haul. Miles per tractor were down 0.2%, as we were able to mitigate much of the impact from the new industry-wide regulations governing hours of service that went into effect in July 2013. Our asset based businesses (dry van, refrigerated, and port services) significantly improved their operating ratio to 81.6% in the fourth quarter of 2013 from 83.8% in the fourth quarter of 2012. Our non-asset based businesses (brokerage, intermodal, and other) grew revenue 42.6% with an operating ratio of 95.6%, led by strong performance in our brokerage business.''

The following chart reflects the financial performance of our asset based and our non-asset based businesses for the fourth quarter and full year of 2013 and 2012.

    Three Months Ended Dec. 31,   Twelve Months Ended Dec. 31,
(dollars in thousands, except operating ratio) (dollars in thousands, except operating ratio)
2013   2012   Diff 2013   2012   Diff
Asset based
Revenue, excluding trucking fuel surcharges $ 164,751 $ 166,035 -0.8 % $ 644,682 $ 652,360 -1.2 %
Operating Income $ 30,317 $ 26,849 12.9 % $ 106,167 $

103,013

(1)

 3.1 %
Operating Ratio 81.6 % 83.8 % -220 bps 83.5 % 84.2

%(2)

 -70 bps
 
Non-asset based
Revenue $ 41,549 $ 29,129 42.6 % $ 147,169 $ 99,790 47.5 %
Operating Income $ 1,848 $ 1,715 7.8 % $ 7,742 $

5,254

(1)

 47.4 %
Operating Ratio 95.6 % 94.1 %

150 bps

94.7 % 94.7

%(2)

 0 bps
Consolidated
Revenue, excluding trucking fuel surcharges $ 206,300 $ 195,164 5.7 % $ 791,851 $ 752,150 5.3 %
Operating Income $ 32,165 $ 28,564 12.6 % $ 113,909 $

108,267

(1)

 5.2 %
Operating Ratio 84.4 % 85.4 % -100 bps 85.6 % 85.6 %(2) 0 bps
 
        (1) The 1st quarter of 2012 included a $4.0 million non-cash charge ($3.9 million after tax) for stock option acceleration. Excluding the effect of this non-cash charge, operating income for 2012 would have been $106.9 for the asset based business, $5.3 million for the non-asset based business, and $112.2 million consolidated.
 
(2)Operating ratio is defined as total operating expenses, net of trucking fuel surcharge, as a percentage of revenue before trucking fuel surcharge. The 1st quarter of 2012 included a $4.0 million non-cash charge ($3.9 million after tax) for stock option acceleration. Excluding the effect of this non-cash charge, operating ratio for 2012 would have been 83.6% in the asset based business, 94.7% in the non-asset based business, and 85.1% consolidated.

Operating income in our asset based businesses improved 12.9% in the fourth quarter, year over year. Our specific efforts to improve yield and increase operational efficiencies have improved our results. We continue our efforts to control cost despite multiple inflationary pressures and expect further improvement in 2014. During the fourth quarter we incurred approximately $1.2 million of additional legal and professional expenses when compared to the same period last year. The majority of this expense is related to acquisition activity and resolving various nonrecurring litigation claims. We expect these expenses to normalize in future quarters.

During the fourth quarter, our brokerage business grew revenue 70.4%, gross margin 67.5%, and operating income 64.8%, when compared to the same period last year. We continue to gain market share, build out our team, source additional capacity, and strategically align our service offering with the supply chain needs of our customers. Our intermodal business underperformed during the fourth quarter which contributed to the deterioration in our year over year operating ratio for the non-asset based segment.

Sourcing and retaining high quality drivers continues to be a challenge for the industry and is critical to our success in improving the productivity of our assets and providing industry leading customer service. We continue to see positive results from our investment in our driver development and training programs. During the fourth quarter we experienced improvement in both sourcing and retaining driving associates, and we feel well positioned to continue to make progress in the coming quarters.

The DOE national average diesel fuel price decreased 3.6% when compared to the fourth 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 1.9 years. Our gain on sale of revenue equipment in the fourth quarter of 2013 was $2.6 million, an increase from $2.0 million in the fourth quarter of 2012.

We have returned $78.6 million to our shareholders in the form of quarterly dividends over the two years ended December 31, 2013. We ended the quarter with $38.0 million of long term debt, and $551.5 million of shareholders' equity. Our 2013 net capital expenditures were $85.4 million compared to $120.8 million in 2012.

The company will hold a conference call on January 29, 2013, at 4:30 PM EST, to further discuss its results of operations for the quarter ended December 31, 2013. 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, ''Fourth Quarter 2013 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 December 31, Twelve Months Ended December 31,
(Unaudited, in thousands, except per share amounts)
         

2013

2012

2013

2012

REVENUE:
Revenue, before fuel surcharge $ 206,300 $ 195,164 $ 791,851 $ 752,151
Fuel surcharge   43,416       47,139     177,386       183,885  
TOTAL REVENUE   249,716       242,303     969,237       936,036  
 
OPERATING EXPENSES:
Salaries, wages and benefits 59,749 60,046 234,306 238,266
Fuel expense - gross 52,073 56,781 214,843 230,178
Operations and maintenance 15,799 16,954 64,715 61,875
Insurance and claims 7,710 8,429 29,350 32,138
Operating taxes and licenses 3,979 4,180 15,624 16,184
Communications 1,399 1,299 5,015 5,172
Depreciation and amortization 21,551 21,925 86,129 85,056
Purchased transportation 51,389 41,008 189,667 148,022
Miscellaneous operating expenses   3,902       3,117     15,679       10,878  
  217,551       213,739     855,328       827,769  
 
Income From Operations   32,165       28,564     113,909       108,267  
 
 
Interest income 119 100 413 417
Interest expense (152 ) (100 ) (462 ) (457 )
Other income   1,820       1,120     2,844       1,550  
Income before income taxes 33,952 29,684 116,704 109,777
INCOME TAXES   13,580       11,620     46,680       45,014  
Net Income 20,372 18,064 70,024 64,763
Net income attributable to noncontrolling interest   (271 )     (366 )   (742 )     (646 )
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION $ 20,101     $ 17,698   $ 69,282     $ 64,117  
 
Basic Earnings Per Share $ 0.25 $ 0.22 $ 0.87 $ 0.80
Diluted Earnings Per Share $ 0.25 $ 0.22 $ 0.86 $ 0.80
 
Weighted Average Shares Outstanding - Basic 80,131 79,746 79,994 79,673
Weighted Average Shares Outstanding - Diluted 80,587 79,987 80,330 80,000
 
BALANCE SHEET DATA:

12/31/13

12/31/12

ASSETS (Unaudited, in thousands)
Cash and cash equivalents $ 992 $ 5,684
Trade receivables, net of allowance for doubtful accounts 116,391 102,553
Notes receivable, net of allowance for doubtful accounts 774 791
Related party notes and interest receivable 748 2,814
Prepaid expenses 15,026 17,035
Assets held for sale 16,476 18,362
Other current assets 11,066 12,449
Current deferred tax assets   3,359       3,409  
Total Current Assets   164,832       163,097  
 
Property and equipment, net 591,791 584,064
Notes receivable, long-term 4,047 3,692
Goodwill 10,257 10,276
Other assets and restricted cash   36,194       21,383  
Total Long-term Assets 642,289 619,415
 
Total Assets $ 807,121     $ 782,512  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 14,354 $ 11,281
Accrued payroll and purchased transportation 13,864 10,489
Accrued liabilities 18,800 16,020
Claims accrual - current portion 15,616 15,892
Dividend payable - current portion   168       141  
Total Current Liabilities 62,802 53,823
 
Claims accrual - long-term portion 8,889 10,340
Long-term dividend payable and other liabilities 2,486 2,638
Deferred tax liabilities 142,504 144,871
Long-term debt   38,000       80,000  
Total Long-term Liabilities 191,879 237,849
 
Total Liabilities   254,681       291,672  
 
Common stock 802 798
Additional paid-in capital 150,079 142,837
Accumulated other comprehensive income (loss) 4,582 (302 )
Retained earnings   396,032       346,899  
Total Knight Transportation Shareholders' Equity 551,495 490,232
Noncontrolling interest   945       608  
Total Shareholders' Equity   552,440       490,840  
Total Liabilities and Shareholders' Equity $ 807,121     $ 782,512  
 
 
                 
 
Three Months Ended December 31, Twelve Months Ended December 31,

2013

2012

% Change

2013

2012

% Change

(Unaudited) (Unaudited)
 
OPERATING STATISTICS

 

 

 

 

Average Revenue Per Tractor* $ 40,918 $ 39,653 3.2 % $ 160,186 $ 158,978 0.8 %
 
Non-paid Empty Mile Percent 10.2 % 11.0 % -7.3 % 10.6 % 10.6 % 0.0 %
 
Average Length of Haul 474 480 -1.3 % 479 482 -0.6 %
 
Operating Ratio** 84.4 % 85.4 % 85.6 % 85.6 % ***
 
Average Tractors - Total 4,021 4,178 4,017 4,096
 
Trailers - End of Quarter 9,382 9,564 9,382 9,564
 
Net Capital Expenditures (in thousands) $ 28,217 $ 34,942 $ 85,368 $ 120,844
 
Cash Flow From Operations (in thousands) $ 38,271 $ 44,142 $ 138,985 $ 150,820
* Includes dry van, refrigerated, and port services revenue excluding fuel surcharge, brokerage revenue, intermodal revenue, and other revenue.
 
** 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. 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.
 
*** The 1st quarter of 2012 included a $4.0 million non-cash charge ($3.9 million after tax) for stock option acceleration. Excluding the effect of this non-cash charge, 2012 YTD operating income would have been $112.2 million, net income would have been $68.0 million, and diluted earnings per share would have been $0.85. Operating ratio, excluding the non-cash charge, would have been 85.1% for 2012.
 

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 and 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.

Knight Transportation, Inc.
David A. Jackson, President
or
Adam W. Miller, CFO
(602) 606-6349