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, 2013.

Key financial highlights for the second quarter and first half of 2013 and 2012 were as follows:

     

Three Months Ended June 30,
(dollars in thousands, except per share data)

     

Six Months Ended June 30,
(dollars in thousands, except per share data)

2013     2012    

% Change

2013     2012    

% Change

Total revenue $ 244,783 $ 236,268

3.6%

 

$ 480,183 $ 455,800 5.3 %
Revenue, excluding trucking fuel surcharge $ 200,104 $ 188,838

6.0%

 

$ 389,704 $ 364,437 6.9 %
GAAP operating income $ 31,925 $ 32,103

-0.6%

 

$ 57,469 $ 51,937 10.7 %
Adjusted operating income NA NA NA $ 57,469 $

55,918

(1)

 2.8 %
GAAP net income $ 18,939 $ 19,289

-1.8%

 

$ 34,122 $ 29,835 14.4 %
Adjusted net income NA NA NA $ 34,122 $

33,729

(1)

 1.2 %
GAAP earnings per diluted share $ 0.24 $ 0.24

-2.1%

 

$ 0.43 $ 0.37 14.1 %
Adjusted earnings per diluted share NA NA NA $ 0.43 $

0.42

(1)

 1.0 %
 

(1) The 1st quarter of 2012 included a $4.0 million non-cash charge ($3.9 million after tax) for stock option acceleration. See GAAP to Non-GAAP reconciliation schedule. GAAP and Non-GAAP measurements for 2013 are identical.

 

The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on June 7, 2013, which was paid on June 28, 2013.

Kevin Knight, Chairman and Chief Executive Officer, commented on the quarter, ''We have continued to expand our market share in our wide range of truckload logistic services in a challenging operating and economic environment. Our consolidated revenue, before trucking fuel surcharge, increased 6.0% on a year over year basis. Our non-asset service offerings lead the way with revenue growth of 64.2%, and now make up approximately 20.0% of our total revenue before trucking fuel surcharge. Compared to the same quarter last year, our revenue per loaded mile, net of fuel surcharge, increased just less than 1.0% while our length of haul and miles per tractor were virtually flat. We experienced an improvement in our revenue per tractor compared to the same quarter last year, while operating income was essentially unchanged.''

The following chart reflects the year-over-year operating ratio and revenue comparison for our asset based businesses and our non-asset based businesses for the second quarter and first half of 2013 and 2012.

           
Three Months Ended June 30, Six Months Ended June 30,
 
Operating ratios(2)      

Revenue change,
excluding
trucking fuel
surcharge

Operating ratios(2)      

Revenue change,
excluding
trucking fuel
surcharge

2013     2012   2013     2012  
Asset based 81.7% 81.1% -2.5% 83.5% 83.2% -0.6%
Non-asset based 93.6% 96.0% 64.2% 93.2% 95.3% 61.7%
 
Consolidated 84.0% 83.0% 6.0% 85.3% 84.7% 6.9%
 

(2)Operating ratio is defined as total operating expenses, net of trucking fuel surcharge, as a percentage of revenue before trucking fuel surcharge.

 

Our asset based businesses continued to operate at a high level of profitability and efficiency. Our non-asset based businesses continued to produce strong revenue growth along with improved margins, when compared to the same quarter last year. Our businesses continue to complement each other and enable us to provide our customers with truckload services that are efficient and valuable to their supply chain needs.

The industry continues to be faced with a shortage of high quality driving associates. Sourcing and retaining high quality drivers is paramount to our success in improving the productivity of our assets. We believe our decentralized regional service centers provide a ''hometown'' feel that affords us a significant advantage in recruiting, retaining, and developing driving associates. We have also continued to invest in our driver development and training programs to source driving associates and develop them into Knight company drivers. As a result, our driver turnover continues to compare favorably to what we believe to be the industry average.

The DOE national average diesel fuel price decreased 1.3% 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 lessening the environmental impact of our operations.

Our average tractor count for the quarter decreased 107 trucks, year-over-year, to 3,963 tractors. Our tractor fleet remains one of the most modern fleets in the industry with an average age of 2.1 years. Our gain on sale of revenue equipment in the second quarter of 2013 was $1.6 million, down from $2.2 million in the second quarter of 2012.

We have returned $78.5 million to our shareholders in the form of quarterly dividends over the twenty-four-month period ending June 30, 2013. We ended the quarter with $0.7 million of cash and $517.4 million of shareholders' equity. Year-to-date our net capital expenditures are $17.8 million compared to $56.5 million for the same period last year, while our cash flow from operations is $72.3 million compared to $62.4 million. This has resulted in significantly more free cash flow and has allowed us to repay $54.0 of our outstanding debt year-to-date.

The company will hold a conference call on July 24, 2013, at 4:30 PM EDT, to further discuss its results of operations for the quarter ended June 30, 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, ''Second 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 June 30, Six Months Ended June 30,
(Unaudited, in thousands, except per share amounts)
       

2013

2012

2013

2012

REVENUE:
Revenue, before fuel surcharge $ 200,104 $ 188,838 $ 389,704 $ 364,437
Fuel surcharge   44,679         47,430     90,479         91,363  
TOTAL REVENUE   244,783         236,268     480,183         455,800  
 
OPERATING EXPENSES:
Salaries, wages and benefits 56,807 59,089 114,461 120,045
Fuel expense - gross 52,739 56,612 108,432 113,923
Operations and maintenance 15,919 15,078 31,828 28,815
Insurance and claims 7,295 8,281 14,450 15,926
Operating taxes and licenses 3,985 3,973 7,893 8,075
Communications 1,200 1,271 2,372 2,666
Depreciation and amortization 21,089 20,933 42,597 41,305
Purchased transportation 49,883 36,064 92,675 67,924
Miscellaneous operating expenses   3,941         2,864     8,006         5,184  
  212,858         204,165     422,714         403,863  
               
Income From Operations   31,925         32,103     57,469         51,937  
 
 
Interest income 96 108 205 221
Interest expense (77 ) (114 ) (219 ) (242 )
Other income (expense)   (168 )       197     53         394  
Income before income taxes 31,776 32,294 57,508 52,310
INCOME TAXES   12,712         12,924     23,010         22,280  
Net Income 19,064 19,370 34,498 30,030
Net income attributable to noncontrolling interest   (125 )       (81 )   (376 )       (195 )
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION $ 18,939       $ 19,289   $ 34,122       $ 29,835  
 
Basic Earnings Per Share $ 0.24 $ 0.24 $ 0.43 $ 0.37
Diluted Earnings Per Share $ 0.24 $ 0.24 $ 0.43 $ 0.37
 
Weighted Average Shares Outstanding - Basic 79,954 79,686 79,898 79,609
Weighted Average Shares Outstanding - Diluted 80,296 80,076 80,209 80,045
 
BALANCE SHEET DATA:

06/30/13

12/31/12

ASSETS (Unaudited, in thousands)
Cash and cash equivalents $ 747 $ 5,684
Trade receivables, net of allowance for doubtful accounts 109,671 102,553
Notes receivable, net of allowance for doubtful accounts 749 791
Related party notes and interest receivable 1,663 2,814
Prepaid expenses 11,371 17,035
Assets held for sale 14,119 18,362
Other current assets 10,944 12,449
Current deferred tax assets   4,239         3,409  
Total Current Assets   153,503         163,097  
 
Property and equipment, net 569,620 584,064
Notes receivable, long-term 3,267 3,692
Goodwill 10,266 10,276
Other assets and restricted cash   22,036         21,383  
 
Total Assets $ 758,692       $ 782,512  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 20,892 $ 11,281
Accrued payroll and purchased transportation 11,241 10,489
Accrued liabilities 13,288 16,020
Claims accrual - current portion 15,563 15,892
Dividend payable - current portion   152         141  
Total Current Liabilities 61,136 53,823
 
Claims accrual - long-term portion 9,741 10,340
Long-term dividend payable and other liabilities 2,369 2,638
Deferred tax liabilities 141,367 144,871
Long-term debt   26,000         80,000  
Total Long-term Liabilities 179,477 237,849
 
Total Liabilities   240,613         291,672  
 
Common stock 800 798
Additional paid-in capital 146,213 142,837
Accumulated other comprehensive loss (251 ) (302 )
Retained earnings   370,680         346,899  
Total Knight Transportation Shareholders' Equity 517,442 490,232
Noncontrolling interest   637         608  
Total Shareholders' Equity   518,079         490,840  
Total Liabilities and Shareholders' Equity $ 758,692       $ 782,512  
 
 
               
Three Months Ended June 30, Six Months Ended June 30,

2013

    

2012

% Change

   

2013

    

2012

% Change

OPERATING STATISTICS

 (Unaudited) (Unaudited)

 

 

Average Revenue Per Tractor* $ 40,523 $ 40,459 0.2% $ 79,069 $ 79,519 -0.6%
 
Non-paid Empty Mile Percent 10.8% 10.1% 6.9% 10.9% 10.4% 4.8%
 
Average Length of Haul 482 485 -0.6% 481 482 -0.2%
 
Operating Ratio** 84.0% 83.0% 85.3% 84.7%
 
Average Tractors - Total 3,963 4,070 4,020 4,024
 
Trailers - End of Quarter 9,401 9,118 9,401 9,118
 
Net Capital Expenditures (in thousands) $ 19,580 $ 32,184 $ 17,822 $ 56,474
 
Cash Flow From Operations (in thousands) $ 31,935 $ 32,155 $ 72,257 $ 62,410
 
* 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. Operating ratio reported for the six months ending June 30, 2012 is based upon total operating expenses, excluding the first quarter 2012 one time non-cash stock compensation charge of $4 million related to the accelerated vesting of certain stock options issued prior to 2009, and 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 following is a reconciliation of 2012 YTD GAAP Income to Non-GAAP Income:
 

Reconciliation:

      

(GAAP) YTD
6-30-12

      

* Option
Acceleration
Expense
Recorded in
Q1 - 2012

      

(Non-GAAP)
Adjusted YTD
6-30-12

Total Revenue $ 455,800             $ 455,800
Total Operating Expense   403,863   (3,981 )   399,882  
51,937 55,918
 
Other Income   373     373  
Income before income taxes 52,310 56,291
Income taxes   22,280   87   22,367  
Net Income 30,030 33,924
Net income attributable to noncontrolling interest   (195 )   (195 )
Net income attributable to Knight Transportation $ 29,835   $ 33,729  
Net Income Per Share
- Basic $ 0.37 $ 0.42
- Diluted $ 0.37 $ 0.42
Weighted Average Shares Outstanding
- Basic 79,609 79,609
- Diluted 80,045 80,045
 
* The first quarter of 2012 included a $4.0 million pretax non-cash stock compensation charge ($3.9 million after tax) relating to the accelerated vesting of certain stock options that had been issued prior to 2009.
 

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, 602-606-6349
President
or
Adam W. Miller, 602-606-6349
CFO