Knight Transportation, Inc. (NYSE: KNX), one of North
America’s largest truckload transportation companies, today
reported revenue and net income for the fourth quarter ended
December 31, 2011.
For the quarter, total revenue increased 19.0% to $224.1 million
from $188.3 million for the same quarter of 2010. Revenue before
fuel surcharge increased 14.6% to $181.0 million compared to $158.0
million in the fourth quarter of 2010. Net income per diluted share
increased 30.0% to $0.22 compared to $0.17 for the same quarter of
2010. Net income increased 22.7% to $17.5 million compared to $14.2
million for the same quarter of 2010.
As reported previously, the fourth quarter of 2010 included a
non-cash $2.5 million pre-tax ($2.0 million after tax) stock
compensation charge related to an adjustment to the straight-line
recognition of expense as prescribed in ASC 718 and the accelerated
vesting of equity awards under the plan as a result of the passing
of a senior executive. Any year over year operating ratio
comparisons made below exclude this 2010 non-cash charge. Excluding
the 2010 non-cash charge, net income per diluted share increased
14.0% to $0.22 compared to $0.19, and net income increased 7.6% to
$17.5 million compared to $16.2 million for the same quarter of
2010.
For the year, total revenue increased 18.5% to $866.2 million
from $730.7 million for the same period of 2010. Revenue before
fuel surcharge increased 13.3% to $697.3 million compared to $615.7
million for the same period of 2010. Net income per diluted share
increased 5.2% to $0.74 in 2011 compared to $0.70 in 2010. Net
income increased 2.0% to $60.2 million for 2011 from $59.1 million
for 2010. Excluding the 2010 non-cash charge discussed above, net
income per diluted share increased 1.7% to $0.74 from $0.72, and
net income decreased 1.4% to $60.2 million from $61.1 million for
2010.
The company previously announced a quarterly cash dividend of
$0.06 per share to shareholders of record on December 2, 2011, paid
on December 22, 2011.
Chairman and Chief Executive Officer, Kevin P. Knight, offered
the following comments:
“We were pleased with our ninth consecutive quarter of year over
year revenue growth as we continue to gain market share and grow
each of our businesses. In the fourth quarter our asset-based
businesses (dry van, refrigerated, and port/rail services)
demonstrated healthy operating fundamentals with the 6.8%
improvement in revenue per tractor, a 4.1% increase in miles per
tractor, and a 2.6% increase in revenue per total mile (not
including fuel surcharge), as compared to the fourth quarter last
year. This marks the eighth consecutive quarter with year over year
improvement in revenue per tractor and is the largest improvement
we have produced in the last six quarters. We continued to see
double-digit revenue growth from our non-asset based brokerage and
intermodal businesses.
“Our objective is to be an industry leader in growth and
profitability for each service and mode of truckload transportation
we provide. Although industry freight volumes appeared to have
grown modestly compared to the fourth quarter last year, we were
able to deliver double digit growth in both revenue and operating
income, year over year. Each of our businesses produced meaningful
top line growth, year over year, and we expect continued growth in
future quarters.
“On a consolidated basis, we produced an operating ratio of
83.8% compared to 83.6% for the same quarter last year. Our dry van
business produced an operating ratio of 82.4% compared to 82.9% for
the same quarter last year with 3.4% revenue growth, excluding fuel
surcharge. Our refrigerated business produced an operating ratio of
81.7% compared to 82.5% for the same quarter last year with 15.9%
revenue growth, excluding fuel surcharge. Our port and rail
services business produced an operating ratio of 88.9% compared to
84.8% for the same quarter last year with 21.0% revenue growth,
excluding fuel surcharge. Our brokerage business produced an
operating ratio of 93.3% compared to 94.7% for the same quarter
last year with 23.6% total revenue growth. Our intermodal business
continues to grow, but did not provide meaningful revenue in the
quarter.
"We remain committed to providing our customers a broad and
growing range of truckload services. The more rapid growth of our
port and rail services, brokerage, and intermodal businesses
impacts our operating margin and returns because these businesses
usually generate lower margins than our asset-based businesses, but
they typically require less capital investment.
“Higher fuel prices have continued to negatively impact the
industry and fuel surcharge programs have not adequately offset the
additional cost. The U.S. National Average Diesel Fuel price per
gallon for the fourth quarter increased 22.5% to $3.87 from $3.16
for the same period of 2010. We continue to mitigate the effects of
rising fuel expense by effectively managing our fuel miles per
gallon with an intense focus on reducing idle time, managing out of
route miles, and improving the driving habits of our driving
associates. We also continue to update our fleet with more fuel
efficient post-2010 EPA emission compliant engines, install
aerodynamic devices on our tractors, and equip our trailers with
trailer blades, which lead to meaningful fuel efficiency
improvements.
“Driver availability continues to be a concern across the
industry as increased regulation has continued to shrink the pool
of qualified drivers. Although we face a challenging driver market,
we believe our driver development and training programs continue to
enable us to source driving associates and develop them into Knight
company drivers. We also feel our decentralized service center
network, regional freight lanes, late-model tractor fleet,
financial strength, and ability to provide favorable compensation
offer us a competitive advantage in recruiting and retaining
qualified driving associates.
“Our combined fleet finished the quarter with 3,976 tractors
compared to 3,866 last year. This includes owner-operators which
grew from 446 tractors to 467 tractors in the fourth quarter this
year, an increase of 4.7%. We invested $40.3 million of net capital
expenditures in the fourth quarter. For the year, net capital
expenditures were $138.3 million as we refreshed our tractor fleet
from an average age of 2.2 years at the beginning of 2011 to ending
the year with an average age of 1.7 years. We expect our net
capital expenditures to decrease significantly in 2012, as our
newer fleet will require fewer replacement trucks. Our gain on sale
of revenue equipment decreased to $2.5 million in the fourth
quarter of 2011 from $2.8 million in the fourth quarter of
2010.
“We have returned $96.1 million to our shareholders in the form
of quarterly dividends and stock repurchases over the twelve month
period ending December 31, 2011. Our cash balance at December 31,
2011 was $9.6 million and we ended the fourth quarter with $476.4
million of shareholders' equity.
“Acquisitions continue to be part of our growth strategy, and we
continue to evaluate strategic opportunities to enhance the returns
for our shareholders over time. In this environment we feel well
positioned to capitalize on opportunities to grow revenues in each
of our businesses.
"Subsequent to the fourth quarter of 2011, the compensation
committee of the board of directors approved the accelerated
vesting of certain stock options issued prior to 2009 which will
result in a non-cash stock compensation charge that will be
recognized in the first quarter 2012. The majority of this expense
is related to stock options with a grant price above the company
share price as of December 31, 2011. We estimate this charge will
impact our net income per diluted share by approximately $.05 in
the first quarter 2012. We believe taking the non-cash charge
facilitates the ability to better align our employees' compensation
with company goals."
The company will hold a conference call on January 25, 2012 at
4:30 PM EDT, to further discuss its results of operations for the
quarter ended December 31, 2011. The dial in number for this
conference call is 1-877-743-0363. 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://investors.knighttrans.com/presentations, “Fourth Quarter
2011 Conference Call Presentation.”
Knight Transportation, Inc. is a provider of multiple truckload
transportation 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 partners 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 Dec
31, Twelve Months Ended Dec 31, (Unaudited, in
thousands, except per share amounts)
2011 2010
2011 2010 REVENUE:
Revenue, before fuel surcharge $ 181,001 $ 157,982 $ 697,286 $
615,654 Fuel surcharge 43,099 30,329
168,913 115,055
TOTAL REVENUE 224,100
188,311 866,199 730,709
OPERATING EXPENSES: Salaries, wages and benefits 56,467
52,904 218,686 206,536 Fuel expense - gross 56,968 45,603 226,471
174,398 Operations and maintenance 13,401 11,920 53,714 46,612
Insurance and claims 7,044 6,613 30,072 25,053 Operating taxes and
licenses 3,973 3,783 15,212 13,998 Communications 1,437 1,411 5,534
5,465 Depreciation and amortization 19,891 18,077 75,832 70,962
Purchased transportation 33,600 23,128 129,143 82,031 Miscellaneous
operating expenses 2,084 1,417 11,514
10,439 194,865 164,856
766,178 635,494 Income From Operations 29,235
23,455 100,021 95,215
Interest income 131 129 1,068 1,554 Interest expense (131 ) - (180
) - Other (expense) income 271 271 279
843 Income before income taxes 29,506 23,855 101,188
97,612
INCOME TAXES 11,800 9,643
40,480 38,633 Net Income 17,706 14,212 60,708 58,979
Net (income)/loss attributable to noncontrolling interest
(237 ) 29 (461 ) 93
NET INCOME ATTRIBUTABLE
TO KNIGHT TRANSPORTATION $ 17,469 $ 14,241 $ 60,247
$ 59,072 Net Income Per Share - Basic $ 0.22 $ 0.17 $ 0.74 $
0.71 - Diluted $ 0.22 $ 0.17 $ 0.74 $ 0.70 Weighted Average Shares
Outstanding - Basic 79,378 83,677 81,439 83,533 - Diluted 79,706
84,444 81,872 84,416
BALANCE SHEET DATA:
12/31/11
12/31/10 ASSETS (Unaudited, in
thousands) Cash and cash equivalents $ 9,584 $ 28,013 Short-term
investments - 24,379 Accounts receivable, net 101,319 78,479 Notes
receivable, net 1,034 1,391 Related party notes and interest
receivable 2,868 3,038 Prepaid expenses 10,131 8,514 Assets held
for sale 19,416 4,132 Other current assets 9,605 4,717 Income tax
receivable 3,821 6,914 Current deferred tax asset 2,319
5,671 Total Current Assets 160,097
165,248 Property and equipment, net
547,033 483,709 Notes receivable, long-term 3,987 4,246 Goodwill
10,295 10,313 Intangible assets, net - 52 Other assets and
restricted cash 16,171 13,419 Total
Assets $ 737,583 $ 676,987
LIABILITIES AND
SHAREHOLDERS' EQUITY Accounts payable $ 14,322 $ 7,571 Accrued
payroll and purchased transportation 9,096 6,547 Accrued
liabilities 13,645 11,075 Claims accrual - current portion 12,875
13,843 Dividend payable - current portion 77
1,433 Total Current Liabilities 50,015 40,469 Claims
accrual - long-term portion 8,693 10,168 Dividend payable -
long-term portion 1,457 - Deferred income taxes 145,668 118,886
Debt - long-term 55,000 - Total
Long-term Liabilities 210,818 129,054 Total Liabilities
260,833 169,523
Common stock 794 837 Additional paid-in capital 132,723 126,975
Accumulated other comprehensive (loss)/income (448 ) 7 Retained
earnings 343,290 379,714 Total Knight
Transportation Shareholders' Equity 476,359 507,533 Noncontrolling
interest 391 (69 ) Total Shareholders' Equity
476,750 507,464 Total Liabilities and
Shareholders' Equity $ 737,583 $ 676,987
OPERATING STATISTICS: Three Months
Ended Dec 31, Twelve Months Ended Dec 31,
2011 2010 % Change
2011 2010 % Change (Unaudited)
(Unaudited) (Unaudited) (Unaudited) Average Revenue Per
Tractor* $39,974 $37,443 6.8% $157,076 $150,992 4.0%
Non-paid Empty Mile Percent 10.8% 10.8% -0.4% 10.6% 10.7% -1.3%
Average Length of Haul 468 467 0.2% 483 478 1.0%
Operating Ratio** 83.8% 85.2% 85.7% 84.5% Average Tractors -
Total 3,963 3,904 3,908 3,817 Tractors - End of Quarter:
Company 3,509 3,420 3,509 3,420 Owner - Operator 467 446 467 446
3,976 3,866 3,976 3,866 Trailers - End of Quarter 8,986
9,008 8,986 9,008 Net Capital Expenditures (in thousands)
$40,327 $4,392 $138,308 $91,511 Adjusted Cash Flow From
Operations Excluding Change in Short-term Investments (in
thousands) *** $38,341 $44,649 $136,318 $126,228 *
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.
Revenue from fuel surcharge is available on the accompanying income
statements. We measure our revenue, before fuel surcharge, and our
operating expenses, net of fuel surcharge, because we believe that
eliminating this potentially volatile source of revenue affords a
more consistent basis for comparing our results of operations from
period to period. *** Adjusted cash flow from operations of
$44,649 for prior year quarter ended December 31, 2010 does not
include $46,011 decrease in short-term trading investments. This
item is needed to tie back to cash flow from operations. ***
Adjusted cash flow from operations of $136,318 for the twelve-month
period ended December, 2011 does not include $24,379 decrease in
short-term trading investments, and adjusted cash flow from
operations of $126,228 for the comparative twelve-month period
ended December 31, 2010 does not include $42,563 decrease in
short-term trading investments. These are the reconciling items
needed to tie back to cash flow from operations. In the
press release, we provided adjusted cash flow from operations
excluding change in short-term investments. The exclusion of the
change in short-term investments is not in accordance with
generally accepted accounting principles in the United States
("GAAP"). This non-GAAP financial measure is intended to
supplement, but not substitute for, the most directly comparable
GAAP measure. We believe that the non-GAAP financial measure
provides meaningful information to assist investors and analysts in
understanding our financial results because it excludes an item
that may not be indicative or is unrelated to our core operating
results. However, because non-GAAP financial measures are not
standardized, investors are strongly encouraged to review our
financial statements and publicly filed reports in their entirety
and not rely on any single financial measure. A reconciliation to
the most closely-related GAAP measure is provided in the preceding
paragraphs. 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.
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