Knight Transportation Announces Fourth Quarter Financial Results
For the quarter ended Dec. 31, 2004, total revenue increased 40.7%, to $126.8 million from $90.1 million for the same quarter of 2003. Revenue, before fuel surcharge, increased 32.3%, to $115.2 million from $87.1 million for the same quarter of 2003. Net income increased 46.2%, to $14.6 million from $10.0 million for the same quarter of 2003. Net income per diluted share increased to $0.25 from $0.17 for the same quarter in 2003.
For the 12 months ended Dec. 31, 2004, total revenue increased 30.1%, to $442.3 million from $340.1 million for the same period of 2003. Revenue, before fuel surcharge, increased 26.0%, to $411.7 million from $326.9 million for the same period of 2003. Net income increased 35.0% to $47.9 million from $35.5 million for the same period of 2003. Earnings per diluted share increased to $0.83 from $0.62 for the same period of 2003.
Chairman and Chief Executive Officer Kevin P. Knight had the following comments: "Knight Transportation registered another quarter of record revenue and earnings as we continued to execute our operating model focused on leading growth and profitability. We were especially pleased with revenue growth of over 32% before fuel surcharge and over 40% including fuel surcharge. In addition, even with industry-leading growth and significant fuel, driver pay and other cost pressures facing our industry, we improved our margins. Our operating ratio (operating expenses, net of fuel surcharge as a percentage of revenue, before fuel surcharge) improved by more than 180 basis points points to 78.9%, and our net income was 12.7% of revenue, before fuel surcharge, which is the best in our history as a public company. We achieved these results through a combination of expanding our fleet, significant rate increases, greater productivity from our trucks, and a never-ending mission of cost-control.
Our growth came from expansion of our fleet and higher revenue per tractor. Our average tractors operating in the fourth quarter were up over 17% year over year, our average freight revenue per loaded and total mile, before surcharges, were up 11.5% and 10.2%, respectively. Our average miles per tractor were up 2.3% and our average length of haul was up 6.7%.
During the year, we continued our long-running strategy of growth through new operations centers and continued expansion at existing operations centers. In February we opened our Las Vegas operating center, in June we opened our Eastern Pennsylvania operating center, and in July we opened our Lakeland, Fla., operating center. We added a total of 400 additional tractors for the year.
We also were successful in our opening of Knight Refrigerated, a wholly owned subsidiary. Our associates at Knight Refrigerated continue to work hard to develop our refrigerated operating model, in preparation for rolling out these services in other parts of the country. Our services have been well received in the temperature-control marketplace, leading to Knight-like financial performance for this subsidiary.
Rapidly escalating fuel prices are a significant challenge for our industry, and our sales and operations associates are working diligently with our customers to mitigate the negative impact of fuel prices. For the quarter, we increased fuel surcharge billings by 280% compared with the same quarter last year. These efforts helped us limit the negative impact of fuel prices.
During the quarter we continued to make significant investments in equipment and facilities to support our growth. We added 77 new tractors, upgraded an additional 45 tractors, and capitalized 97 tractors from early buy-out options exercised on operating leases. We reduced our trailer fleet by 16, while upgrading 106 trailers, and we continued to upgrade our terminal network. For the year, we invested $115.7 million in net capital expenditures. At Dec. 31, our strong balance sheet reflected $25.4 million in cash, zero debt, and $291.0 million in shareholders' equity.
This was an eventful year for Knight Transportation. We completed our 10th full year of being a public company with our 40th straight quarter of year-over-year increases in net income as a public company. In October Knight was named to Forbes Magazine's list of 200 Best Small Companies in America for the 10th consecutive year. In addition, based on our capital position and historical and expected cash flows, we initiated a $.02 per share dividend in December 2004 that we expect to pay quarterly in the future. Finally, on Dec. 30, 2004, we listed our common stock on the New York Stock Exchange under the symbol 'KNX.' We appreciate the hard work of everyone at Knight Transportation, whose dedication and discipline allowed us to continue to deliver value to our customers, associates, and shareholders in 2004."
Looking forward, we expect the shipping environment to remain favorable based on United States economic growth of approximately 3 percent or better during 2005 and assuming the strong demand and constrained supply for truckload services continues. We also expect industrywide trucking capacity to remain constrained for the foreseeable future, mainly due to the limited number of qualified drivers. Against that background, we expect freight rates to increase at least as much as operating costs and that our driver compensation will allow us to continue to attract and retain the quality drivers we need to support our efforts. Based on these expectations, we plan to grow our tractor base by approximately 400 units and to open three or four more operations centers in 2005.
The company will hold a conference call on Jan. 20, 4 p.m. EST, to further discuss its results of operations for the quarter ended Dec. 31, 2004. The dial-in number for this conference call is 800-289-0572
INCOME STATEMENT DATA: Three Months Ended Dec. 31,
(Unaudited, in thousands, except
per share amounts)
2004 2003
---- ----
REVENUE:
Revenue, before fuel surcharge $115,196 $87,070
Fuel surcharge 11,573 3,042
--------- --------
TOTAL REVENUE $126,769 $90,112
--------- --------
OPERATING EXPENSES:
Salaries, Wages &
Benefits 36,918 27,660
Fuel expense - gross 26,058 14,430
Operations & Maintenance 7,346 5,180
Insurance & Claims 6,341 4,321
Operating Taxes &
Licenses 2,732 2,391
Communications 948 766
Depreciation &
Amortization 11,820 8,270
Lease Expense - Revenue Equipment 145 1,792
Purchased Transportation 7,645 6,675
Miscellaneous Operating Expenses 2,549 1,808
--------- --------
102,502 73,293
--------- --------
Income From Operations 24,267 16,819
--------- --------
OTHER INCOME (EXPENSE):
Interest Income 59 142
Other Expense - (330)
Interest Expense - (334)
--------- --------
59 (522)
--------- --------
Income Before Income Taxes 24,326 16,297
INCOME TAXES 9,750 6,330
--------- --------
NET INCOME $14,576 $9,967
========= ========
Earnings Per Share:
- Basic $0.26 $0.18
- Diluted $0.25 $0.17
Weighted Average Shares Outstanding:
- Basic 56,598 56,184
- Diluted 57,958 57,431
Twelve Months Ended Dec. 31,
(Unaudited, in thousands, except
per share amounts)
2004 2003
---- ----
REVENUE:
Revenue, before fuel surcharge $411,717 $326,856
Fuel surcharge 30,571 13,213
-------- --------
TOTAL REVENUE $442,288 $340,069
OPERATING EXPENSES:
Salaries, Wages &
Benefits 133,822 104,756
Fuel expense - gross 85,071 56,573
Operations & Maintenance 26,369 20,345
Insurance & Claims 22,319 16,558
Operating Taxes &
Licenses 9,798 9,148
Communications 3,602 3,002
Depreciation &
Amortization 40,755 30,066
Lease Expense - Revenue Equipment 3,047 7,635
Purchased Transportation 29,342 25,194
Miscellaneous Operating Expenses 8,801 7,343
-------- --------
362,926 280,620
-------- --------
Income from Operations 79,362 59,449
-------- --------
OTHER INCOME (EXPENSE):
Interest Income 398 560
Other Expense - (330)
Interest Expense - (881)
-------- --------
398 (651)
-------- --------
Income Before Income Taxes 79,760 58,798
INCOME TAXES 31,900 23,340
-------- --------
NET INCOME $47,860 $35,458
======== ========
Earnings Per Share:
- Basic $0.85 $0.63
- Diluted $0.83 $0.62
Weighted Average Shares Outstanding:
- Basic 56,399 56,015
- Diluted 57,639 57,357
BALANCE SHEET DATA:
12/31/2004 12/31/2003
---------- ----------
(Unaudited, in thousands)
ASSETS
Cash and cash equivalents $25,357 $40,550
Accounts receivable, net 58,733 38,751
Notes receivable, net 171 515
Inventories and supplies 2,332 1,336
Prepaid expenses 5,215 7,490
Income tax receivable 3,216 1,761
Deferred tax asset 7,493 5,667
-------- --------
Total Current Assets 102,517 96,070
-------- --------
Property and equipment, net 287,930 212,935
Notes receivable, long-term 77 362
Goodwill 7,504 7,504
Other assets 4,839 4,355
-------- --------
Total Assets $402,867 $321,226
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $5,044 $3,408
Accrued payroll 4,558 3,448
Accrued liabilities 5,684 4,493
Claims accrual 23,904 14,805
-------- --------
Total Current Liabilities 39,190 26,154
Deferred income taxes 72,660 55,149
------- -------
Total Liabilities 111,850 81,303
------- -------
Common Stock 567 563
Additional paid-in capital 82,117 77,754
Retained earnings 208,333 161,606
------- -------
Total Shareholders' Equity 291,017 239,923
------- -------
Total Liabilities and
Shareholders' Equity $402,867 $321,226
======== ========
Three Months Ended Dec. 31,
2004 2003
----------- ----------
(Unaudited) (Unaudited)
OPERATING STATISTICS %
Change
Average Revenue Per Loaded Mile(a) $1.614 $1.447 11.5%
Average Revenue Per Total Mile(a) $1.424 $1.292 10.2%
Empty Mile Factor 11.8% 10.8% 9.3%
Average Miles Per Tractor 28,692 28,060 2.3%
Average Length of Haul 577 541 6.7%
Operating Ratio(b) 78.9% 80.7%
Average Tractors - Total 2,797 2,385
Tractors - End of Quarter:
Company 2,574 2,165
Owner - Operator 244 253
------- -------
2,818 2,418
Trailers - End of Quarter 7,126 6,212
Net Capital Expenditures
(in thousands) $23,023 $17,244
Cash Flow From Operations
(in thousands) $22,809 $24,316
Twelve Months Ended Dec. 31,
2004 2003
----------- ----------
(Unaudited) (Unaudited)
OPERATING STATISTICS %
Change
Average Revenue Per Loaded Mile(a) $1.546 $1.437 7.6%
Average Revenue Per Total Mile(a) $1.369 $1.281 6.9%
Empty Mile Factor 11.5% 10.8% 6.5%
Average Miles Per Tractor 114,829 112,106 2.4%
Average Length of Haul 556 532 4.5%
Operating Ratio(b) 80.7% 81.8%
Average Tractors - Total 2,600 2,266
Tractors - End of Quarter:
Company 2,574 2,165
Owner - Operator 244 253
------- -------
2,818 2,418
Trailers - End of Quarter 7,126 6,212
Net Capital Expenditures
(in thousands) $115,672 $70,307
Cash Flow From Operations
(in thousands) $97,195 $84,392
(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.
Knight Transportation Inc. is a short to medium haul, truckload carrier headquartered in Phoenix. The company serves most of the United States through its regional operations in Phoenix; Salt Lake City; Portland, Ore.; Las Vegas; Denver; Kansas City, Kansas; Indianapolis; Katy, Texas; Gulfport, Miss.; Charlotte, N.C.; Memphis, Tenn.; Atlanta; Carlisle, Pa.; and Lakeland, Fla. The company transports general commodities, including consumer goods, packaged foodstuffs, paper products, beverage containers, imported and exported commodities and refrigerated goods.
This press release may contain statements that might be considered as forward-looking statements or predictions of future operations. Such statements are based on management's belief or interpretation of information currently available. These statements and assumptions involve certain risks and uncertainties. Actual events may differ from these expectations as specified from time to time in filings with the Securities and Exchange Commission.
Digg
Delicious
Newsvine
Reddit
Twitter
Google
LinkedIn
Yahoo
Facebook
MySpace
Permalink
Email
