Knight Transportation Posts Record Revenue and Net Income for the Second Quarter of 2005
For the quarter, total revenue increased 25%, to $133.9 million from $107.1 for the same quarter of 2004. Revenue, before fuel surcharge, increased 20%, to $119.7 million from $100.2 million for the same quarter of 2004. Net income increased 31%, to $15.0 million from $11.4 million for the same period of 2004. Net income per diluted share increased to $0.26 from $0.20 for the same quarter 2004.
“Our footprint expansion continues with the recently announced opening of our 20th operations center in El Paso, Texas, the second of our scheduled new operations centers in 2005. We are excited to have a physical presence in El Paso and expect successful growth from this center.”
For the year-to-date, total revenue increased 27%, to $256.1 million from $201.5 for the same period of 2004. Revenue, before fuel surcharge, increased 21%, to $230.8 million from $190.4 million for the same period of 2004. Net income increased 34%, to $27.7 million from $20.7 million for the same period of 2004. Net income per diluted share increased to $0.48 from $0.36 for same period 2004.
Chairman and Chief Executive Officer Kevin P. Knight commented on the quarter:
"We are encouraged by another quarter of record revenue and earnings as we continued to execute our operating model focused on leading growth and profitability. With 20% growth in revenue before fuel surcharges and an operating ratio (operating expenses, net of fuel surcharge, as a percentage of revenue, before fuel surcharge) of 79.3%, this ranks as one of our better quarters in recent memory. Including this quarter, we have now demonstrated 15 years of consecutive, quarterly year-over-year revenue and operating income growth. We appreciate the continued contributions of all of our associates.
"Revenue growth came from a combination of higher revenue per tractor and expansion of our fleet and network of operations centers. Our average tractors operating in the second quarter were up 16% from the same period of 2004. Our average freight revenue per loaded and total mile, before fuel surcharges, increased 7.0% and 6.1%, respectively, without sacrificing length of haul which was up 2.9%. Revenue per tractor, excluding fuel surcharge, increased 3.1%.
"Our footprint expansion continues with the recently announced opening of our 20th operations center in El Paso, Texas, the second of our scheduled new operations centers in 2005. We are excited to have a physical presence in El Paso and expect successful growth from this center.
"Subsequent to the quarter, we created Knight Brokerage, LLC, a wholly owned subsidiary. We view Knight Brokerage as a natural extension of our customer service offerings and look forward to providing a nonasset-based capability to manage our customers' freight when the shipments do not fit our asset-based model.
"In addition to expanding our revenue base, we continued to focus on controlling costs. In particular, rapidly escalating fuel prices have been a significant challenge for our industry. Our sales and operations associates are working diligently with our customers to mitigate the negative impact of fuel prices, and for the quarter, we increased fuel surcharge billings by 103% compared with the same quarter of last year. These efforts helped us limit the negative impact of fuel prices. Despite the impact of higher driver pay, increased equipment prices, and other cost pressures facing our industry, we achieved an operating ratio of 79.3%, an improvement of 180 basis points compared with the second quarter last year.
"During the quarter we continued to make significant investments in revenue equipment to support our growth. We added a total of 90 tractors, of which 85 were new company tractors and 5 were owner operators, while upgrading an additional 111 existing company tractors. We anticipate growing our fleet by an additional 200 to 250 tractors over the remainder of 2005. We added 238 new trailers, while upgrading an additional 91 existing trailers. For the quarter, we invested $24.3 million in net capital expenditures. At June 30, 2005, our strong balance sheet reflected $40.9 million in cash, no debt, and $318.5 million in shareholders' equity."
The company will hold a conference call on July 21, 4 p.m. ET, to further discuss its results of operations for the quarter ended June 30, 2005. The dial-in number for this conference call is 800-475-3716.
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; Tulare, Calif.; Salt Lake City; Portland, Ore.; Las Vegas; Denver; Kansas City, Kan.; Indianapolis; Katy, Texas; Gulfport, Miss.; Charlotte, N.C.; Memphis, Tenn.; Atlanta; Carlisle, Pa.; Lakeland, Fla.; Chicago; and El Paso, Texas. The company transports general commodities, including consumer goods, packaged foodstuffs, paper products, beverage containers, imported and exported commodities and refrigerated goods.
INCOME STATEMENT DATA:
Three Months Ended June 30,
2005 2004
----------- ---------
(Unaudited, in thousands,
except per share amounts)
REVENUE:
Revenue, before fuel surcharge $119,722 $100,168
Fuel surcharge 14,145 6,980
----------- ---------
TOTAL REVENUE 133,867 107,148
----------- ---------
OPERATING EXPENSES:
Salaries, wages and benefits 39,196 32,333
Fuel expense - gross 30,192 20,418
Operations and maintenance 8,171 6,128
Insurance and claims 5,940 5,714
Operating taxes and licenses 2,964 2,366
Communications 952 872
Depreciation and amortization 12,786 9,573
Lease expense - revenue equipment - 1,035
Purchased transportation 7,127 7,549
Gain on sales of equipment (691) -
Miscellaneous operating expenses 2,416 2,228
----------- ---------
109,053 88,216
----------- ---------
Income From Operations 24,814 18,932
----------- ---------
Interest income 143 83
----------- ---------
Income Before Income Taxes 24,957 19,015
INCOME TAXES 10,000 7,600
----------- ---------
NET INCOME $14,957 $11,415
=========== =========
Net Income Per Share
- Basic $0.26 $0.20
- Diluted $0.26 $0.20
Weighted Average Shares Outstanding
- Basic 56,815 56,340
- Diluted 57,977 57,479
Three Months Ended June 30,
2005 2004
----------- ---------
(Unaudited) (Unaudited)
OPERATING STATISTICS %
Change
Average Revenue Per Loaded Mile(a) $1.622 $1.516 7.0%
Average Revenue Per Total Mile(a) $1.433 $1.350 6.1%
Empty Mile Factor 11.7% 10.9% 7.3%
Average Miles Per Tractor 28,408 29,125 -2.5%
Average Length of Haul 565 549 2.9%
Operating Ratio(b) 79.3% 81.1%
Average Tractors - Total 2,928 2,525 16.0%
Tractors - End of Quarter:
Company 2,746 2,338
Owner - Operator 235 251
----------- ---------
2,981 2,589
Trailers - End of Quarter 7,381 6,591
Net Capital Expenditures (in thousands) $24,330 $30,800
Cash Flow From Operations (in thousands) $27,420 $25,900
INCOME STATEMENT DATA:
Six Months Ended June 30,
2005 2004
----------- -----------
(Unaudited, in thousands,
except per share amounts)
REVENUE:
Revenue, before fuel surcharge $230,797 $190,411
Fuel surcharge 25,252 11,049
----------- -----------
TOTAL REVENUE 256,049 201,460
----------- -----------
OPERATING EXPENSES:
Salaries, wages and benefits 76,114 62,463
Fuel expense - gross 56,033 37,132
Operations and maintenance 15,803 11,789
Insurance and claims 12,304 10,603
Operating taxes and licenses 5,894 4,590
Communications 1,927 1,741
Depreciation and amortization 25,096 18,471
Lease expense - revenue equipment - 2,268
Purchased transportation 13,611 14,137
Gain on sales of equipment (1,320) -
Miscellaneous operating expenses 4,625 3,947
----------- -----------
210,087 167,141
----------- -----------
Income From Operations 45,962 34,319
----------- -----------
Interest income 253 207
----------- -----------
Income Before Income Taxes 46,215 34,526
INCOME TAXES 18,500 13,800
----------- -----------
NET INCOME $27,715 $20,726
=========== ===========
Net Income Per Share
- Basic $0.49 $0.37
- Diluted $0.48 $0.36
Weighted Average Shares Outstanding
- Basic 56,781 56,298
- Diluted 58,013 57,435
BALANCE SHEET DATA:
6/30/2005 12/31/2004
----------- -----------
ASSETS (Unaudited, in thousands)
Cash and cash equivalents $40,923 $25,357
Accounts receivable, net 64,638 58,733
Notes receivable, net 194 171
Inventories and supplies 3,077 2,332
Prepaid expenses 6,684 5,215
Income tax receivable - 3,216
Deferred tax asset 8,950 7,493
----------- -----------
Total Current Assets 124,466 102,517
----------- -----------
Property and equipment, net 302,875 287,930
Notes receivable, long-term 234 77
Goodwlll 7,504 7,504
Other Assets 4,241 4,839
----------- -----------
Total Assets $439,320 $402,867
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $4,389 $5,044
Accrued payroll 5,360 4,558
Accrued liabilities 9,680 5,684
Dividends payable 1,137 -
Claims accrual 27,092 23,904
----------- -----------
Total Current Liabilities 47,658 39,190
Deferred Income Taxes 73,152 72,660
----------- -----------
Total Liabilities 120,810 111,850
----------- -----------
Common stock 568 567
Additional paid-in capital 84,167 82,117
Retained earnings 233,775 208,333
----------- -----------
Total Shareholders' Equity 318,510 291,017
----------- -----------
Total Liabilities and
Shareholders' Equity $439,320 $402,867
=========== ===========
Six Months Ended June 30,
2005 2004
----------- -----------
(Unaudited) (Unaudited)
OPERATING STATISTICS %
Change
Average Revenue Per Loaded Mile(a) $1.628 $1.503 8.3%
Average Revenue Per Total Mile(a) $1.433 $1.332 7.6%
Empty Mile Factor 12.0% 11.4% 5.3%
Average Miles Per Tractor 55,674 57,285 -2.8%
Average Length of Haul 565 541 4.4%
Operating Ratio(b) 80.1% 82.0%
Average Tractors - Total 2,879 2,479 16.1%
Tractors - End of Quarter:
Company 2,746 2,338
Owner - Operator 235 251
----------- -----------
2,981 2,589
Trailers - End of Quarter 7,381 6,591
Net Capital Expenditures (in thousands) $37,596 $51,200
Cash Flow From Operations (in
thousands) $53,286 $46,000
(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 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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