Knight Transportation Posts Record Revenue and Net Income for the Fourth Quarter of 2005
For the quarter, total revenue increased 29.8%, to $164.6 million from $126.8 for the same quarter of 2004. Revenue, before fuel surcharge, increased 22.2%, to $140.8 million from $115.2 million for the same quarter of 2004. Net income increased 27.3%, to $18.5 million from $14.6 million for the same period of 2004. Net income per diluted share increased to $0.21 from $0.17 for same quarter 2004.
“During the fourth quarter our revenue growth was driven by a combination of fleet expansion and improved revenue per mile. We benefited from opening new service centers, increasing service in existing centers, and a full quarter of revenue from Edwards Bros., which we acquired in August 2005.”
For the 12 months ended Dec. 31, 2005, total revenue increased 28.2%, to $566.8 million from $442.3 million for the same period of 2004. Revenue, before fuel surcharge, increased 21.2%, to $499.0 million from $411.7 million for the same period of 2004. Net income increased 28.9%, to $61.7 million from $47.9 million for the same period of 2004. Net income per diluted share increased to $0.71 from $0.55 for the same period of 2004.
During the quarter, the company completed a 3-for-2 stock split effected in the form of a 50% stock dividend paid on Dec. 23, 2005. This was the company's fifth 3-for-2 stock split since May of 1998, and raised outstanding shares to approximately 85.6 million. The company had previously announced a cash dividend of $.02 per share to shareholders of record on Jan. 30, 2006, and payable on Feb. 14, 2006. The aggregate cash payable in the dividend will be increased by approximately 50% compared with the cash dividends paid prior to the recent stock split.
Chairman and Chief Executive Officer Kevin P. Knight, offered the following comments: "During the fourth quarter our revenue growth was driven by a combination of fleet expansion and improved revenue per mile. We benefited from opening new service centers, increasing service in existing centers, and a full quarter of revenue from Edwards Bros., which we acquired in August 2005.
"A solid U.S. economy and a favorable relationship between shipping demand and truckload capacity contributed to a 5.9% increase in average revenue per loaded mile, before fuel surcharge, and an improvement in our percentage of non-revenue miles compared with the also strong fourth quarter of 2004.
"In addition to growth, for the 44th consecutive quarter since going public, we generated higher year-over-year operating income. In addition, our operating ratio of 78.2% represented a 70 basis point improvement over the 2004 quarter and the best quarterly operating ratio in our history as a public company. Solid productivity, improved fuel surcharge collection, and constant focus on expense control more than overcame cost increases relating to higher prices of revenue equipment, higher diesel fuel prices, declining fuel efficiency due to emissions control regulations, and increases in driver compensation.
"During the quarter, average tractors operated increased 15.4% over the fourth quarter of 2004. We purchased 349 new tractors during the quarter, 241 of which replaced existing units and 108 were for expansion. We also purchased 406 new trailers, 270 of which replaced existing units. For the quarter we invested $37.5 in net capital expenditures. At Dec. 31, 2005, our balance sheet reflected $18.8 million in cash, $2.3 million in short-term investments, zero debt, and $352.9 million in shareholders' equity.
"In looking at 2005 as a whole, we continued to demonstrate the strength and flexibility of our growth model. We expanded organically by opening new dry van service centers in Chicago, El Paso and Reno, as well as increasing business at existing service centers. We also added our first brokerage service center in Phoenix as well as our second refrigerated service center in Idaho Falls through the acquisition of Edwards Bros. We now have 23 service centers strategically located throughout the U.S.
"Looking forward to 2006, we plan to continue to grow our fleet by approximately 15% and, assuming GDP growth remains favorable, we believe that our markets will continue to offer an environment for rate increases to offset the additional costs associated with driver pay, fuel and the introduction of the federally mandated 2007 engines."
The company will hold a conference call on Jan. 19, 4 p.m. ET, to further discuss its results of operations for the quarter ended Dec. 31, 2005. The dial-in number for this conference call is 800-350-3624.
Knight Transportation Inc., headquartered in Phoenix, is a truckload carrier offering dry van, refrigerated and brokerage services to its customers through a network of service centers located throughout the United States. Refrigerated and brokerage services are provided through the wholly owned subsidiaries of Knight Refrigerated, LLC, and Knight Brokerage, LLC, respectively. The principal types of freight transported includes consumer staples, retail, paper products, packaging/plastics, manufacturing and import/export commodities.
INCOME STATEMENT DATA: Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31,
(Unaudited, in thousands,
except per share amounts)
2005 2004 2005 2004
---- ---- ---- ----
REVENUE:
Revenue, before fuel
surcharge $140,755 $115,196 $498,996 $411,717
Fuel surcharge 23,821 11,573 67,817 30,571
--------- --------- --------- ---------
TOTAL REVENUE 164,576 126,769 566,813 442,288
--------- --------- --------- ---------
OPERATING EXPENSES:
Salaries, wages and benefits 44,731 36,918 162,778 133,822
Fuel expense - gross 40,385 26,058 133,469 85,071
Operations and maintenance 9,580 7,346 34,449 26,369
Insurance and claims 7,939 6,341 25,159 22,319
Operating taxes and licenses 3,406 2,732 12,412 9,798
Communications 1,330 948 4,267 3,602
Depreciation and amortization 14,180 11,820 52,603 40,755
Lease expense - revenue
equipment 115 145 183 3,047
Purchased transportation 9,591 7,645 31,787 29,342
Gain on sales of equipment (1,019) - (2,803) -
Miscellaneous operating
expenses 3,616 2,549 10,814 8,801
--------- --------- --------- ---------
133,854 102,502 465,118 362,926
--------- --------- --------- ---------
Income From Operations 30,722 24,267 101,695 79,362
--------- --------- --------- ---------
Other income/(expense) (189) - 361 -
Interest income 216 59 658 398
--------- --------- --------- ---------
27 59 1,019 398
--------- --------- --------- ---------
Income Before Income Taxes 30,749 24,326 102,714 79,760
INCOME TAXES 12,200 9,750 41,000 31,900
--------- --------- --------- ---------
NET INCOME $ 18,549 $ 14,576 $ 61,714 $ 47,860
========= ========= ========= =========
Net Income Per Share
- Basic $ 0.22 $ 0.17 $ 0.72 $ 0.57
- Diluted $ 0.21 $ 0.17 $ 0.71 $ 0.55
Weighted Average Shares
Outstanding
- Basic 85,567 84,897 85,302 84,599
- Diluted 87,110 86,937 86,647 86,459
BALANCE SHEET DATA:
12/31/2005 12/31/2004
---------- ----------
ASSETS (Unaudited, in thousands)
Cash and cash equivalents $ 18,809 $ 23,155
Short term investments 2,278 2,202
Accounts receivable, net 79,848 58,733
Notes receivable, net 241 171
Inventories and supplies 3,355 2,332
Prepaid expenses 7,156 5,215
Income tax receivable - 3,216
Restricted cash 211 -
Deferred tax asset 8,533 7,493
--------- ---------
Total Current Assets 120,431 102,517
--------- ---------
Property and equipment, net 352,339 287,930
Notes receivable, long-term 344 77
Goodwill 8,119 7,504
Other Assets 2,594 4,839
--------- ---------
Total Assets $483,827 $402,867
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 7,464 $ 5,044
Accrued payroll 5,452 4,558
Accrued liabilities 13,307 5,684
Dividends payable 1,713 -
Claims accrual 26,155 23,904
Other current liabilities 211 -
--------- ---------
Total Current Liabilities 54,302 39,190
Deferred Income Taxes 76,597 72,660
--------- ---------
Total Liabilities 130,899 111,850
--------- ---------
Common stock 857 850
Additional paid-in capital 87,148 81,834
Retained earnings 264,923 208,333
--------- ---------
Total Shareholders' Equity 352,928 291,017
--------- ---------
Total Liabilities and Shareholders' Equity $483,827 $402,867
========= =========
Three Months Ended Twelve Months Ended
Dec. 31, Dec. 31,
2005 2004 2005 2004
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
OPERATING
STATISTICS % %
Change Change
Average Revenue
Per Loaded
Mile(a) $ 1.709 $ 1.614 5.9% $ 1.654 $ 1.546 7.0%
Average Revenue
Per Total
Mile(a) $ 1.518 $ 1.424 6.6% $ 1.461 $ 1.369 6.7%
Empty Mile
Factor 11.2% 11.8% -5.1% 11.7% 11.5% 1.7%
Average Miles
Per Tractor 28,421 28,692 -0.9% 112,382 114,793 -2.1%
Average Length
of Haul 609 577 5.5% 580 556 4.3%
Operating
Ratio(b) 78.2% 78.9% 79.6% 80.7%
Average
Tractors -
Total 3,227 2,797 15.4% 3,016 2,600 16.0%
Tractors -
End of
Quarter:
Company 3,034 2,574 3,034 2,574
Owner -
Operator 237 244 237 244
----------- ----------- ----------- -----------
3,271 2,818 3,271 2,818
Trailers -
End of Quarter 7,885 7,126 7,885 7,126
Net Capital
Expenditures
(in thousands) $37,535 $23,023 $103,583 $115,672
Cash Flow From
Operations
(in thousands) $45,447 $22,809 $107,764 $97,195
(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 oth Annual Report on Form 10-K, and other filings with the Securities 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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