Knight Transportation Announces Acquisition of Roads West Transportation Assets

PHOENIX--(BUSINESS WIRE)--Knight Transportation, Inc. (NYSE: KNX) announced today that it has completed the purchase of most of the trucking assets of Roads West Transportation, Inc. and related corporations (collectively, “Roads West”).

“Based on Roads West’s recent interim, unaudited financial statements, we believe the acquired business generated approximately $25 million to $30 million in annual revenue, including approximately $5 million in brokerage operations. Roads West had approximately 110 company-employed drivers and 45 owner-operators before closing.”

Chairman and Chief Executive Officer, Kevin P. Knight, stated, “We are pleased to welcome the customers, driving and non-driving associates, and independent contractors of Roads West to Knight Transportation. Roads West has a long history in the refrigerated market and also operates dry van and brokerage divisions. For the past several years, Roads West has leased space from Knight at our Phoenix terminal, so we are familiar with their leadership and operations. Based on the company’s profile and our knowledge of their operations, we expect a good fit with Knight.

“Based on Roads West’s recent interim, unaudited financial statements, we believe the acquired business generated approximately $25 million to $30 million in annual revenue, including approximately $5 million in brokerage operations. Roads West had approximately 110 company-employed drivers and 45 owner-operators before closing.

“In the acquisition, we purchased 133 tractors, 280 trailers, and miscellaneous other assets. The over-the-road fleet was comprised of 2005 model year or newer tractors. We did not purchase cash or accounts receivable. The purchase price for the assets was approximately $15.6 million, not including potential earn-outs that could increase the price to approximately $16 million. The purchase price was based primarily on the fair market value of the acquired equipment, which we believe will give us the flexibility to dispose of any excess equipment if needed. We paid cash for the transaction and did not assume any debt or other outstanding obligations. After the transaction, we will have used most of the cash and investments that were on our balance sheet at September 30.

“We believe that Roads West has a good base of customers and employees, and that Knight can help in various operations and expense areas. Casey Hughes and his team will manage the business as a separate operation, much like one of our existing 27 Knight service centers. We expect our first priority to be ensuring continuity of service for customers and a professional transition for driving and non-driving associates. Our approach is designed to maintain and improve service for customers and minimize the risk of unseated tractors. At the same time, we will be working toward improving the acquired operation’s profitability to Knight’s standards. Although this will take some time, we expect the acquired operations to be accretive to earnings after not more than two quarters.”

Knight Transportation, Inc is a truckload carrier offering dry van, refrigerated, and brokerage services to customers through a network of service centers located throughout the United States. As “Your Hometown National Carrier,” Knight strives to offer customers and drivers personal service and attention through each service center, while offering integrated freight transportation nationwide and beyond through the scale of one of North America’s largest trucking companies. The principal types of freight we transport include consumer staples, retail, paper products, packaging/plastics, manufacturing, and import/export commodities. Knight's common stock is traded on the New York Stock Exchange under the symbol KNX.

This press release contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934, and is subject to risks and uncertainties that could cause actual results to differ materially from those projected or described. Statements that constitute forward-looking statements are usually identified by words such as "anticipates," believes," "estimates," "projects," "expects," "plans," "intends," or similar expressions. Such statements include, but are not limited to, statements concerning the expected revenue, earnings, earnings per share accretion, improvements in profitability, and other financial results of Roads West, as well as potential employee and customer retention, equipment replacement, and strategic benefits. Forward-looking statements are based upon the current beliefs and expectations of management and are subject to significant risks and uncertainties. Without limitation, these risks and uncertainties include the risk that the integration of Roads West assets into Knight over time will not be successful, will be delayed,or otherwise will not proceed as planned; the risk that Knight will lose key components of the acquired operation, including customers and drivers, none of whom are bound to remain with the acquired operation; the risk of geographic expansion of operations; the risk of stretching management resources; the risk that Knight will not be able to improve the profitability of the acquired operation and operate it near the level of Knight’s profitability;, the risk of receiving less than expected for tractors and trailers expected to be disposed of and recording a loss on disposal of such equipment; the risk of unknown liabilities related to the acquired operation; other risks associated with acquisitions generally; and the business and other risks disclosed from time-to-time in the company’s filings made with the SEC, as applied to Knight and the acquired operation. Readers are urged to carefully review and consider the various disclosures made by the company in this and other press releases, stockholder reports, and in periodic reports on forms 8-K, 10-K, 10-Q, and other public filings.