Exhibit 99.1
For Immediate Release |
Phoenix, Arizona - October 18, 2006 |
Contact: |
David Jackson, CFO |
(602) 269-2000 |
Knight Transportation Posts Record Revenue and Net Income for the Third Quarter of 2006
Knight Transportation, Inc. (NYSE: KNX) announced today its financial results for the quarter and year-to-date ended September 30, 2006.
For the quarter, total revenue increased 19.5%, to $174.7 million from $146.2 million for the same quarter of 2005. Revenue, before fuel surcharge, increased 15.1%, to $146.6 million from $127.4 million for the same quarter of 2005. Net income increased 22.0 %, to $18.9 million from $15.5 million for the same period of 2005. Net income per diluted share increased to $0.22 from $0.18 for the same period of 2005. Excluding equity-based compensation expense for the third quarter 2006, net income increased 25.8%, to $19.5 million from $15.5 million for the same period of 2005, when equity-based compensation was not required to be expensed.
Year-to-date, total revenue increased 21.7%, to $489.5 million from $402.2 million for the same period of 2005. Revenue, before fuel surcharge, increased 16.2%, to $416.3 million from $358.2 million for the same period of 2005. Net income increased 22.3%, to $52.8 million from $43.2 million for the same period of 2005. Net income per diluted share increased to $0.61 from $0.50 for the same period of 2005. Excluding equity-based compensation expense for the nine months ended September 30, 2006, net income increased 25.9%, to $54.4 million from $43.2 million for the same period of 2005, when equity-based compensation was not required to be expensed.
The company previously announced a cash dividend of $.02 per share to shareholders of record on September 8, 2006, which was paid on September 29, 2006.
On October 12, 2006, Knight Transportation was named to Forbes Magazine's list of the "200 Best Small Companies in America " for the twelfth consecutive year.
Chairman and Chief Executive Officer, Kevin P. Knight, in commenting on the quarter said, "This quarter represented the 47th consecutive quarter, since going public, that Knight Transportation generated higher year-over-year operating income. Our operating ratio was 79.1%, a 130 basis point improvement over the third quarter of 2005. Our net income, as a percentage of revenue before fuel surcharge, was 12.9%, which was the best 3rd quarter in our history and a 50 basis point improvement over the same quarter in 2005. Our team achieved these results despite 68 basis points of negative impact on the operating ratio from non-cash expensing of equity compensation during the quarter.
"Revenue growth continued during the quarter and was driven by a combination of fleet expansion and increased revenue per mile. In the quarter we opened our 24th dry van truckload service center in Boise, Idaho.
"For the third quarter, average freight revenue per tractor per week remained essentially constant at $3,154 compared with $3,159 during a very strong freight quarter in 2005. Average revenue per loaded mile, before fuel surcharges, increased 7.6%, while non-revenue miles increased by a percentage point with a shorter average length of haul. Average miles per tractor decreased 6.4% as compared to the same period of 2005. Adjusting for the one less business day in the third quarter 2006 (63) compared to third quarter 2005 (64), average miles per tractor would have decreased 4.9%. The decrease in utilization is also attributed to a less robust freight environment, more stringent hours of service regulations, and a shortened length of haul.
"Continued positive results in fuel surcharge recovery and used equipment sales, as well as our constant focus on cost controls, more than overcame expense increases relating to recording equity based compensation expense, increased driver compensation, prices of revenue equipment, and declining fuel efficiency due to emissions control regulations.
"The 2006 periods include our initial adoption of the accounting standard which requires expensing of equity based compensation such as stock options. At Knight Transportation we have a broad based stock option program in which approximately one-third of our total employees participate. The third quarter and first nine months of 2006 included approximately $1.0 million and $2.6 million, respectively, of non-cash equity-based compensation expense recorded, while such expense was not recorded in 2005.
"For the quarter, we invested $30.7 million in net capital expenditures. At September 30, 2006, our balance sheet reflected $17.1 million in cash and short-term investments, zero debt, and $406.4 million in shareholders' equity.
"Looking forward, we intend to continue to execute our business model that is focused on industry-leading growth and profitability. This will not be easy in the current environment. However, with our network of 24 dry van and 3 refrigerated service centers to support company growth efforts nationwide, we are optimistic about our opportunity. We also will continue to evaluate the market for acquisition opportunities that make sense within our disciplined operating framework. Our base expectation for the medium to longer term is to grow our fleet between ten and fifteen percent annually. We will evaluate that base goal and may adjust it up or down periodically based on factors such as freight demand, driver availability, and acquisitions. "
The Company will hold a conference call on October 19, 4PM ET, to further discuss its results of operations for the quarter ended September 30, 2006. The dial in number for this conference call is 1-866-550-6338.
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.
INCOME STATEMENT DATA: | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
(Unaudited, in thousands, except per share amounts) | |||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
REVENUE: | |||||||||||||
Revenue, before fuel surcharge | $ | 146,555 | $ | 127,444 | $ | 416,266 | $ | 358,241 | |||||
Fuel surcharge | 28,117 | 18,744 | 73,225 | 43,996 | |||||||||
TOTAL REVENUE | 174,672 | 146,188 | 489,491 | 402,237 | |||||||||
OPERATING EXPENSES: | |||||||||||||
Salaries, wages and benefits | 49,467 | 41,934 | 140,530 | 118,047 | |||||||||
Fuel expense - gross | 45,528 | 37,051 | 124,775 | 93,084 | |||||||||
Operations and maintenance | 9,277 | 9,067 | 26,991 | 24,869 | |||||||||
Insurance and claims | 6,929 | 4,916 | 18,791 | 17,221 | |||||||||
Operating taxes and licenses | 3,423 | 3,112 | 10,015 | 9,006 | |||||||||
Communications | 1,397 | 1,009 | 4,134 | 2,936 | |||||||||
Depreciation and amortization | 15,449 | 13,328 | 45,041 | 38,423 | |||||||||
Lease expense - revenue equipment | 106 | 67 | 323 | 67 | |||||||||
Purchased transportation | 10,871 | 8,585 | 28,609 | 22,196 | |||||||||
Miscellaneous operating expenses | 1,616 | 2,107 | 3,646 | 5,415 | |||||||||
144,063 | 121,176 | 402,855 | 331,264 | ||||||||||
Income From Operations | 30,609 | 25,012 | 86,636 | 70,973 | |||||||||
Other income | - | 551 | - | 551 | |||||||||
Interest income | 301 | 188 | 878 | 442 | |||||||||
301 | 739 | 878 | 993 | ||||||||||
Income Before Income Taxes | 30,910 | 25,751 | 87,514 | 71,966 | |||||||||
INCOME TAXES | 12,060 | 10,300 | 34,710 | 28,800 | |||||||||
NET INCOME | $ | 18,850 | $ | 15,451 | $ | 52,804 | $ | 43,166 | |||||
Net Income Per Share | |||||||||||||
- Basic | $ | 0.22 | $ | 0.18 | $ | 0.62 | $ | 0.51 | |||||
- Diluted | $ | 0.22 | $ | 0.18 | $ | 0.61 | $ | 0.50 | |||||
Weighted Average Shares Outstanding | |||||||||||||
- Basic | 85,895 | 85,298 | 85,823 | 85,215 | |||||||||
- Diluted | 86,922 | 86,744 | 87,077 | 86,715 |
BALANCE SHEET DATA: | |||||||
9/30/2006 | 12/31/2005 | ||||||
ASSETS | (Unaudited, in thousands) | ||||||
Cash and cash equivalents | $ | 10,668 | $ | 18,809 | |||
Short term investment | 6,463 | 2,278 | |||||
Restricted cash | - | 211 | |||||
Accounts receivable, net | 84,004 | 79,848 | |||||
Notes receivable, net | 270 | 241 | |||||
Other Assets | 9,095 | 3,355 | |||||
Prepaid expenses | 7,683 | 7,156 | |||||
Deferred tax asset | 8,190 | 8,533 | |||||
Total Current Assets | 126,373 | 120,431 | |||||
Property and equipment, net | 403,497 | 352,339 | |||||
Notes receivable, long-term | 407 | 344 | |||||
Goodwill | 8,439 | 8,119 | |||||
Other assets and restricted cash | 5,218 | 2,594 | |||||
Total Assets | $ | 543,934 | $ | 483,827 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Accounts payable | $ | 12,389 | $ | 7,464 | |||
Accrued payroll | 6,524 | 5,452 | |||||
Accrued liabilities | 16,283 | 13,307 | |||||
Dividends payable | - | 1,713 | |||||
Other current liabilities | - | 211 | |||||
Claims accrual | 23,214 | 26,155 | |||||
Total Current Liabilities | 58,410 | 54,302 | |||||
Deferred Income Taxes | 79,155 | 76,597 | |||||
Total Liabilities | 137,565 | 130,899 | |||||
Common stock | 860 | 857 | |||||
Additional paid-in capital | 92,936 | 87,148 | |||||
Retained earnings | 312,573 | 264,923 | |||||
Total Shareholders' Equity | 406,369 | 352,928 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 543,934 | $ | 483,827 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||||||||
(Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||||||
OPERATING STATISTICS | % Change | % Change | |||||||||||||||||
Average Revenue Per Loaded Mile* | $ | 1.766 | $ | 1.642 | 7.6% | $ | 1.713 | $ | 1.633 | 4.9% | |||||||||
Average Revenue Per Total Mile* | $ | 1.546 | $ | 1.451 | 6.5% | $ | 1.503 | $ | 1.439 | 4.4% | |||||||||
Empty Mile Factor | 12.5 | % | 11.6 | % | 7.8% | 12.2 | % | 11.9 | % | 2.5% | |||||||||
Average Miles Per Tractor | 26,510 | 28,308 | -6.4% | 80,292 | 84,012 | -4.4% | |||||||||||||
Average Length of Haul | 551 | 582 | -5.3% | 561 | 571 | -1.8% | |||||||||||||
Operating Ratio** | 79.1 | % | 80.4 | % | 79.2 | % | 80.2 | % | |||||||||||
Average Tractors - Total | 3,463 | 3,078 | 12.5% | 3,371 | 2,945 | 14.5% | |||||||||||||
Tractors - End of Quarter: | |||||||||||||||||||
Company | 3,346 | 2,926 | 3,346 | 2,926 | |||||||||||||||
Owner - Operator | 232 | 241 | 232 | 241 | |||||||||||||||
3,578 | 3,167 | 3,578 | 3,167 | ||||||||||||||||
Trailers - End of Quarter | 8,188 | 7,749 | 8,188 | 7,749 | |||||||||||||||
Net Capital Expenditures (in thousands) | $ | 30,682 | $ | 28,452 | $ | 88,098 | $ | 66,048 | |||||||||||
Cash Flow From Operations (in thousands) | $ | 24,669 | $ | 9,032 | $ | 86,367 | $ | 62,317 |
* | Excludes fuel surcharge. |
** | 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 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.
Contact: Dave Jackson, CFO, at (602) 269-2000