Knight Transportation Reports Revenue and Net Income for the Fourth Quarter Ended December 31, 2009
Knight Transportation (NYSE: KNX), one of North America’s largest truckload carriers, reported revenue and earnings for the fourth quarter ended December 31, 2009. Highlights included:
| · | Revenue before fuel surcharge increased 0.2% to $143.9 million, compared to $143.6 million in the fourth quarter of 2008. |
| · | Diluted earnings per share of $0.16 from $0.19 in the fourth quarter of 2008. |
| · | Net income of $13.1 million, a decrease of 18.6% compared to $16.1 million in the fourth quarter of 2008. |
For the quarter, revenue before fuel surcharge increased 0.2% to $143.9 million compared to $143.6 million in the fourth quarter of 2008. Total revenue decreased 4.0%, to $167.8 million from $174.8 million for the same quarter of 2008 due primarily to decreased fuel surcharge revenue as the U.S. average cost of diesel fuel per gallon during the fourth quarter of 2009 was $2.74 compared to $2.93 in the fourth quarter of 2008. Net income decreased 18.6% to $13.1 million from $16.1 million for the same period of 2008. Net income per diluted share for the quarter was $0.16, compared to $0.19 for the same period of 2008, primarily as a result of increased fuel expense net of fuel surcharge.
For the year, revenue before fuel surcharge decreased 4.0%, to $571.5 million from $595.6 million for the year of 2008. Net income decreased 10.1% to $50.6 million from $56.3 million for the year of 2008. Net income per diluted share was $0.60 compared to $0.66 for the previous year.
The company previously announced a quarterly cash dividend of $0.05 per share to shareholders of record on December 4, 2009, which was paid on December 23, 2009.
Chairman and Chief Executive Officer, Kevin P. Knight, offered the following comments:
“Although near-term challenges in the truckload industry remain, we are encouraged with the year-over-year improvement of our miles per tractor and the 10.6% increase in our total loads hauled for the fourth quarter as compared to the same period a year ago. Miles per tractor in the fourth quarter increased 2.1%, as compared to the same period last year. Throughout 2009, the year-over-year negative difference in miles per tractor narrowed as the year progressed until now being positive for the first time in many quarters. Although significant improvement in miles per tractor is needed before rivaling the levels experienced a few years ago, we believe that our improvement in miles per tractor, especially without major reductions in our tractor count, is evidence that we are in the early stages of a turnaround in the truckload freight market. Nevertheless, residual consequences remain from the oversupply of capacity in 2006, combined with the subsequent economic slowdown, and continue to manifest themselves through the year-over-year decline in revenue per mile. Revenue per total mile before fuel surcharge decreased 2.2% from the same period a year ago.
“In the fourth quarter, equipment productivity, as measured by average revenue before fuel surcharge per tractor in the quarter, was nearly flat with a decrease of 0.1% from the year-ago period. In 2009, the year-over-year difference in revenue before fuel surcharge per tractor in the fourth quarter compared favorably when
compared sequentially to the declines of -4.5% in the third quarter, -8.1% in the second quarter, and -4.7% in the first quarter, when each quarter is compared to the same period last year. Our non-paid empty mile percentage decreased by 6.5% to 11.5% from 12.3% in the year-ago period. Our average length of haul decreased 8.0% to 458 miles from 498 miles in the same period last year.
“Net fuel expense has been significantly volatile over the past two years due to severe fluctuations in the price of diesel fuel. This volatility has gone from a meaningful benefit in the end of 2008 and early 2009 to a detriment in the more recent quarters.
“On a consolidated basis, Knight Transportation produced an operating ratio (operating expenses, net of fuel surcharge, as a percentage of revenue before fuel surcharge) of 85.4% in the fourth quarter of this year compared to 81.2% in the same period last year. Knight Dry Van generated an operating ratio of 85.0%. Knight Refrigerated generated an operating ratio of 85.2%. Knight Brokerage generated an operating ratio of 92.8%. We have made the decision to maintain our fleet size for longer-term strategy rather than short-term benefit that would have likely improved our near-term operating ratio.
“We continue to be reminded of how challenging the current truckload environment is with the news of trucking company failures, despite having been in the seasonally stronger part of the year. We expect the challenging truckload market to yield opportunities to continue to capture market share over time. We believe we are well positioned to navigate the challenges of the current environment and thrive as the market improves when truckload capacity decreases and/or freight demand modestly increases.
“We continue to remain focused on refining our operating model to create additional efficiencies, offering customers a high level of service through our network of service centers and branches, and preparing for growth opportunities that will enhance the returns for our shareholders over time. We continue to actively evaluate strategic opportunities that can create value for our stakeholders without undue risk. We have significant financial flexibility and a strong balance sheet, with $520.0 million of stockholders’ equity, $97.8 million in cash and short-term investments, and zero debt at December 31, 2009.
“In the quarter, our gain on the sale of equipment increased to $694,000 from $258,000 for the same period last year. We continue to operate a relatively young fleet of late-model equipment that consists primarily of tractors equipped with 2007 U.S. EPA emission-compliant engines. Our service center network allows us to efficiently maintain this equipment. In 2010, we plan to continue a similar trade cycle and adopt the even cleaner burning engines which have just become available.”
The company will hold a conference call on January 27, 5:30 PM EDT, to further discuss its results of operations for the quarter ended December 31, 2009. The dial-in number for this conference call is 1-866-793-1299. Slides to accompany this call will be posted on the company’s website and will be available to download prior to the scheduled conference time. To view the presentation, please visit http://investors.knighttrans.com/presentations, “Fourth Quarter 2009 Conference Call Presentation.”
Knight Transportation, Inc. is a truckload carrier offering dry van, refrigerated, intermodal and brokerage services to customers through a network of service centers and branches located throughout the United States serving North America. 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.
