Knight Transportation 8-K Results of Operations and Financial Condition

Exhibit 99

July 25, 2012

Phoenix, Arizona

Knight Transportation Reports Revenue and Net Income for the Second Quarter Ended June 30, 2012

Knight Transportation, Inc. (NYSE: KNX), one of North America’s largest truckload transportation companies, today reported revenue and net income for the second quarter ended June 30, 2012.

For the quarter, total revenue increased 3.4% to $236.3 million from $228.5 million in the second quarter of 2011.  Revenue before fuel surcharge increased 3.6% to $188.8 million compared to $182.4 million in the same period of 2011.  Net income increased to $19.3 million, or $0.24 per diluted share, from $16.4 million, or $0.20 per diluted share, in the second quarter of 2011.

Key financial results for the second quarter were as follows:

	Three Months Ended June 30, (dollars in thousands, except per share data)
	2012		2011		% Change
Total revenue	$	236,268	$	228,483		3.4	%
Revenue, excluding fuel surcharge	$	188,838	$	182,350		3.6	%
Income from operations	$	32,103	$	27,134		18.3	%
Net income	$	19,289	$	16,358		17.9	%
Earnings per diluted share	$	0.24	$	0.20		22.7	%

Year-to-date, total revenue increased 9.8% to $455.8 million from $415.0 million in the first half of 2011.  Revenue before fuel surcharge increased 9.5% to $364.4 million compared to $332.9 million in the same period of 2011.  Net income increased to $29.8 million, or $0.37 per diluted share, from $26.2 million, or $0.31 per diluted share, in the first half of 2011.  The first quarter of 2012 included a $4.0 million pretax non-cash stock compensation charge ($3.9 million after tax) relating to the accelerated vesting of certain stock options that had been issued prior to 2009.  Excluding the non-cash charge, net income for the first half of 2012 would have been $33.7 million, or $0.42 per diluted share.

The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on June 1, 2012, paid on June 29, 2012.

Chairman and Chief Executive Officer, Kevin P. Knight, offered the following comments:

“In the second quarter of 2012 we experienced typical seasonal improvement in the freight environment.    Supply and demand were relatively balanced and resulted in less spot pricing opportunities, as compared to the same period last year.  Our asset-based businesses continued to grow market share while meaningfully improving operating margins.  Our average revenue per total mile (excluding fuel surcharges) increased 2.1% in the second quarter when compared to the same period last year while increasing our length of haul and lowering our non-paid empty mile percentage.  Average revenue per tractor (excluding fuel surcharges) declined slightly as higher rates were offset by lower utilization per truck as we continued to grow our fleet. Our net income of $19.3 million and earnings per diluted share of $0.24 represent the highest second quarter net income as well as the highest earnings per diluted share recorded in company history.”

The following chart reflects the year-over-year operating ratio comparison and revenue growth (excluding trucking fuel surcharge revenue) for each of our businesses for the second quarter of 2012 and 2011.

	Operating ratios(1)		Revenue growth (excluding trucking fuel surcharge)
	2012	2011
Dry van	80.6%	83.8%	3.1%
Refrigerated	81.1%	82.0%	3.7%
Port and Rail Services	86.8%	88.1%	21.2%
Asset based operations	81.1%	83.7%	4.3%
Brokerage	94.3%	92.5%	-23.2%
Intermodal	98.1%	104.8%	90.0%
Other	98.0%	96.4%	34.2%
Non-asset based operations	96.0%	94.4%	-1.1%
Consolidated	83.0%	85.1%	3.6%

(1)Operating ratio is defined as total operating expenses, net of trucking fuel surcharge, as a percentage of revenue before fuel surcharge.

Kevin Knight further commented, “We are pleased with the performance of our asset-based businesses.  Most notably, our dry van business achieved an operating ratio improvement of 320 basis points on a year over year basis and our port and rail services business improved their operating ratio 740 basis points from the first quarter of 2012.

“Our brokerage business experienced a decline in revenue as margins were pressured and resulted in fewer opportunities that met our targeted total gross margin. Although we are not pleased with the performance of our brokerage business in the second quarter, we are encouraged with the trends we have been experiencing in the third quarter, which have demonstrated improved revenue and margin when compared to the same period of the prior year. We are pleased with the growth we have seen in our intermodal service offering, which is now operating profitably.  We are excited with the traction we have gained in this business and expect to continue to grow profitably.

“Our primary objective continues to be to operate with industry leading growth and profitability.  Our average tractor count for the second quarter grew 5.1% on a year over year basis.

“The DOE national average diesel fuel price declined 2.1% in the second quarter, when compared to the same period last year.  Our focus remains on continually improving fuel efficiency by effectively improving the driving behavior of our driving associates.  We also continue to update our fleet with more fuel efficient post-2010 EPA emission compliant engines, install aerodynamic devices on our tractors, and equip our trailers with trailer blades, which lead to meaningful fuel efficiency improvements.

“Having a sufficient number of qualified driving associates continues to be a major concern as the driver market continues to tighten.  Given these concerns, we have made a significant effort to position our driver development and training programs to source driving associates and develop them into Knight company drivers.  We also feel our decentralized service center network, regional freight lanes, late-model tractor fleet, financial strength, competitive pay packages, and overall culture offer competitive advantages in recruiting and retaining qualified driving associates.  As a result, our driver turnover has been trending favorably and is well below what we understand to be the industry average.

“Our combined fleet finished the quarter with 4,133 tractors compared to 3,883 last year, an increase of 250 tractors or 6.4%.  This includes owner-operators, which grew from 465 tractors to 473 tractors in the second quarter this year.  We invested $32.2 million of net capital expenditures in the second quarter, as we continue to maintain a modern tractor fleet with an average age of 1.8 years.  Our gain on sale of revenue equipment increased to $2.2 million in the second quarter of 2012 from $1.5 million in the second quarter of 2011.

“We have returned $178.6 million to our shareholders in the form of quarterly dividends and stock repurchases over the twenty-four-month period ending June 30, 2012.  We did not repurchase any shares in the second quarter of 2012.  We ended the quarter with $2.8 million of cash, $50.0 million of borrowing under our unsecured revolving credit agreement, and $504.7 million of shareholders' equity.

“Acquisitions and investments continue to be part of our growth strategy, and we continue to evaluate strategic opportunities to enhance the returns for our shareholders over time.”

The company will hold a conference call on July 25, 2012, at 4:30 PM EDT, to further discuss its results of operations for the quarter ended June 30, 2012. The dial in number for this conference call is 1-855-733-9163. 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, “Second Quarter 2012 Conference Call Presentation.”

Knight Transportation, Inc. is a provider of multiple truckload transportation services using a nationwide network of service centers in the U.S. to serve customers throughout North America.  In addition to operating one of the country’s largest tractor fleets, Knight also partners with third-party equipment providers to provide a broad range of truckload services to its customers while creating quality driving jobs for our driving associates and successful business opportunities for owner-operators.

Contact:

David A. Jackson, President

602-606-6224

INCOME STATEMENT DATA:	Three Months Ended June 30,						Six Months Ended June 30,
	(Unaudited, in thousands, except per share amounts)
	2012			2011			2012			2011
REVENUE:
Revenue, before fuel surcharge	$	188,838		$	182,350		$	364,437		$	332,850
Fuel surcharge		47,430			46,133			91,363			82,107
TOTAL REVENUE		236,268			228,483			455,800			414,957
OPERATING  EXPENSES:
Salaries, wages and benefits		59,089			55,856			120,045			106,791
Fuel expense - gross		56,612			60,079			113,923			109,778
Operations and maintenance		15,078			14,859			28,815			26,588
Insurance and claims		8,281			8,794			15,926			15,015
Operating taxes and licenses		3,973			3,893			8,075			7,605
Communications		1,271			1,396			2,666			2,721
Depreciation and amortization		20,933			18,351			41,305			36,825
Purchased transportation		36,064			34,801			67,924			60,240
Miscellaneous operating expenses		2,864			3,320			5,184			6,313
		204,165			201,349			403,863			371,876
Income From Operations		32,103			27,134			51,937			43,081
Interest income		108			462			221			807
Interest expense		(114	)		-			(242	)		-
Other income		197			-			394			8
Income before income taxes		32,294			27,596			52,310			43,896
INCOME  TAXES		12,924			11,120			22,280			17,565
Net Income		19,370			16,476			30,030			26,331
Net income attributable to noncontrolling interest		(81	)		(118	)		(195	)		(117	)
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION	$	19,289		$	16,358		$	29,835		$	26,214
Net Income Per Share
- Basic	$	0.24		$	0.20		$	0.37		$	0.31
- Diluted	$	0.24		$	0.20		$	0.37		$	0.31
Weighted Average Shares Outstanding
- Basic		79,686			82,785			79,609			83,275
- Diluted		80,076			83,307			80,045			83,882

BALANCE SHEET DATA:
	06/30/12			12/31/11
ASSETS	(Unaudited, in thousands)
Cash and cash equivalents	$	2,843		$	9,584
Accounts receivable, net		113,336			101,319
Notes receivable, net		864			1,034
Related party notes and interest receivable		2,814			2,868
Prepaid expenses		15,122			10,131
Assets held for sale		18,230			19,416
Other current assets		12,688			9,605
Income tax receivable		-			3,821
Current deferred tax asset		3,202			2,319
Total Current Assets		169,099			160,097
Property and equipment, net		559,719			547,033
Notes receivable, long-term		3,637			3,987
Goodwill		10,285			10,295
Other assets and restricted cash		18,208			16,171
Total Assets	$	760,948		$	737,583
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	6,372		$	14,322
Accrued payroll and purchased transportation		10,455			9,096
Accrued liabilities		20,558			13,645
Claims accrual - current portion		13,892			12,875
Dividend payable - current portion		91			77
Total Current Liabilities		51,368			50,015
Claims accrual - long-term portion		8,557			8,693
Long-term dividend payable & other liabilities		2,397			1,457
Deferred income taxes		143,660			145,668
Long-term debt		50,000			55,000
Total Long-term Liabilities		204,614			210,818
Total Liabilities		255,982			260,833
Common stock		797			794
Additional paid-in capital		141,470			132,723
Accumulated other comprehensive income/(loss)		(399	)		(448	)
Retained earnings		362,842			343,290
Total Knight Transportation Shareholders' Equity		504,710			476,359
Noncontrolling interest		256			391
Total Shareholders' Equity		504,966			476,750
Total Liabilities and Shareholders' Equity	$	760,948		$	737,583

	Three Months Ended June 30,									Six Months Ended June 30,
	2012			2011			% Change			2012			2011			% Change
	(Unaudited)									(Unaudited)
OPERATING  STATISTICS
Average Revenue Per Tractor*	$	40,459		$	40,849			-1.0	%	$	79,519		$	76,245			4.3	%
Non-paid Empty Mile Percent		10.1	%		10.5	%		-3.8	%		10.4	%		10.5	%		-1.0	%
Average Length of Haul		485			478			1.5	%		482			473			1.9	%
Operating Ratio**		83.0	%		85.1	%					84.7	%		87.1	%
Average Tractors - Total		4,070			3,871						4,024			3,875
Tractors - End of Quarter:
Company		3,660			3,418						3,660			3,418
Owner - Operator		473			465						473			465
		4,133			3,883						4,133			3,883
Trailers - End of Quarter		9,118			8,837						9,118			8,837
Net Capital Expenditures (in thousands)	$	32,184		$	31,116					$	56,474		$	33,874
Adjusted Cash Flow From Operations Excluding Change in Short-term Investments (in thousands) ***	$	32,155		$	39,921					$	62,410		$	65,476

* Includes dry van, refrigerated, and port services revenue excluding fuel surcharge, brokerage revenue, intermodal revenue, and other revenue.

** 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.  Operating ratio reported for the six months ending June 30, 2012 is based upon total operating expenses, excluding the first quarter 2012 one time non-cash stock compensation charge of $4 million related to the accelerated vesting of certain stock options issued prior to 2009, and net of fuel surcharge, as a percentage of revenue before fuel surcharge. 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.

*** No adjustment was made to the current quarter ended June 30, 2012 adjusted cash flow from operations of $32,155 as there was no change in short-term trading investments.  Adjusted cash flow from operations of $39,921 for prior year quarter ended June 30, 2011 does not include $58,757 decrease in short-term trading investments.  This reconciling item is needed to tie back to cash flow from operations.

*** No adjustment was made to the six-month period ended June 30, 2012 adjusted cash flow from operations of $62,410 as there was no change in short-term trading investments.  Adjusted cash flow from operations of $65,476 for the prior year six-month period ended June 30, 2011 does not include $24,379 decrease in short-term trading investments.  This reconciling item is needed to tie back to cash flow from operations.

In the press release, we provided adjusted cash flow from operations excluding changes in short-term investments.  The exclusion of the change in short-term investments is not in accordance with generally accepted accounting principles in the United States ("GAAP").  This non-GAAP financial measure is intended to supplement, but not substitute for, the most directly comparable GAAP measure.  We believe that the non-GAAP financial measure provides meaningful information to assist investors and analysts in understanding our financial results because it excludes an item that may not be indicative or is unrelated to our core operating results.  However, because non-GAAP financial measures are not standardized, investors are strongly encouraged to review our financial statements and publicly filed reports in their entirety and not rely on any single financial measure.  A reconciliation to the most closely-related GAAP measure is provided in the preceding paragraph.

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.

Contact:      Dave Jackson, President at (602) 269-2000

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