Exhibit 99.2
|
Knight and Swift to Combine
Creating North America’s Premier Truckload Carrier
April 10, 2017
|
Non-GAAP Financial Metrics The attached charts include information that does not conform to generally accepted accounting principles (GAAP). Management of Knight Transportation, Inc. (“Knight”) and Swift Transportation Company (“Swift”) believe that an analysis of this data is meaningful to investors because it provides insight with respect to comparisons of the ongoing operating results of each of Knight and Swift. These measures should not be viewed as an alternative to GAAP measures of performance. Furthermore, these measures may not be consistent with similar measures provided by other companies. This data should be read in conjunction with previously published reports by Knight and Swift on their respective Forms10-K,10-Q, and8-K. These reports, along with reconciliations ofnon-GAAP measures to GAAP are available on Knight and Swift’s respective websites. Reconciliations ofnon-GAAP measures to GAAP are also included with this presentation. Forward Looking Statements This communication includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Use of the words “may,” “will,” “would,” “could,” “should,” “believes,” “estimates,” “projects,” “potential,” “expects,” “plans,” “seeks,” “intends,” “evaluates,” “pursues,” “anticipates,” “continues,” “designs,” “impacts,” “affects,” “forecasts,” “target,” “outlook,” “initiative,” “objective,” “designed,” “priorities,” “goal,” or the negative of those words or other similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. These forward-looking statements may include statements with respect to, among other things, the proposed Merger, including the expected timing of completion of the Merger; the benefits of the Merger; the combined company’s plans, objectives and expectations; future financial and operating results; and other statements that are not historical facts. These forward-looking statements are based on numerous assumptions (some of which may prove to be incorrect) and are subject to risks, uncertainties and other factors that could cause actual results and events to differ materially from those expressed or implied by these forward-looking statements. In addition to the risks, uncertainties and other factors previously disclosed in Swift’s and Knight’s reports filed with the Securities and Exchange Commission (“SEC”) and those identified elsewhere in this communication, the following risks, uncertainties and other factors, among others, could cause actual results to differ materially from forward-looking statements and historical performance: the risk that the Merger may not be completed in a timely manner or at all due to the failure to obtain the approval of Swift’s or Knight’s stockholders or the failure to satisfy other conditions to completion of the Merger; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement; the outcome of any legal proceeding that may be instituted against Swift, Knight or others following the announcement of the Merger; the amount of the costs, fees, expenses and charges related to the Merger; the risk that the benefits of the Merger, including synergies, may not be fully realized or may take longer to realize than expected; the risk that the Merger may not advance the combined company’s business strategy; the risk that the combined company may experience difficulty integrating Swift’s and Knight’s employees or operations; the potential diversion of Swift’s and Knight’s management’s attention resulting from the proposed Merger; economic conditions, including future recessionary economic cycles and downturns in customers’ business cycles, particularly in market segments and industries in which Swift or Knight has a significant concentration of customers; increasing competition from trucking, rail, intermodal, and brokerage competitors; increases in driver compensation to the extent not offset by increases in freight rates and difficulties in driver recruitment and retention; additional risks arising from contractual agreements with owner-operators that do not exist Swift or Knight drivers; the loss of key employees or inability to identify and recruit new employees Swift’s and Knight’s dependence on third parties for intermodal and brokerage business; potential failure in computer or communications systems; the consequences of any armed conflict involving, or terrorist attack against, the United States; inflationary, deflationary and other general economic trends; seasonal factors such as severe weather conditions that increase operating costs; the possiblere-classification of owner-operators as employees; changes in rules or legislation by the National Labor Relations Board, Congress, or states and/or union organizing efforts; government regulation with respect to captive insurance companies; uncertainties and risks associated with operations in Mexico; significant reduction in, or termination of, Swift’s or Knight’s trucking services by a key customer; Swift’s and Knight’s significant ongoing capital requirements; volatility in the price or availability of fuel, as well as Swift’s and Knight’s ability to recover fuel prices through a fuel surcharge program; fluctuations in new and used equipment prices or replacement costs, and the potential failure of manufacturers to meet their sale and trade-back obligations; the impact that the combined company’s leverage may have on the way it operates its business and its ability to services debt, including compliance with its debt covenants; restrictions contained in its debt agreements; adverse impacts of insuring risk through captive insurance companies, including the need to provide restricted cash and similar collateral for anticipated losses; potential volatility or decrease in the amount of earnings as a result of the claims exposure through captive insurance companies and third-party insurance; goodwill impairment; fluctuations in interest rates; the outcome of pending or future litigation; the effects of losses from natural catastrophes in excess of insurance coverage; and the potential impact of announcement of the proposed Merger or consummation of the proposed Merger on relationships, including with employees, customers and competitors. Actual results may differ materially from those projected in the forward-looking statements. Neither Swift nor Knight undertakes to update any forward-looking statements. 1
|
Additional Information and Where to Find It
Investors and security holders are urged to carefully review and consider each of Swift’s and Knight’s public filings with the SEC, including but not limited to their Annual Reports on Form10-K, their proxy statements, their Current Reports on Form8-K and their Quarterly Reports on Form10-Q. The documents filed by Swift with the SEC may be obtained free of charge at Swift’s website at http://investor.swifttrans.com/ or at the SEC’s website at www.sec.gov.
These documents may also be obtained free of charge from Swift by requesting them in writing to 2200 S. 75th Ave., Phoenix, AZ 85043, or by telephone at1-602-269-9700. The documents filed by Knight with the SEC may be obtained free of charge at Knight’s website at www.knighttrans.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Knight by requesting them in writing to 20002 N 19th Ave, Phoenix, AZ 85027, or by telephone at1-602-606-6315.
In connection with the proposed Merger, Swift intends to file a registration statement on FormS-4 with the SEC which will include a joint proxy statement of Knight and Swift and a prospectus of Swift, and each party will file other documents regarding the proposed Merger with the SEC. BEFORE MAKING ANY
VOTING OR INVESTMENT DECISION, INVESTORS AND SECURITY HOLDERS OF SWIFTAND KNIGHT ARE URGED TO CAREFULLY READ THE ENTIRE REGISTRATION STATEMENT AND JOINT PROXY STATEMENT/PROSPECTUS, WHEN THEY BECOME AVAILABLE, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. A definitive joint proxy statement/prospectus will be sent to the shareholders of each party seeking the required shareholder approval. Investors and security holders will be able to obtain the registration statement and the joint proxy statement/prospectus free of charge from the SEC’s website or from Swift or Knight as described above. The contents of the websites referenced above are not deemed to be incorporated by reference into the registration statement or the joint proxy statement/prospectus.
Certain Information Regarding Participants
Swift, Knight and their respective directors and executive officers may be deemed participants in the solicitation of proxies in connection with the proposed Merger. You can find information about Swift’s directors and executive officers in its definitive proxy statement for the 2016 Annual Meeting of Stockholders, which was filed with the SEC on April 22, 2016, and in other documents filed with the SEC by Swift and its directors and executive officers.
You can find information about Knight’s directors and executive officers in its definitive proxy statement for the 2017 Annual Meeting of Stockholders, which was filed with the SEC on March 31, 2017, and in other documents filed with the SEC by Knight and its directors and executive officers. Additional information regarding the interests of these directors and executive officers in the Merger will be included in the registration statement, joint proxy statement/prospectus or other documents filed with the SEC if any when they become available. You may obtain these documents (when they become available) free of charge at the SEC’s web site at www.sec.gov and from Swift or Knight as described above.
No Offer or Solicitation
This document shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the U.S. Securities Act of 1933, as amended.
2
|
Transaction Overview
All-stock merger, unanimously approved by the Knight and Swift boards
Knight-Swift Transportation Holdings Inc. (“Knight-Swift” or “KS”) will trade on the NYSE under KNX; EPS
Transaction and stock price based on historical Knight shares
Structure and Swift will conduct a 0.72 for 1.0 reverse stock split prior to the merger and thepre-merger Swift
Consideration stockholders will retain their shares; Knight shareholders will receive 1.000 shares of Knight-Swift in
exchange for each Knight share
Knight to be accounting acquirer; Swift HoldCo to be legal survivor with revised governance
KS will have a single class of shares outstanding with equal voting power for each share
Shareholder Current Swift shareholders will own 54% of KS; current Knight shareholders will own 46%
Considerations KS expects to pay quarterly dividends per share of $0.06 (unchanged from Knight’s current dividend
policy)
KS’s Board of Directors to consist of all Knight directors and 4 directors from Swift (2 named by Jerry
Moyes and 2 named by the Swift board)
Governance Jerry Moyes will be anon-employee director and Senior Advisor to the Executive Chairman and Vice
Chairman
Moyes’ family to own approximately 24%, with votes in excess of 12.5% to be cast by a committee of
Jerry Moyes, Kevin Knight, and Gary Knight, except in business combination
Executive Chairman of KS / President Swift Operating Entities – Kevin Knight
Leadership Vice Chairman of KS – Gary Knight
Team Chief Executive Officer of KS / President Knight Operating Entities – David Jackson
Chief Financial Officer of KS – Adam Miller
Shareholder approval required from both companies. The Moyes family and Kevin Knight and Gary Knight
Closing have agreed to vote in favor of the transaction
Considerations Expected to close in the third quarter of 2017, subject to regulatory approvals and customary closing
conditions
3
|
Uniting Two Leading Trucking Companies With a Successful History
The combination of Knight & Swift brings together two Phoenix-based organizations whose leaders have common roots going back half a century
1960s –
1990s 2000s 2010s 2017 1970s
Swift taken Expansion of product Swift’s Continued public on lines, reaches $4 predecessor expansion NASDAQ billion in revenue founded by Jerry 20%+ Revenue Swift taken private Moyes and family Swift taken public CAGR by Jerry Moyes and in Phoenix, AZ again on New York family 12 Acquisitions Stock Exchange
Knight & Swift combine to create North America’s
Knight founded by Kevin, Establishment of premier trucking Randy, Kevin, Gary, Randy, and Keith Knight Gary, and Keith Knight reaches $1 company Knight Refrigerated, Knight begin billion in Brokerage & their trucking Knight listed on NASDAQ revenues in 2014 Port Services, careers at Swift +30% Revenue CAGR, 3 and Intermodal Acquisitions divisions
4
|
Market Leaders Under Common Ownership Create Largest Truckload Company
2016 Revenue1 $1,118 million $4,032 million $5,225 million
2016 Adjusted
85.3% 92.9% 88.3%
Operating Ratio1,2
Net Debt / Adj. EBITDA: 0.0x Net Debt / Adj. EBITDA: 2.0x Net Debt / Adj. EBITDA: 1.1x
2016 Leverage1,3
Adj. Net Debt / Adj. EBITDAR: 0.1x Adj. Net Debt / Adj. EBITDAR: 2.9x Adj. Net Debt / Adj. EBITDAR: 1.9x
Intermodal 2%Intermodal 9%TruckloadIntermodal
7%
RefrigeratedRefrigerated50%Refrigerated
15%8%10%
Service Line Logistics &
Logistics & OtherLogistics &
Composition OtherTruckload9%4OtherTruckload
51%
19%57%11%
DedicatedDedicatedDedicated 4
7%24%20%
Tractors5: 4,705 Tractors5: 18,366 Tractors5: 23,071
Operations Trailers: 12,746 Trailers: 64,066 Trailers: 76,812
Drivers: 4,738 Drivers: 16,600 Drivers: 21,338
Source: Company Filings
Note: All Knight and Swift combined figures are shown on a pro forma basis as if the merger occurred on January 1, 2016
1. Gross revenues. Pro Forma assumes $150 million of totalrun-rate synergies within three years of closing, consisting of $75 million of run rate revenue synergies and $75 million of run rate cost synergies
2. See Appendix for calculation
3. Adjusted debt assumes capitalization of operating leases using a rent capitalization factor of 5.0x
4. Other includes revenue from repair and maintenance shops, premium revenue from captive insurance companies, and tractor leasing revenue from Swift’s IEL subsidiary
5. Tractor count includes both company owned and owner operated tractors
5
|
Strategic Geographic Presence
Over 70 locations in 30 states and 3 locations throughout Mexico
Lewiston Inner Grove Heights Seattle l Grand Rapids Sumner l l Syracuse Portland Menasha New Boston l l Idaho Falls
l
Troutdale l
Boise Columbus l l Yankton l Gary
l l
Salt Lake City Granger l l Rochelle l l
l
Sparks ll Denver Kansas City l Avenel Manteno Carlisle l
l Reno ll ll
Willows l ll l l l Jonestown West Valley City l Edwardsville Indianapolis Manchester Lathrop l Tulsa l Oklahoma City Richmond Tulare l l Las Vegas Albuquerque l l Fontana l ll l Phoenix l Nashville l l Charlotte Rancho Dominguez l Memphis l ll « « l Greer ll Decatur Jurupa Valley l Dallas l l
Otay Mesa l Corsicana Atlanta Enhanced Profile to Customers & Drivers
l ll Lancaster Nogales El Paso
l Forward positioning aligns with shortening
Katy ll l Ocala Laredo
Gulfport supply chain
l Houston l Lakeland
l
Monterrey Nuevo Laredo Near all major driver domiciles l
Unparalleled proximity to population centers No plan to close service centers or combine networks
Knight Headquarters Mexico City l Swift Headquarters Knight Locations (33) Swift Locations (39)
6
|
Compelling Strategic and Financial Rationale
Knight-Swift will offer the largest truckload and dedicated fleets and service center network by a
North America’s Leading significant factor.
Truckload Group
? 23,000 tractors; 77,000 trailers; over 70 service locations
Swift strengths in dedicated, Mexico, with unparalleled fleet size
Highly Complementary
Operations/Expertise Knight strengths of industry-leading margins and returns in dry van and refrigerated segments
and brokerage expertise
Decentralized operations with strong accountability for performance
Disciplined Implementation Retain distinct brands, service centers, and operating networks
Plan
Dedicated transition teams to work together
Estimated synergies of $15 million in 2H2017, $100 million in 2018 and $150 million in 2019
Adjusted EPS accretion estimate of over 30% in 2018, the first full year of the merger
Significant Value Creation
Significant free cash flow creation to support deleveraging
Expected $5 billion+ pro forma market capitalization
Highly Investable Stock in Significant liquidity and share liquidity
Sector KNX to be accounting acquirer and expects to benefit from Knight’s history of industry-leading
operational and financial metrics
7
|
Business Strategy
Knight and Swift will maintain their distinct brands in customer and driver facing activities,
Separate Operations sustaining many years of strong relationships and operating knowledge
Execution Managing on a per load, per truck, and a per service center basis
Operating ratio drives both companies
Efficiency/Accountability Target areas include sharing best practices (safety, operating efficiency, technology),
improving yield, and identifying purchasing economies
Business Intelligence Leverage combined freight market knowledge when making decisions to commit capacity
Technology Collaborate on the development and adoption of impactful technology
8
|
Significant Synergy Potential
Synergies of $150 million by 2019
Revenue and Cost Synergies Sources of Synergies
Cross-functional team will include leaders from both
$200 companies
32 focus areas
$150 Improving Yield by Managing
$150 Mix, Deadhead, and
Commitments
Revenue
Shared Market Intelligence
$75
$100
$100 Non-Asset Growth
$51 Accountability in Service Centers
$50 Purchasing Economies
Cost
$31 $75 Enhancing Efficiencies
$15 $49
Sharing Best Practices
$16
$0
2017PF1 2018E 2019E
Projected Revenue Synergies Projected Cost Synergies
1. PF for a full-year of synergies, assuming the transaction occurred on 12/31/16
9
|
Strong Balance Sheet and Cash Flow
Strong balance sheet provides operating and strategic flexibility going forward Significant cash flow allows for capital returns and acceleratedde-leveraging
Capital policy will target quarterly dividends of $0.06 per share and continued deleveraging
Unlevered Free Cash Flow1 Leverage (Net Debt / Adjusted EBITDA)
$700
$600 $588
$93
$500
$400
$400
$340
$300
$221
$343
$200
$100 $223
$154
$56
$ -
($2)
($100) 2
2014 20152016PF2
Knight Standalone Swift StandaloneAfter-Tax Run Rate Synergies 3
Source: Company Filings, Knight Management
1. Free cash flow is calculated as reported cash flows from operating activities less net capital expenditures, excluding acquisitions
2. Pro Forma assumes $150 million of totalpre-taxrun-rate synergies, unless otherwise specified
3. Synergies aretax-effected at 38.25%
10
|
Creating North America’s Premier Truckload Company
ites two long-standing industry leaders with complementary 1 erations under common ownership
Maintenance of distinct brands 2
Strong, experienced management team with long-history 3 of operational excellence to realize significant synergies
eate significant shareholder value through strength and scale 4 f business, and synergy realization
11
|
Appendix
|
Non-GAAP Reconciliation
A BA + BCA + B + C
2016 Actual 2016 Actual2016 Pro FormaSynergies 32016 PF + Synergies
Adjusted Operating Income Reconciliation Run Rate Synergies
Total Revenue $1,118 $4,032$5,150$75$5,225
Less: Trucking Fuel Surcharge (90) (309)(399)-(399)
Revenue, excluding Trucking Fuel Surcharge $1,028 $3,723$4,751$75$4,826
Operating Expenses $970 $3,790$4,759($75)$4,684
Adjusted for:
Trucking Fuel Surcharge ($90) ($309)($399)$ -($399)
Accrual for Class Action Lawsuits (2) -(2)-(2)
Amortization of Certain Intangibles - (16)(16)-(16)
Non-Cash Impairments - (1)(1)-(1)
Moyes Retirement Package - (7)(7)-(7)
Adjusted Operating Expenses $877 $3,457$4,335($75)$4,259
Operating Income (GAAP) $148 $242$390$150$541
Adjusted Operating Income $151 $266$416$150$567
Operating Ratio
Operating Ratio 1 86.7% 94.0%92.4%89.6%
Adjusted Operating Ratio 2 85.3% 92.9%91.2%88.3%
Free Cash Flow
Cash Flow from Operating Activities $243 $466$710$93 3$803
Less: Capital Expenditures (155) (239)(394)-(394)
Plus: Proceeds from Sale of Equipment 66 113179-179
Unlevered Free Cash Flow $154 $340$495$93$588
1. Operating Ratio calculated as total operating expenses as a percentage of total revenue
2. Adjusted Operating Ratio calculated as total Adjusted Operating Expenses as a percentage of Revenue Excluding Trucking Fuel Surcharge
3. Synergies represent 2019 forecastedpre-tax revenue and cost synergies of $150 million, thentax-effected at 38.25%
13
|
Non-GAAP Reconciliation (Cont’d) ABA + B + CCA + B + C 2016 Actual2016 Actual2016 Pro FormaSynergies 22016 Pro Forma Adjusted EBITDA Reconciliation Net Income $95$149$245$93$337 Adjusted for: Plus: Depreciation and Amortization $116$267$383$ -$383 Plus: Amortization of Intangibles 11717017 Interest Expense 13131031 Interest Income (0)(3)(3)0(3) Income Tax Expense 586612358181 EBITDA $270$527$796$150$947 Adjusted for: Accrual for Class Action Lawsuits $2$ -$2$ -$2Non-cash Impairments -11-1Non-cash Equity Compensation -66-- Adjusted EBITDA $272$534$806$150$950 Adjusted EBITDAR Reconciliation Adjusted EBITDA $272$534$806$150$950 Plus: Operating Lease Expense 5226231-231 Adjusted EBITDAR $277$760$1,037$150$1,181 Return on Invested Capital (ROIC) Adjusted Operating Income $151$266$416$150$567 Tax Rate 38.25%38.25%38.25%38.25%38.25%Tax-Effected Adjusted Operating Income $93$164$257$93$350 20152016201520162015201620152016 Debt $112 $18$1,385$1,145$1,497$1,163$1,497$1,163 Shareholders’ Equity 1 740 7896176721,3571,4611,3571,461 Total Capitalization $852 $807$2,002$1,817$2,854$2,624$2,854$2,624 Average Total Capitalization $830$1,9102,739$2,739 Adjusted Return on Invested Capital (ROIC) 11.2%8.6%9.4%12.8% 1. Pro forma shareholders’ equity represents simple sum of 12/31/16 actual shareholders’ equity balances for Knight and Swift. Does not incorporate purchase accounting adjustments 2. Synergies represent 2019 forecastedpre-tax revenue and cost synergies of $150 million, thentax-effected at 38.25% 14