Exhibit 99.1
For Immediate Release
Phoenix, Arizona - October 20, 2004
Contacts: Kevin P. Knight, Chairman & CEO
Dave Jackson, CFO
(602) 269-2000
Knight Transportation Announces
Third Quarter Financial Results
Knight Transportation, Inc. (NASDAQ NM: KNGT) announced today its financial
results for the quarter and nine months ended September 30, 2004.
For the quarter ended September 30, 2004, total revenue increased 30.1%, to
$114.1 million from $87.6 million for the same quarter of 2003. Revenue, before
fuel surcharge, increased 25.7%, to $106.1 million from $84.4 million for the
same quarter of 2003. Net income increased 32.6%, to $12.6 million from $9.5
million for the same quarter of 2003. Net income per diluted share increased to
$0.22 from $0.16 for the same quarter in 2003.
For the nine months ended September 30, 2004, total revenue increased 26.2%, to
$315.5 million from $250.0 million for the same period of 2003. Revenue, before
fuel surcharge, increased 23.6%, to $296.5 million from $239.8 million for the
same period of 2003. Net income increased 30.6% to $33.3 million from $25.5
million for the same period of 2003. Net income per diluted share increased to
$0.58 from $0.44 for the same period of 2003.
Chairman and Chief Executive Officer Kevin P. Knight commented on the quarter:
"Our associates registered another quarter of record revenue and earnings as we
continued to execute our operating model focused on leading growth and
profitability. We were especially pleased with revenue growth of over 25% before
fuel surcharge and over 30% including fuel surcharge in a difficult growth
environment for our industry. In addition, even with industry-leading growth and
significant fuel, driver pay, and other cost pressures facing our industry, we
improved our margins. Our operating ratio (operating expenses, net of fuel
surcharge, as a percentage of revenue, before fuel surcharge) improved by nearly
a full point to 80.4%, the lowest since the 4th quarter 1994, and our net income
was 11.8% of revenue, before fuel surcharge, which is the best in our history as
a public company. We achieved these results through a combination of expanding
our fleet, significant rate increases, greater productivity from our trucks, and
a never-ending mission of cost-control.
Our growth came from expansion of our fleet and higher revenue per tractor. Our
average tractors operating in the third quarter were up 15% year over year, our
average freight revenue per loaded and total mile, before surcharges, were up
8.3% and 7.5%, respectively. Our average miles per tractor were up 1.6% and our
average length of haul was up 5.0%.
During the quarter, we continued our long-running strategy of growth through new
operations centers and continued expansion at existing operations centers. In
July, we opened our 17th operations center in Lakeland, Florida. We are
especially pleased with the efforts of our Florida team, who, in spite of many
challenges as a result of the hurricanes, managed another successful startup for
our company.
We also were successful in our opening of Knight Refrigerated, a wholly owned
subsidiary. Our associates at Knight Refrigerated are working hard to develop
our refrigerated operating model, in preparation for rolling out these services
in other parts of the country. Our services have been well received in the
temperature-control marketplace, leading to Knight-like financial performance
for this subsidiary.
Rapidly escalating fuel prices are a significant challenge for our industry, and
our sales and operations associates are working diligently with our customers to
mitigate the negative impact of fuel prices. For the quarter, we increased fuel
surcharge billings by 149% compared with the same quarter last year. These
efforts helped us limit the negative impact of fuel prices to approximately $.01
per share compared with the third quarter of last year.
During the quarter we continued to make significant investments in equipment and
facilities to support our growth. We added 159 new tractors, upgraded an
additional 71 tractors, and capitalized 119 tractors from early buy out options
exercised on operating leases. We also added 551 trailers and upgraded an
additional 82 trailers, and we continued to upgrade our terminal network.
Through nine months we have invested nearly $93 million in net capital
expenditures, which is most of our expected budget for the year. For 2004, we
expect cash flow from operations to nearly cover our net capital expenditures.
At September 30, our strong balance sheet reflected $24 million in cash, zero
debt, and $275 million in stockholder's equity.
Looking forward, we expect the shipping environment to remain favorable based on
economic growth of approximately three percent or better in the remainder of
2004 and into 2005. We also expect industry-wide trucking capacity to remain
constrained for the foreseeable future, mainly due to the limited number of
qualified drivers. Against that background, we expect freight rates to increase
at least as much as operating costs and that our driver compensation will allow
us to continue to attract and retain the quality drivers we need to support our
efforts. Based on these assumptions, we remain on track to grow our tractor base
in 2004 by 350 to 400 units and anticipate growing our tractor base by
approximately 400 units next year. We also expect to open 3 or 4 more operations
centers in 2005.
This month we were recognized by Forbes for the 10th consecutive year, placing
#66 on the annual list of 200 Best Small Companies. Only 1 other company has
been on the list for the past ten years. We would like to recognize everyone in
our organization for their hard work and dedication to the operating model that
makes our business what it is today. We plan to continue our strategy of
profitable growth with the goal of creating additional value for our customers,
associates, and stockholders."
The Company will hold a conference call on October 21, 4:00 EST, to further
discuss its results of operations for the quarter ended September 30, 2004. The
dial in number for this conference call is (800) 811-0667
INCOME STATEMENT DATA: Three Months Ended September 30, Nine Months Ended September 30,
(Unaudited, in thousands, except per share amounts)
2004 2003 2004 2003
---- ---- ---- ----
REVENUE:
Revenue, before fuel surcharge $ 106,109 $ 84,445 $ 296,521 $ 239,786
Fuel surcharge 7,947 3,194 18,996 10,171
------------------ ------------------ ------------------ ---------------------
TOTAL REVENUE $ 114,056 $ 87,639 $ 315,517 $ 249,957
------------------ ------------------ ------------------ ---------------------
OPERATING EXPENSES:
Salaries, Wages & Benefits 34,441 26,908 96,904 77,097
Fuel expense - gross 21,879 14,277 59,011 42,142
Operations & Maintenance 7,234 5,444 19,022 15,165
Insurance & Claims 5,376 4,136 15,978 12,237
Operating Taxes & Licenses 2,476 2,342 7,066 6,758
Communications 912 769 2,653 2,236
Depreciation & Amortization 10,463 7,744 28,935 21,796
Lease Expense - Revenue Equipment 634 1,920 2,903 5,843
Purchased Transportation 7,560 6,465 21,697 18,519
Miscellaneous Operating Expenses 2,305 1,816 6,253 5,535
------------------ ------------------ ------------------ ---------------------
93,280 71,821 260,422 207,328
------------------ ------------------ ------------------ ---------------------
Income From Operations 20,776 15,818 55,095 42,629
------------------ ------------------ ------------------ ---------------------
OTHER INCOME (EXPENSE):
Interest Income 132 110 339 419
Other Expense - - - -
Interest Expense - (165) - (548)
------------------ ------------------ ------------------ ---------------------
132 (55) 339 (129)
------------------ ------------------ ------------------ ---------------------
Income Before Income Taxes 20,908 15,763 55,434 42,500
INCOME TAXES 8,350 6,300 22,150 17,010
------------------ ------------------ ------------------ ---------------------
NET INCOME $ 12,558 $ 9,463 $ 33,284 $ 25,490
================== ================== ================== =====================
Earnings Per Share:
- Basic $ 0.22 $ 0.17 $ 0.59 $ 0.46
- Diluted $ 0.22 $ 0.16 $ 0.58 $ 0.44
Weighted Average Shares Outstanding:
- Basic 56,402 56,082 56,332 55,958
- Diluted 57,747 57,503 57,534 57,345
BALANCE SHEET DATA:
9/30/2004 12/31/2003
------------ ------------
ASSETS (Unaudited, in thousands)
Cash and cash equivalents $ 24,382 $ 40,550
Accounts receivable, net 52,802 38,751
Notes receivable, net 226 515
Inventories and supplies 1,957 1,336
Prepaid expenses 2,325 7,490
Income tax receivable - 1,761
Deferred tax asset 6,863 5,667
------------------------ ------------------------
Total Current Assets 88,555 96,070
------------------------ ------------------------
Property and equipment, net 283,542 212,935
Notes receivable, long-term 80 362
Goodwill 7,504 7,504
Other assets 5,285 4,355
------------------------ ------------------------
Total Assets $ 384,966 $ 321,226
======================== ========================
Accounts payable $ 13,658 $ 3,408
Accrued payroll 4,467 3,448
Accrued liabilities 7,043 4,493
Claims accrual 20,329 14,805
------------------------ ------------------------
Total Current Liabilities 45,497 26,154
Deferred income taxes 64,425 55,149
------------------------ ------------------------
Total Liabilities 109,922 81,303
------------------------ ------------------------
Common Stock 565 563
Additional paid-in capital 79,589 77,754
Retained earnings 194,890 161,606
------------------------ ------------------------
Total Shareholders' Equity 275,044 239,923
------------------------ ------------------------
Total Liabilities and Shareholders' Equity $ 384,966 $ 321,226
========================= ========================
Three Months Ended September 30, Nine Months Ended September 30,
2004 2003 2004 2003
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
OPERATING STATISTICS % %
Change Change
Average Revenue Per Loaded Mile* $1.556 $1.437 8.3% $1.521 $1.433 6.1%
Average Revenue Per Total Mile* $1.378 $1.282 7.5% $1.349 $1.277 5.6%
Empty Mile Factor 11.4% 10.8% 5.6% 11.4% 10.9% 4.6%
Average Miles Per Tractor 28,834 28,379 1.6% 86,116 84,044 2.5%
Average Length of Haul 564 537 5.0% 549 529 3.8%
Operating Ratio** 80.4% 81.3% 81.4% 82.2%
Average Tractors - Total 2,646 2,305 2,535 2,226
Tractors - End of Quarter:
Company 2,497 2,101 2,497 2,101
Owner - Operator 256 229 256 229
----------- ---------- ---------- ----------
2,753 2,330 2,753 2,330
Trailers - End of Quarter 7,142 6,165 7,142 6,165
Net Capital Expenditures (in thousands) $41,410 $15,139 $92,650 $53,064
Cash Flow From Operations (in thousands) $28,670 $22,924 $74,720 $60,076
* 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.
Knight Transportation, Inc. is a short to medium haul, truckload carrier
headquartered in Phoenix, Arizona. The Company serves most of the United States
through its regional operations in Phoenix, AZ; Salt Lake City, UT; Portland,
OR; Las Vegas, NV; Denver, CO; Kansas City, KS; Indianapolis, IN; Katy, TX;
Gulfport, MS; Charlotte, NC; Memphis, TN, Atlanta, GA; Carlisle, PA and
Lakeland, FL. The Company transports general commodities, including consumer
goods, packaged foodstuffs, paper products, beverage containers, imported and
exported commodities and refrigerated goods.
This press release may contain statements that might be considered as
forward-looking statements or predictions of future operations. Such statements
are based on management's belief or interpretation of information currently
available. These statements and assumptions involve certain risks and
uncertainties. Actual events may differ from these expectations as specified
from time to time in filings with the Securities and Exchange Commission.
Contact: Kevin P. Knight, Chairman & CEO or Dave Jackson, CFO, at (602) 269-2000