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Form 8-K KNIGHT TRANSPORTATION For: Oct 21

October 21, 2015 4:27 PM EDT
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_____________________________________________________________________

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
October 21, 2015

_____________________________________________________________________

KNIGHT TRANSPORTATION, INC.
(Exact name of registrant as specified in its charter)



Arizona
001-32396
86-0649974
(State or other jurisdiction
of incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)


20002 North 19th Avenue, Phoenix, AZ
85027
(Address of principal executive offices)
(Zip Code)


(602) 269-2000
(Registrant's telephone number, including area code)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[   ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
[   ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
[   ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
[   ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 

 
 
Item 2.02
Results of Operations and Financial Condition.
   
 
On Wednesday, October 21, 2015, Knight Transportation, Inc., an Arizona corporation (the "Company"), issued a press release (the "Press Release") announcing its financial results for the quarter ended September 30, 2015. A copy of the Press Release is attached to this report as Exhibit 99.
   
Item 9.01
Financial Statements and Exhibits.
   
 
(d)
Exhibits.
     
 
EXHIBIT
NUMBER
EXHIBIT DESCRIPTION
     
 
Knight Transportation, Inc. press release announcing financial results for the quarter ended September 30, 2015
     
 
The information contained in this report (including Items 2.02 and 9.01) and the exhibit hereto shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
     
 
The information in this report and the exhibit hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by forward-looking statements. Please refer to the paragraph following the financial and operating information in the attached press release and various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.
 
 
 

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
KNIGHT TRANSPORTATION, INC.
   
   
Date: October 21, 2015
By:
/s/ Adam W. Miller
   
Adam W. Miller
   
Chief Financial Officer
 
 
 
 

 

EXHIBIT INDEX

EXHIBIT
NUMBER
 
EXHIBIT DESCRIPTION
     
 
Knight Transportation, Inc. press release announcing financial results for the quarter ended September 30, 2015

 

Exhibit 99
 
October 21, 2015
 
Phoenix, Arizona
 
Knight Transportation Reports Third Quarter 2015 Revenue and Earnings
 
Knight Transportation, Inc. (NYSE: KNX), one of North America’s largest and most diversified truckload transportation companies, today reported revenue and net income for the third quarter and nine months ended September 30, 2015.
 
Key financial highlights for the third quarter and first nine months of 2015 and 2014 were as follows:
 
(dollars in thousands, except per share data)
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
% Chg
   
2015
   
2014
   
% Chg
 
Total revenue
  $ 300,122     $ 271,547       10.5 %   $ 892,225     $ 784,865       13.7 %
Revenue, excluding trucking fuel surcharge
  $ 269,930     $ 227,829       18.5 %   $ 795,767     $ 652,333       22.0 %
                                                 
Operating income
  $ 46,426     $ 39,791       16.7 %   $ 134,348     $ 109,940       22.2 %
Adjusted operating income(1)
 
NA
   
NA
   
NA
    $ 141,511     $ 109,940       28.7 %
                                                 
Net income, attributable to Knight
  $ 30,283     $ 25,100       20.6 %   $ 87,484     $ 69,924       25.1 %
Adjusted net income, attributable to Knight(2)
 
NA
   
NA
   
NA
    $ 91,879     $ 69,924       31.4 %
                                                 
Earnings per diluted share
  $ 0.37     $ 0.31       20.8 %   $ 1.06     $ 0.86       23.7 %
Adjusted earnings per diluted share(2)
 
NA
   
NA
   
NA
    $ 1.11     $ 0.86       29.9 %
 
The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on September 4, 2015, which was paid on September 25, 2015.
 
Dave Jackson, President and Chief Executive Officer, commented on the quarter, “During the third quarter we grew our consolidated revenue, excluding trucking fuel surcharge, by 18.5% while improving our operating income by 16.7%, despite a lukewarm freight environment.  Our diluted earnings per share increased to $0.37, and benefited from a lower effective tax rate which was primarily offset by less gain on sale.  Both our trucking and logistics segments continue to contribute to our growth as we continue to enhance our logistics capabilities to meet the supply chain needs of our customers.”
 
 
 

 
 
The following chart reflects our consolidated financial performance and that of our trucking and our logistics segments for the third quarter and first nine months of 2015 and 2014.
 
(dollars in thousands)
 
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
Chg
   
2015
   
2014
   
Chg
 
Consolidated
                                   
Revenue, excluding trucking fuel surcharge
  $ 269,930     $ 227,829       18.5 %   $ 795,767     $ 652,333       22.0 %
Adjusted operating income(1)
  $ 46,426     $ 39,791       16.7 %   $ 141,511     $ 109,940       28.7 %
Adjusted operating ratio(1)
    82.8 %     82.5 %  
30 bps
      82.2 %     83.1 %  
-90 bps
 
Trucking
                                               
Revenue, excluding trucking fuel surcharge
  $ 211,816     $ 174,126       21.6 %   $ 626,389     $ 506,974       23.6. %
Adjusted operating income(3)
  $ 42,710     $ 35,514       20.3 %   $ 129,963     $ 100,491       29.3 %
Adjusted operating ratio(3)
    79.8 %     79.6 %  
20 bps
      79.3 %     80.2 %  
-90 bps
 
Logistics
                                               
Revenue
  $ 58,114     $ 53,703       8.2 %   $ 169,378     $ 145,359       16.5 %
Operating income
  $ 3,716     $ 4,277       -13.1 %   $ 11,548     $ 9,449       22.2 %
Operating ratio
    93.6 %     92.0 %  
160 bps
      93.2 %     93.5 %  
-30 bps
 

 
In the third quarter, the trucking segment achieved an adjusted operating ratio of 79.8% compared to 79.6% from the same quarter last year.  The trucking segment experienced revenue growth, excluding trucking fuel surcharge, of 21.6% while improving operating income by 20.3%.  Despite a less robust freight environment, we continue to experience positive results from our efforts to improve yield.  Revenue per tractor, excluding fuel surcharge, increased 1.8%, year over year, attributable to a 4.6% improvement in revenue per loaded mile, a 2.6% increase in length of haul, off-set by a 0.2% decrease in average miles per tractor, and an increase in our non-paid empty mile percentage.  Our improvements in our revenue per tractor were partially offset by increased salaries and wages, increased driver recruiting and hiring costs, and rising equipment prices.
 
Our brokerage business, which is the largest component of our logistics segment, increased load volume by 64.8%, however, due to lower fuel surcharge and a shorter length of haul, revenue increased 11.7% while operating income improved by 8.8%, when compared to the same quarter last year.  Gross margins expanded 70 basis points compared to the third quarter last year.  Revenue in our intermodal business increased year over year 3.6%, while operating income improved 20.5%, when compared to the same quarter last year. We continue to invest in our logistics capabilities in order to provide more solutions to our customers, while improving our return on capital.  In the third quarter, the logistics segment produced an operating ratio of 93.6% compared to 92.0% for the same quarter last year.  During the quarter, operating income was negatively impacted by approximately $700,000 as a result of lower commodity prices that negatively impacted our sourcing business as well as costs associated with the startup of our expanded logistics and transportation management offering.
 
 
 

 
 
Attracting and retaining high quality driving associates remains a significant industry challenge.  The current shortage of qualified driving associates has been and will continue to be a headwind for adding additional capacity.  Our driver development and training programs remain a primary focus area for our management team.
 
Our tractor fleet remains one of the most modern fleets in the industry with an average age of 1.7 years.  The used equipment market softened during the quarter and resulted in gain on sale of revenue equipment in the third quarter of 2015 of $2.3 million, compared to $4.3 million in the third quarter of 2014.
 
During the third quarter of 2015 we purchased 564,016 shares of our common stock for $15.0 million. We currently have approximately 5.8 million shares available under our stock repurchase authorization.  Over the last twelve months ended September 30, 2015 we have returned $65.3 million to our shareholders in the form of quarterly dividends and stock repurchases.  We ended the quarter with $12.7 million of cash, $120.0 million of long term debt, and $712.6 million of shareholders' equity.  For the first nine months of the year our net capital expenditures were $108.9 million, while our cash flow from operations was $156.6 million.
 
The company will hold a conference call on October 21, 2015, at 4:30 PM EDT, to further discuss its results of operations for the quarter ended September 30, 2015. 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://investor.knighttrans.com/events, “Third Quarter 2015 Conference Call Presentation.”
 
Adjusted operating income, adjusted operating ratio, adjusted net income attributable to Knight, and adjusted earnings per diluted share (EPS) are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. These non-GAAP financial measures supplement our GAAP results in evaluating certain parts of our business.  We believe that using these measures affords a more consistent basis for comparing our results of operations from period to period. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to their most directly comparable financial measures calculated in accordance with GAAP, is included in the tables at the end of this press release.
 
Knight Transportation, Inc. is a provider of multiple truckload transportation and logistics services using a nationwide network of business units and 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 contracts 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 independent contractors.
 
 
 

 


INCOME STATEMENT DATA:
                       
                         
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited, in thousands, except per share amounts)
 
REVENUE:
                       
  Revenue, before fuel surcharge
  $ 269,930     $ 227,829     $ 795,767     $ 652,333  
  Fuel surcharge
    30,192       43,718       96,458       132,532  
TOTAL REVENUE
    300,122       271,547       892,225       784,865  
                                 
OPERATING  EXPENSES:
                               
    Salaries, wages and benefits
    85,514       65,296       249,921       190,779  
    Fuel expense - gross
    39,795       51,221       120,247       155,422  
    Operations and maintenance
    20,390       17,305       62,065       51,481  
    Insurance and claims
    8,149       7,530       25,076       22,414  
    Operating taxes and licenses
    3,373       4,338       13,954       12,265  
    Communications
    849       1,164       3,066       3,621  
    Depreciation and amortization
    28,204       22,684       82,728       66,422  
    Purchased transportation
    62,115       60,017       182,279       168,305  
    Miscellaneous operating expenses
    5,307       2,201       18,541       4,216  
           Total operating expenses
    253,696       231,756       757,877       674,925  
                                 
    Income from operations
    46,426       39,791       134,348       109,940  
                                 
    Interest income
    140       104       377       326  
    Interest expense
    (220 )     (135 )     (714 )     (339 )
    Other income
    2,335       2,399       7,234       5,856  
    Income before income taxes
    48,681       42,159       141,245       115,783  
INCOME  TAXES
    17,946       16,786       52,379       45,062  
Net income
    30,735       25,373       88,866       70,721  
Net income attributable to noncontrolling interest
    (452 )     (273 )     (1,382 )     (797 )
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION
  $ 30,283     $ 25,100     $ 87,484     $ 69,924  
 
                               
     Basic Earnings Per Share
  $ 0.37     $ 0.31     $ 1.07     $ 0.87  
     Diluted Earnings Per Share
  $ 0.37     $ 0.31     $ 1.06     $ 0.86  
 
                               
     Weighted Average Shares Outstanding - Basic
    81,127       81,035       81,678       80,802  
     Weighted Average Shares Outstanding - Diluted
    82,005       82,097       82,714       81,776  

 
 

 

BALANCE SHEET DATA:
               
     
09/30/15
     
12/31/14
 
ASSETS
   
(Unaudited, in thousands)
 
Cash and cash equivalents
  $
12,703
     $
            17,066
 
Trade receivables, net of allowance for doubtful accounts
134,985
     
143,531
 
Notes receivable, net of allowance for doubtful accounts
731
     
1,020
 
Prepaid expenses
   
              23,472
     
              17,423
 
Assets held for sale
   
              18,005
     
              23,248
 
Other current assets
   
              14,251
     
              13,345
 
Income Tax Receivable
   
                9,713
     
              19,432
 
Current deferred tax assets
   
                3,785
     
                3,187
 
     Total Current Assets
   
            217,645
     
            238,252
 
                 
Property and equipment, net
   
            804,224
     
            752,046
 
Notes receivable, long-term
   
                3,459
     
                4,065
 
Goodwill
   
              47,055
     
              47,067
 
Intangible Assets, net
   
                3,200
     
                3,575
 
Other assets and restricted cash
   
              22,339
     
              37,280
 
     Total Long-term Assets
   
            880,277
     
            844,033
 
                 
     Total Assets
  $
1,097,922
     $
        1,082,285
 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY
             
Accounts payable
  $
24,941
     $
            19,122
 
Accrued payroll and purchased transportation
 
              27,961
     
              34,127
 
Accrued liabilities
   
              32,518
     
              20,604
 
Claims accrual - current portion
   
              18,747
     
              18,532
 
Dividend payable - current portion
   
                   306
     
                   200
 
     Total Current Liabilities
   
            104,473
     
              92,585
 
                 
Claims accrual - long-term portion
   
              11,681
     
              11,505
 
Long-term dividend payable and other liabilities
 
                2,196
     
                2,513
 
Deferred tax liabilities
   
            144,724
     
            162,007
 
Long-term debt
   
            120,000
     
            134,400
 
     Total Long-term Liabilities
   
            278,601
     
            310,425
 
                 
     Total Liabilities
   
            383,074
     
            403,010
 
                 
Common stock
   
                   809
     
                   818
 
Additional paid-in capital
   
            203,073
     
            185,184
 
Accumulated other comprehensive income
 
                3,506
     
              12,231
 
Retained earnings
   
            505,165
     
            479,527
 
     Total Knight Transportation Shareholders' Equity
 
            712,553
     
            677,760
 
     Noncontrolling interest
   
                2,295
     
                1,515
 
     Total Shareholders' Equity
   
            714,848
     
            679,275
 
     Total Liabilities and Shareholders' Equity
$
1,097,922
     $ 
       1,082,285
 

 
 

 

   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
% Change
   
2015
   
2014
   
% Change
 
   
(Unaudited)
         
(Unaudited)
       
OPERATING  STATISTICS
                                   
                                     
Average Revenue Per Tractor*
  $ 43,863     $ 43,100       1.8 %   $ 130,398     $ 126,648       3.0 %
                                                 
Non-paid Empty Mile Percent
    12.1 %     9.8 %     23.5 %     11.7 %     9.6 %     21.9 %
                                                 
Average Length of Haul
    505       492       2.6 %     505       497       1.6 %
                                                 
Adjusted Operating Ratio (1)
    82.8 %     82.5 %             82.2 %     83.1 %        
                                                 
Average Tractors - Total
    4,829       4,040               4,804       4,003          
                                                 
Average Trailers - Total
    12,021       9,381               11,668       9,163          
                                                 
Net Capital Expenditures (in thousands)
  $ 69,242     $ 59,950             $ 108,852     $ 121,308          
                                                 
Cash Flow From Operations (in thousands)
  $ 49,172     $ 39,215             $ 156,639     $ 117,067          
 
* Includes trucking segment revenue excluding fuel surcharge.
 
 
 

 
 
(1)
             
 
Non-GAAP reconciliation
                       
Adjusted operating income, operating ratio, and adjusted operating ratio reconciliation (a)
       
                         
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited, in thousands)
 
                         
Total revenue
    300,122       271,547       892,225       784,865  
Less: Trucking fuel surcharge
    30,192       43,718       96,458       132,532  
Revenue, excluding trucking fuel surcharge
    269,930       227,829       795,767       652,333  
Operating expense
    253,696       231,756       757,877       674,925  
Adjusted for:
                               
  Trucking fuel surcharge
    (30,192 )     (43,718 )     (96,458 )     (132,532 )
  Accrual for class action lawsuits (b)
    -       -       (7,163 )     -  
Adjusted operating expenses
    223,504       188,038       654,256       542,393  
Adjusted operating income
    46,426       39,791       141,511       109,940  
Operating ratio
    84.5%       85.3%       84.9%       86.0%  
Adjusted operating ratio
    82.8%       82.5%       82.2%       83.1%  
                                 
 
(2)
           
 
Non-GAAP reconciliation
                       
Adjusted net income attributable to Knight and adjusted earnings per diluted share reconciliation:
       
                         
                         
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited, in thousands, except per share amounts)
 
                         
Net Income attributable to Knight
  $ 30,283     $ 25,100     $ 87,484     $ 69,924  
Adjusted for:
                               
  Accrual for class action lawsuits (net of tax)(b)
    -       -     $ 4,395       -  
Adjusted net income attributable to Knight
  $ 30,283     $ 25,100     $ 91,879     $ 69,924  
                                 
Weighted Average Shares Outstanding - Diluted
    82,005       82,097       82,714       81,776  
                                 
Earnings per diluted share
  $ 0.37     $ 0.31     $ 1.06     $ 0.86  
Adjusted for:
                               
  Accrual for class action lawsuits (b)
  $ 0.00     $ 0.00     $ 0.05     $ 0.00  
Adjusted earnings per diluted  share
  $ 0.37     $ 0.31     $ 1.11     $ 0.86  
                                 
 
 
 

 
 
(3)
           
 
Non-GAAP reconciliation
                       
Operating ratio and adjusted operating ratio for trucking segment (a)
             
                         
   
Three Months Ended September 30,
   
Nine Months Ended September 30,
 
   
2015
   
2014
   
2015
   
2014
 
   
(Unaudited, in thousands)
 
Trucking
                       
Total revenue
    242,008       217,844       722,847       639,506  
Less: Trucking fuel surcharge
    30,192       43,718       96,458       132,532  
Revenue, excluding trucking fuel surcharge
    211,816       174,126       626,389       506,974  
Operating expense
    199,298       182,330       600,047       539,015  
Adjusted for:
                               
  Trucking fuel surcharge
    (30,192 )     (43,718 )     (96,458 )     (132,532 )
  Accrual for class action lawsuits (b)
    -       -       (7,163 )     -  
Adjusted operating expenses
    169,106       138,612       496,426       406,483  
Adjusted operating income
    42,710       35,514       129,963       100,491  
Operating ratio
    82.4%       83.7%       83.0%       84.3%  
Adjusted operating ratio
    79.8%       79.6%       79.3%       80.2%  
                                 
 

(a) 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.  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.
             
(b) During the second quarter of 2015 we accrued $7.2 million of expense ($4.4 million after-tax) related to two class action lawsuits involving employment related claims.

 
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:  David A. Jackson, President and CEO, or Adam W. Miller, CFO at (602) 606-6315
 
 


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