Knight Transportation Posts Record Revenue and Net Income for the Fourth Quarter of 2005

Category:

Wednesday, January 18, 2006 6:21 pm EST

Dateline:

PHOENIX

Public Company Information:

NYSE:
KNX
"During the fourth quarter our revenue growth was driven by a combination of fleet expansion and improved revenue per mile. We benefited from opening new service centers, increasing service in existing centers, and a full quarter of revenue from Edwards Bros., which we acquired in August 2005."
PHOENIX--(BUSINESS WIRE)--Jan. 18, 2006--Knight Transportation Inc. (NYSE: KNX) announced today its financial results for the quarter and year ended Dec. 31, 2005. All earnings per share amounts reflect the company's 3-for-2 stock split effective Dec. 23, 2005.

For the quarter, total revenue increased 29.8%, to $164.6 million from $126.8 for the same quarter of 2004. Revenue, before fuel surcharge, increased 22.2%, to $140.8 million from $115.2 million for the same quarter of 2004. Net income increased 27.3%, to $18.5 million from $14.6 million for the same period of 2004. Net income per diluted share increased to $0.21 from $0.17 for same quarter 2004.

For the 12 months ended Dec. 31, 2005, total revenue increased 28.2%, to $566.8 million from $442.3 million for the same period of 2004. Revenue, before fuel surcharge, increased 21.2%, to $499.0 million from $411.7 million for the same period of 2004. Net income increased 28.9%, to $61.7 million from $47.9 million for the same period of 2004. Net income per diluted share increased to $0.71 from $0.55 for the same period of 2004.

During the quarter, the company completed a 3-for-2 stock split effected in the form of a 50% stock dividend paid on Dec. 23, 2005. This was the company's fifth 3-for-2 stock split since May of 1998, and raised outstanding shares to approximately 85.6 million. The company had previously announced a cash dividend of $.02 per share to shareholders of record on Jan. 30, 2006, and payable on Feb. 14, 2006. The aggregate cash payable in the dividend will be increased by approximately 50% compared with the cash dividends paid prior to the recent stock split.

Chairman and Chief Executive Officer Kevin P. Knight, offered the following comments: "During the fourth quarter our revenue growth was driven by a combination of fleet expansion and improved revenue per mile. We benefited from opening new service centers, increasing service in existing centers, and a full quarter of revenue from Edwards Bros., which we acquired in August 2005.

"A solid U.S. economy and a favorable relationship between shipping demand and truckload capacity contributed to a 5.9% increase in average revenue per loaded mile, before fuel surcharge, and an improvement in our percentage of non-revenue miles compared with the also strong fourth quarter of 2004.

"In addition to growth, for the 44th consecutive quarter since going public, we generated higher year-over-year operating income. In addition, our operating ratio of 78.2% represented a 70 basis point improvement over the 2004 quarter and the best quarterly operating ratio in our history as a public company. Solid productivity, improved fuel surcharge collection, and constant focus on expense control more than overcame cost increases relating to higher prices of revenue equipment, higher diesel fuel prices, declining fuel efficiency due to emissions control regulations, and increases in driver compensation.

"During the quarter, average tractors operated increased 15.4% over the fourth quarter of 2004. We purchased 349 new tractors during the quarter, 241 of which replaced existing units and 108 were for expansion. We also purchased 406 new trailers, 270 of which replaced existing units. For the quarter we invested $37.5 in net capital expenditures. At Dec. 31, 2005, our balance sheet reflected $18.8 million in cash, $2.3 million in short-term investments, zero debt, and $352.9 million in shareholders' equity.

"In looking at 2005 as a whole, we continued to demonstrate the strength and flexibility of our growth model. We expanded organically by opening new dry van service centers in Chicago, El Paso and Reno, as well as increasing business at existing service centers. We also added our first brokerage service center in Phoenix as well as our second refrigerated service center in Idaho Falls through the acquisition of Edwards Bros. We now have 23 service centers strategically located throughout the U.S.

"Looking forward to 2006, we plan to continue to grow our fleet by approximately 15% and, assuming GDP growth remains favorable, we believe that our markets will continue to offer an environment for rate increases to offset the additional costs associated with driver pay, fuel and the introduction of the federally mandated 2007 engines."

The company will hold a conference call on Jan. 19, 4 p.m. ET, to further discuss its results of operations for the quarter ended Dec. 31, 2005. The dial-in number for this conference call is 800-350-3624.

Knight Transportation Inc., headquartered in Phoenix, is a truckload carrier offering dry van, refrigerated and brokerage services to its customers through a network of service centers located throughout the United States. Refrigerated and brokerage services are provided through the wholly owned subsidiaries of Knight Refrigerated, LLC, and Knight Brokerage, LLC, respectively. The principal types of freight transported includes consumer staples, retail, paper products, packaging/plastics, manufacturing and import/export commodities.

 INCOME STATEMENT DATA:         Three Months Ended  Twelve Months Ended                                     Dec. 31,            Dec. 31,                                        (Unaudited, in thousands,                                        except per share amounts)                                    2005      2004      2005      2004                                   ----      ----      ----      ----   REVENUE:   Revenue, before fuel    surcharge                   $140,755  $115,196  $498,996  $411,717   Fuel surcharge                 23,821    11,573    67,817    30,571                                --------- --------- --------- --------- TOTAL REVENUE                   164,576   126,769   566,813   442,288                                --------- --------- --------- ---------  OPERATING EXPENSES:   Salaries, wages and benefits   44,731    36,918   162,778   133,822   Fuel expense - gross           40,385    26,058   133,469    85,071   Operations and maintenance      9,580     7,346    34,449    26,369   Insurance and claims            7,939     6,341    25,159    22,319   Operating taxes and licenses    3,406     2,732    12,412     9,798   Communications                  1,330       948     4,267     3,602   Depreciation and amortization  14,180    11,820    52,603    40,755   Lease expense - revenue    equipment                        115       145       183     3,047   Purchased transportation        9,591     7,645    31,787    29,342   Gain on sales of equipment     (1,019)        -    (2,803)        -   Miscellaneous operating    expenses                       3,616     2,549    10,814     8,801                                --------- --------- --------- ---------                                 133,854   102,502   465,118   362,926                                --------- --------- --------- ---------   Income From Operations         30,722    24,267   101,695    79,362                                --------- --------- --------- ---------    Other income/(expense)           (189)        -       361         -   Interest income                   216        59       658       398                                --------- --------- --------- ---------                                      27        59     1,019       398                                --------- --------- --------- ---------   Income Before Income Taxes     30,749    24,326   102,714    79,760 INCOME TAXES                     12,200     9,750    41,000    31,900                                --------- --------- --------- ---------  NET INCOME                     $ 18,549  $ 14,576  $ 61,714  $ 47,860                                ========= ========= ========= ========= Net Income Per Share     - Basic                    $   0.22  $   0.17  $   0.72  $   0.57      - Diluted                  $   0.21  $   0.17  $   0.71  $   0.55  Weighted Average Shares  Outstanding     - Basic                      85,567    84,897    85,302    84,599      - Diluted                    87,110    86,937    86,647    86,459   BALANCE SHEET DATA:                                               12/31/2005  12/31/2004                                               ----------  ----------      ASSETS                                   (Unaudited, in thousands)  Cash and cash equivalents                      $ 18,809    $ 23,155 Short term investments                            2,278       2,202 Accounts receivable, net                         79,848      58,733 Notes receivable, net                               241         171 Inventories and supplies                          3,355       2,332 Prepaid expenses                                  7,156       5,215 Income tax receivable                                 -       3,216 Restricted cash                                     211           - Deferred tax asset                                8,533       7,493                                                ---------   ---------      Total Current Assets                        120,431     102,517                                                ---------   ---------   Property and equipment, net                     352,339     287,930 Notes receivable, long-term                         344          77 Goodwill                                          8,119       7,504 Other Assets                                      2,594       4,839                                                ---------   ---------       Total Assets                               $483,827    $402,867                                                =========   =========  LIABILITIES AND SHAREHOLDERS' EQUITY Accounts payable                               $  7,464    $  5,044 Accrued payroll                                   5,452       4,558 Accrued liabilities                              13,307       5,684 Dividends payable                                 1,713           - Claims accrual                                   26,155      23,904 Other current liabilities                           211           -                                                ---------   ---------       Total Current Liabilities                    54,302      39,190  Deferred Income Taxes                            76,597      72,660                                                ---------   ---------       Total Liabilities                           130,899     111,850                                                ---------   ---------   Common stock                                        857         850 Additional paid-in capital                       87,148      81,834 Retained earnings                               264,923     208,333                                                ---------   ---------      Total Shareholders' Equity                  352,928     291,017                                                ---------   ---------       Total Liabilities and Shareholders' Equity $483,827    $402,867                                                =========   =========                   Three Months Ended          Twelve Months Ended                      Dec. 31,                    Dec. 31,                   2005        2004            2005        2004               ----------- -----------     ----------- -----------               (Unaudited) (Unaudited)     (Unaudited) (Unaudited)  OPERATING  STATISTICS                            %                          %                                      Change                     Change Average Revenue  Per Loaded  Mile(a)         $ 1.709    $ 1.614   5.9%  $ 1.654     $ 1.546  7.0%  Average Revenue  Per Total  Mile(a)         $ 1.518    $ 1.424   6.6%  $ 1.461     $ 1.369  6.7%  Empty Mile  Factor             11.2%      11.8% -5.1%     11.7%       11.5% 1.7%  Average Miles  Per Tractor      28,421     28,692  -0.9%  112,382     114,793 -2.1%  Average Length  of Haul             609        577   5.5%      580         556  4.3%  Operating  Ratio(b)           78.2%      78.9%           79.6%       80.7%  Average  Tractors -  Total             3,227      2,797  15.4%    3,016       2,600 16.0%  Tractors -  End of  Quarter:   Company          3,034      2,574           3,034       2,574   Owner -    Operator          237        244             237         244               ----------- -----------     ----------- -----------                    3,271      2,818           3,271       2,818  Trailers -  End of Quarter    7,885      7,126           7,885       7,126  Net Capital  Expenditures  (in thousands)  $37,535    $23,023        $103,583    $115,672  Cash Flow From  Operations  (in thousands)  $45,447    $22,809        $107,764     $97,195 

(a) Excludes fuel surcharge.

(b) 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.

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 oth Annual Report on Form 10-K, and other filings with the Securities 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:

Knight Transportation Inc., Phoenix
David Jackson, 602-269-2000