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Knight Transportation Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 9, 2011 04:17PM

Knight Transportation Inc. (KNX) filed Quarterly Report for the period ended 2011-09-30. Knight Transportation Inc. has a market cap of $1.26 billion; its shares were traded at around $15.63 with a P/E ratio of 22.3 and P/S ratio of 1.7. The dividend yield of Knight Transportation Inc. stocks is 1.6%. Knight Transportation Inc. had an annual average earning growth of 8.4% over the past 10 years.



Highlight of Business Operations:

In the third quarter of 2011, average revenue per tractor improved 4.6% while average fleet count increased 1.8% when compared to the same period of 2010. The revenue per tractor improvement was driven by a 2.2% increase in revenue per total mile and a 2.3% increase in miles per tractor. We realized improvements in revenue per loaded mile, which improved 1.9%, and non-paid empty miles, which improved 2.7%, in the current quarter compared to the same quarter of 2010. Higher fuel prices continued to negatively affect operating results as the U.S. National Average Diesel Fuel price per gallon increased 31.5% in the third quarter of 2011 compared to the same period of 2010.

Total revenue for the nine months ended September 30, 2011, increased 18.4% to $642.1 million from $542.4 million for the same period in 2010. Total revenue included $125.8 million of fuel surcharge revenue in the same nine-month period in 2011 compared to $84.7 million in the same period in 2010. Total revenue for the quarter ended September 30, 2011, increased 18.7% to $227.1 million, from $191.3 million for the same period in 2010. Total revenue for the quarter included $43.7 million of fuel surcharge revenue in the same nine-month period in 2011, compared to $29.2 million in the same period in 2011.

In the third quarter of 2011, we experienced revenue growth in all our service offerings. Our brokerage operations experienced 36.2% revenue growth, our refrigerated operations experienced 18.6%, our port and rail services experienced 22.4% revenue growth, and our dry van operations revenue growth was essentially flat compared to the same quarter in 2010. During the nine-month period ended September 30, 2011, we operated on average 2.7% additional tractors year-over-year compared to the same period last year, while average revenue per tractor increased 3.1%. Our percentage of non-paid miles improved slightly to 10.6% for the nine months ended September 30, 2011, from 10.7% for the same period in 2010. Average revenue per total mile also improved 3.0%.

Fuel expense, net of fuel surcharge, as a percentage of revenue before fuel surcharge, decreased to 8.5% for the nine months ended September 30, 2011, from 9.6% for the same period in 2010. Fuel expense, net of fuel surcharge, as a percentage of revenue before fuel surcharge, decreased to 8.7% for the three months ended September 30, 2011, from 9.5% for the same period in 2010. The decrease as a percentage of revenue before fuel surcharge related primarily to an increase in the percentage of loads transported by independent contractors and third-party capacity providers, who pay for their own fuel. While fuel expense, net of fuel surcharge, decreased as a percentage of revenue, when factoring in our company fuel expense, net of fuel surcharge, and the fuel expense included in our purchased transportation cost, increased fuel prices negatively impacted the operating ratios of our asset-based businesses by more than 100 basis points in the third quarter of 2011 compared to the same period in 2010. The U.S. National Average Diesel Fuel price per gallon for the third quarter of 2011 increased 31.5% to $3.87 from $2.94 for the same period in 2010. We continue to mitigate the effects of rising fuel expense by managing our fuel miles per gallon with an intense focus on reducing idle time, managing out of route miles, improving fuel surcharge recovery, and improving the driving habits of our driving associates. Our fuel surcharge recovery applies only to loaded miles and typically does not offset empty miles, idle time, and out of route miles driven. In periods of rising fuel prices, typical fuel surcharge programs are inadequate. We continue to work with customers to adjust fuel surcharges or make modifications to the base rate to account for the increased fuel prices. We also continue to update our fleet with more fuel efficient 2010 U.S. EPA emission engines, install aerodynamic devices on our tractors, and trailer blades on our trailers, which lead to meaningful fuel efficiency improvements.

Miscellaneous operating expenses as a percentage of revenue, before fuel surcharge, decreased to 1.8% for the nine months ended September 30, 2011, compared to 2.0% for the same period in 2010. For the quarter ended September 30, 2011, miscellaneous operating expenses as a percentage of revenue, before fuel surcharge, decreased to 1.7% compared to 1.8% for the same quarter in 2010. The decrease is primarily due to increased revenue that covers certain fixed components of our miscellaneous operating expenses, along with an increase in our gain from the sale of used equipment. Gains from the sale of used equipment are included in miscellaneous operating expenses. Gains from the sale of used equipment increased to $4.4 million for the nine months ended September 30, 2011, compared to $3.4 million for the same period a year ago. For the quarter ended September 30, 2011, gains from the sale of used equipment increased to $1.8 million, compared to $1.6 million for the same period a year ago.

Read the The complete Report



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