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EX-99.1 - KNIGHT-SWIFT HOLDINGS INC ANNOUNCES FINANCIAL RESULTS FOR FOURTH QUARTER 2017 - Knight-Swift Transportation Holdings Inc. | knx-exhibit99112312017.htm |
8-K - KNX-12.31.2017 8-K - Knight-Swift Transportation Holdings Inc. | knx123120178-k.htm |
4Q 2017 Earnings Call Presentation
Exhibit 99??
Disclosure
This presentation, including documents incorporated herein by reference, will contain 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. Forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ materially from those
contemplated by the forward-looking statements. Please review our disclosures in filings with the
Securities Exchange Commission.
Non-GAAP Financial Data
This presentation includes the use of adjusted operating income, operating ratio, adjusted operating
ratio, adjusted net income, and adjusted earnings per share, which are financial measures that are
not in accordance with generally accepted accounting principles (“GAAP”). Each such measure is a
supplemental non-GAAP financial measure that is used by management and external users of our
financial statements, such as industry analysts, investors and lenders. While management believes
such measures are useful for investors, they should not be used as a replacement for financial
measures that are in accordance with GAAP. In addition, our use of these non-GAAP measures
should not be interpreted as indicating that these or similar items could not occur in future
periods. In addition, adjusted operating ratio excludes trucking segment fuel surcharges from
revenue and nets these surcharges against fuel expense.
2
Disclosure
On September 8, 2017, pursuant to the Agreement and Plan of Merger, dated as of April 9, 2017, by
Swift Transportation Company (“Swift”), Bishop Merger Sub, Inc., a direct wholly owned subsidiary
of Swift, (“Merger Sub”), and Knight Transportation, Inc. (“Knight”), Merger Sub merged with and
into Knight, with Knight surviving as a direct wholly owned subsidiary of Swift (the “2017 Merger”).
Knight was the accounting acquirer and Swift was the legal acquirer in the 2017 Merger. In
accordance with the accounting treatment applicable to the 2017 Merger, throughout this
presentation, the reported results do not include the results of operations of Swift and its
subsidiaries on and prior to the 2017 Merger date of September 8, 2017 (the “2017 Merger Date”).
However, where indicated, certain historical information of Swift and its subsidiaries on and prior to
the 2017 Merger Date, including their results of operations and certain operational statistics
(collectively, the “Swift Historical Information”), has been provided. Management believes that
presentation of the Swift Historical Information will be useful to investors. The Swift Historical
Information has not been prepared in accordance with the rules of the Securities and Exchange
Commission, including Article 11 of Regulation S-X, and it therefore does not reflect any of the pro
forma adjustments that would be required by Article 11 of Regulation S-X. The Swift Historical
Information does not purport to indicate the results that would have been obtained had the Swift
and Knight businesses been operated together during the periods presented, or which may be
realized in the future.
3
Adjustments
• $364.2M income tax benefit
recognized in Q4
• $10.3M of amortization expense (2017
merger-related intangibles only)
• $1.9M legal reserves related to class
action lawsuits
Fourth Quarter 2017 Results
(1) The reported results do not include the results of operations of Swift Transportation Company
(Swift) and its subsidiaries on or prior to the merger with Knight Transportation, Inc. (Knight) on
September 8, 2017 (the 2017 Merger) in accordance with the accounting treatment applicable to
the transaction.
(2) See GAAP to non-GAAP reconciliation in the schedules following this presentation.
(3) Attributable to Knight-Swift
4
(dollars in thousands, except per share data) Three Months Ended December 31,
2017 2016 (1) Change
Total Revenue $1,359,420 $289,098 370.2%
Revenue xFSC $1,218,188 $264,464 360.6%
Operating Income $143,771 $34,736 313.9%
Adj. Operating Income (2) $156,112 $37,186 319.8%
Net Income (3) $447,564 $22,161 1919.6%
Adj. Net income (2) (3) $94,002 $23,671 297.1%
Earnings per diluted share $2.50 $0.27 825.9%
Adj. Earnings per diluted
share (2) $0.52 $0.29 79.3%
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
4Q15 4Q16 4Q17
M
ill
io
n
s
4th Qtr Rev xFSC
Knight Swift Pre-Merger Swift Post-Merger
Fourth Quarter 2017 Results
5
(1) The Swift Historical Information has not been prepared in accordance with the rules of the Securities and Exchange
Commission, including Article 11 of Regulation S-X, and it therefore does not reflect any of the pro forma adjustments that
would be required by Article 11 of Regulation S-X. The Swift Historical Information does not purport to indicate the results that
would have been obtained had the Swift and Knight businesses been operated together during the periods presented, or which
may be realized in the future.
(2) See GAAP to non-GAAP reconciliation in the schedules following this release
(1)
$-
$25
$50
$75
$100
$125
$150
$175
$200
4Q15 4Q16 4Q17
M
ill
io
n
s
4th Qtr Adj. Operating Income
Knight Swift Pre-Merger Swift Post-Merger
(2)
(1)
+33%
Strong Balance Sheet
• Accelerated capex in the fourth quarter to maximize tax benefits
• Net debt of $894.9 million
• Shareholder equity of $5.2 billion
• $76.6 million of unrestricted cash and cash equivalents
• Change in composition of capex funding as we move away from
leasing equipment. Estimated net capex of $525-$575 million in
2018
• Strong leverage position should allow for greater operational and
strategic flexibility
6
Trucking
• Average revenue per tractor
increased 12.2%
• Miles per truck decreased 1.6%
Logistics
• Brokerage revenue increased 8.8%
• Brokerage gross margin remained
flat at 16%
Operating Performance – Knight
(1) See GAAP to non-GAAP reconciliation in the schedules following this presentation.
7
Adjusted Operating Ratio (1)
4Q17 4Q16 Change
Trucking 81.6% 83.7% -210 bps
Logistics 94.0% 93.3% 70 bps
Consolidated 84.5% 85.9% -140 bps
Revenue, xFSC
(dollars in thousands)
4Q17 4Q16 Change
Trucking $215,434 $202,747 6.3%
Logistics $65,899 $61,717 6.8%
Consolidated $281,333 $264,464 6.4%
• Seeing OR improvements in
each segment
• Improving freight market and
expense reduction
• Continued challenge with a
difficult driver market
Operating Performance - Swift
(1) See GAAP to non-GAAP reconciliation in the schedules following this presentation.
8
Adjusted Operating Ratio (1)
4Q17
Truckload 84.6%
Dedicated 86.5%
Refrigerated 92.9%
Intermodal 95.0%
Consolidated 88.0%
Revenue, excluding trucking fsc
(dollars in thousands)
4Q17
Truckload $434,688
Dedicated $144,642
Refrigerated $186,595
Intermodal $91,861
Consolidated $936,856
Market Update
9
• Improved GDP growth
• Tax Cuts and Jobs Act
• Driver shortage
• ELD mandate
• We expect contract rates will increase high single-digits to
low double-digits throughout the year
Execution Strategy
• Maintaining Knight and Swift distinct brands
• Excel at safety and service
• Excel at sourcing and developing qualified driving associates
• Leverage capabilities of both brands to provide capacity to
our markets
• Improve yield by actively managing our markets
• Achieve synergy goals
• Grow profitably in our Logistics business
10
Synergies
• Realized savings from
synergies are ahead of
schedule
• Cross-functional teams
include leaders from both
companies
• Excitement and cooperation
displayed
• We still expect synergies of
$150M by 2019
11
Appendix
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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Non-GAAP Reconciliation
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