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EX-99.1 - KNIGHT-SWIFT HOLDINGS INC ANNOUNCES FINANCIAL RESULTS FOR FIRST QUARTER 2018 - Knight-Swift Transportation Holdings Inc. | exhibit9913312018.htm |
8-K - KNX-03.31.2018 8-K - Knight-Swift Transportation Holdings Inc. | knx-3312018x8k.htm |
1Q 2018 Earnings Call Presentation
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.
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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.
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Adjustments
• $10.3M of
amortization expense
(2017 merger-related
intangibles only)
First Quarter 2018 Results
(1) The reported results do not include the results of operations of Swift Transportation Company
(Swift) and its subsidiaries on and 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. The reported results do not include the results of operations of
Abilene Motor Express, Inc. (Abilene) and its subsidiaries on and prior to its acquisition by Knight
on March 16, 2018 in accordance with the accounting treatment applicable to the transaction
(2) See GAAP to non-GAAP reconciliation in the schedules following this presentation
(3) Adjusted EPS is defined as GAAP earnings per diluted share adjusted for certain items identified
in the GAAP to non-GAAP reconciliation included in the appendix
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(dollars in thousands, except per share data) Quarter Ended March 31, (1)
2018 2017 Change
Total Revenue $1,271,132 $271,182 368.7%
Revenue xFSC $1,124,172 $244,980 358.9%
Operating Income $93,744 $22,638 314.1%
Adj. Operating Income (2) $104,088 $22,638 359.8%
Net Income attributable to Knight-Swift $70,364 $14,876 373.0%
Adj. Net income attributable to Knight Swift(2) $78,511 $14,876 427.8%
Earnings per diluted share $0.39 $0.18 116.7%
Adj. EPS(3) $0.44 $0.18 144.4%
First Quarter 2018 Results
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(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
$-
$25
$50
$75
$100
$125
1Q16 1Q17 1Q18
M
ill
io
ns
1st Qtr Adj. Operating Income
Knight Swift Pre-Merger Swift Post-Merger
(2)
(1)
+147%
$-
$200
$400
$600
$800
$1,000
$1,200
$1,400
1Q16 1Q17 1Q18
M
ill
io
ns
1st Qtr Rev xFSC
Knight Swift Pre-Merger Swift Post-Merger
(1)
Strong Balance Sheet
• Reduced net debt $107 million from 12/31/17, after purchasing
Abilene and first quarter net cash capex of $7 million
• Full year net cash capex still expected to be between $525-$575
million
• $711 million of unrestricted cash and available liquidity
• Shareholder equity of $5.3 billion
• Paid out $31 million of quarterly dividends over the past 12
months
• Free cash flow of $202 million during the quarter
• Strong leverage position should allow for greater operational and
strategic flexibility
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Abilene Motor Express
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• Acquired March 16th of 2018
• Operating Ratio in the low 90’s
• Approximately $100 million in annual revenue, 400 tractors
• Dry van and temperature controlled services
• Strategy similar to other acquisitions
• Maintain distinct brand
• Leverage buying power and other synergy initiatives
• Results will be included in the Knight Segments
Trucking
• Average revenue per tractor
excluding fuel surcharge increased
17.4%
• Miles per truck increased 1.8%
• Grew operational truck count by
24 from Q4 2017 (excludes
Abilene)
Logistics
• Brokerage revenue increased
25.2%
• Brokerage gross margin improved
30 bps to 14.5%
Operating Performance – Knight
(1) See GAAP to non-GAAP reconciliation in the schedules following this presentation.
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Adjusted Operating Ratio (1)
1Q18 1Q17 Change
Trucking 81.6% 89.5% -790 bps
Logistics 94.6% 95.5% -90 bps
Consolidated 84.6% 90.8% -620 bps
Revenue, excluding trucking fsc
(dollars in thousands)
1Q18 1Q17 Change
Trucking $221,675 $192,460 15.2%
Logistics $65,797 $52,520 25.3%
Consolidated $287,472 $244,980 17.4%
• Seeing benefits in synergy
efforts
• Continued year-over-year OR
improvements in each
segment
• Improving freight market and
expense reduction
• Continued challenge with a
difficult driver market
• Truck count decreased 386
sequentially
Operating Performance - Swift
(1) See GAAP to non-GAAP reconciliation in the schedules following this presentation.
(2) Includes the results of our non-reportable segment
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Adjusted Operating Ratio (1)
1Q18
Truckload 90.6%
Dedicated 88.8%
Refrigerated 94.8%
Intermodal 95.7%
Consolidated(2) 92.9%
Revenue, excluding trucking fsc
(dollars in thousands)
1Q18
Truckload $371,344
Dedicated $135,306
Refrigerated $179,929
Intermodal $88,471
Consolidated(2) $836,699
Market Update
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• Improved GDP growth
• Continued Driver shortage
• ELD mandate
• Still expecting contract rates to increase in the 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
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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
16
Non-GAAP Reconciliation
17
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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