KNX 4Q 2018 Earnings 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. Such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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 United States Securities and Exchange Commission.
Non-GAAP Financial Data
This presentation includes the use of adjusted operating income, operating ratio, adjusted operating ratio, adjusted net income, adjusted earnings per share, adjusted pre-tax income, return on net tangible assets and free cash flow, which are financial measures that are not in accordance with United States 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.
KNX Overview
Trucking ~ 80% of Revenue
• Dry Van, Refrigerated, Dedicated, Flatbed, Drayage, and Expedited service offerings
• Includes contiguous U.S., Mexico, and Canada
• Multiple brands - Knight, Swift, Barr-Nunn, Trans-Mex, Abilene, Kold Trans
• Largest fleet in North America ~18,800
• 12,800 irregular route tractors
• 6,000 dedicated tractors
Asset Light ~ 20% of Revenue
• Knight Logistics and Swift Logistics
• ~$500M in annual revenue (2018)
• Q4 year over year revenue growth of 40%
• Access to over 30,000 carriers
• Swift Intermodal
• $470M in annual revenue (2018)
• Q4 year over year revenue growth of 22%
• ~ 9,700 containers and 700 tractors
Revenue Q4'18 (millions)(1)
Trucking $1,100
Swift
Intermodal $130
Logistics $150
Adj Operating Ratio Q4'18 (1)
95.0%
90.0%
85.0%
80.0%
75.0%
70.0%
TruckingSwift Intermodal
Adj Operating Income
Q4'18 (millions)(1)
Swift
Logistics
Trucking $185
Intermodal $13
Logistics $15
(1) Excludes the results of certain non-reportable segments
Fourth Quarter 2018 Comparative Results
(dollars in thousands, except per share data)
Quarter Ended December 31, (1)
2018 2017 Change
Total Revenue | $1,394,640 | $1,359,420 | 2.6% |
Revenue xFSC | $1,242,625 | $1,218,188 | 2.0% |
Operating Income | $206,777 | $143,771 | 43.8% |
Adj. Operating Income (2) | $221,658 | $156,112 | 42.0% |
Net Income attributable to Knight-Swift | $151,696 | $447,564 | (66.1)% |
Adj. Net income attributable to Knight Swift(2) | $162,856 | $94,002 | 73.2% |
Earnings per diluted share | $0.86 | $2.50 | (65.6)% |
Adj. EPS(3) | $0.93 | $0.52 | 78.8% |
Adjustments
• $10.7M in Q4 2018 and $10.3M in Q4 2017 of amortization expense from mergers and acquisitions
• $2.8M in Q4 2018 and $0.1M in Q4 2017 of impairments
• $1.0M in Q4 2018 and $1.9M in Q4 2017 of accruals for class action lawsuits
• $0.4M in Q4 2018 of severance
(1) 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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Disclaimer
Knight-Swift Transportation Holdings Inc. published this content on 29 January 2019 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 January 2019 14:08:09 UTC