Knight Transportation Reports Third Quarter 2013 Revenue and Earnings

Knight Transportation, Inc. (NYSE: KNX), one of North America’s largest and most diversified truckload transportation companies, today reported revenue and net income for the third quarter ended Sept 30, 2013.

Key financial highlights for the third quarter and first nine months of 2013 and 2012 were as follows:

The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on September 6, 2013, which was paid on September 25, 2013.

Kevin Knight, Chairman and Chief Executive Officer, commented on the quarter, ''Despite a difficult operating environment and running 3.6% fewer tractors than last year, we grew our revenue on a year over year basis. Our revenue per tractor improved by 1.0%, as a result of a 1.5% improvement in revenue per total mile and a 0.5% decrease in miles per tractor. Inflationary cost pressures exceeded the improvement in our revenue per total mile, yet we remain confident in our ability to operate with an industry-leading cost per mile.''

The following chart reflects the year-over-year operating ratio and revenue comparison for our asset based businesses and our non-asset based businesses for the third quarter and first nine months of 2013 and 2012.

Our asset based operating ratio was negatively impacted by increased driver wages, additional cost associated with recruiting and retaining driving associates, rising depreciation cost, increased maintenance cost related to the 2010 EPA emission engines, and lower miles per tractor. We believe we can mitigate the impact of these costs by improving operational efficiencies, increasing yield, and intensifying cost control measures. The new industry-wide regulations governing hours of service that went into effect in July 2013 negatively impacted miles per tractor during the quarter, however, we believe we can mitigate this impact in the future through training and network optimization.

Our non-asset based businesses continue to produce strong revenue growth. We continue to ramp up these businesses as we invest in technology, build our team, increase our training, and gain market share. This resulted in margin compression during the quarter, when compared to the same period last year. Our multiple service offerings continue to enable us to provide solutions to the dynamic supply chain needs of our customers.

During the third quarter we recognized a gain related to our investments, which was substantially offset by increases in legal expenses and accruals for claim settlements arising from litigation.

The industry continues to be faced with a shortage of high quality driving associates. Sourcing and retaining high quality drivers is critical to our success in improving the productivity of our assets. We have made additional investments in our driver development and training programs and are seeing improved results in sourcing driving associates. This effort has also resulted in our driver turnover continuing to compare favorably to what we believe to be the industry average.

The DOE national average diesel fuel price decreased 1.0% when compared to the third quarter last year. Fuel remains a major cost focus for us as we continue our work towards cost effective, industry leading fuel economy while at the same time reducing the environmental impact of our operations.

Our average tractor count for the third quarter of 2013 increased 44 tractors from the second quarter of 2013 and decreased 151 tractors, when compared to the same quarter last year, to 4,007 tractors. Our tractor fleet remains one of the most modern fleets in the industry with an average age of 2.0 years. Although we sold more trucks and trailers than during the same quarter last year, our gain on sale of revenue equipment in the third quarter of 2013 was $2.0 million, down from $2.1 million in the third quarter of 2012.

We have returned $78.5 million to our shareholders in the form of quarterly dividends over the twenty-four-month period ending September 30, 2013. We ended the quarter with $5.3 million of cash, $52.0 million of long term debt, and $531.0 million of shareholders' equity. Year-to-date our net capital expenditures are $57.2 million compared to $85.9 million for the same period last year, while our cash flow from operations is $100.7 million compared to $106.7 million. On October 21, 2013 we amended our existing line of credit agreement and extended our borrowing limit from $150 million to $300 million. We believe this provides us more flexibility to pursue acquisition opportunities and/or repurchase shares under our current share repurchase authorization.

The company will hold a conference call on October 23, 2013, at 4:30 PM EDT, to further discuss its results of operations for the quarter ended September 30, 2013. The dial in number for this conference call is 1-855-733-9163. Slides to accompany this call will be posted on the company’s website and will be available to download prior to the scheduled conference time. To view the presentation, please visit http://investor.knighttrans.com/events, ''Third Quarter 2013 Conference Call Presentation.''

Knight Transportation, Inc. is a provider of multiple truckload transportation and logistics services using a nationwide network of service centers in the U.S. to serve customers throughout North America. In addition to operating one of the country’s largest tractor fleets, Knight also contracts with third-party equipment providers to provide a broad range of truckload services to its customers while creating quality driving jobs for our driving associates and successful business opportunities for owner-operators.