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8-K - FORM 8-K - Knight-Swift Transportation Holdings Inc. | c20113e8vk.htm |
EX-99.2 - EXHIBIT 99.2 - Knight-Swift Transportation Holdings Inc. | c20113exv99w2.htm |
Exhibit 99.1
SWIFT TRANSPORTATION COMPANY REPORTS SECOND QUARTER
FINANCIAL AND OPERATING RESULTS
FINANCIAL AND OPERATING RESULTS
| Operating Revenue Increases $114.3 Million or 15.5%, over 2010 Second Quarter |
||
| Operating Income Increases $11.4 Million, or 18.6%, from 2010 Second Quarter |
||
| Operating Ratio Improves 20 basis points, while Adjusted Operating Ratio* Improves
100 basis points from 2010 Second Quarter |
(* 2011 and 2010 results adjusted as detailed below.)
Three Months Ended June 30, | ||||||||||||
2011 | 2010 | Change | ||||||||||
(Unaudited) | ||||||||||||
($ in millions, except per share data) | ||||||||||||
Operating revenue |
$ | 850,470 | $ | 736,185 | 15.5 | % | ||||||
Revenue excluding fuel surcharge revenue |
$ | 672,154 | $ | 624,082 | 7.7 | % | ||||||
Operating Ratio |
91.5 | % | 91.7 | % | 20 | bps | ||||||
Adjusted Operating Ratio |
89.2 | % | 90.2 | % | 100 | bps | ||||||
Diluted EPS |
$ | 0.14 | $ | (0.38 | ) | $ | 0.52 | |||||
Adjusted EPS |
$ | 0.18 | $ | (0.08 | ) | $ | 0.26 |
Phoenix, AZ July 21, 2011 Swift Transportation Company (NYSE: SWFT), a multi-faceted
transportation services company and the largest truckload carrier in North America, today reported
adjusted diluted earnings per share, or Adjusted EPS, of $0.18 per share for the second quarter
ended June 30, 2011, compared to an adjusted loss of $0.08 per share in the same quarter of 2010.
Diluted earnings per share in accordance with GAAP for the second quarter of 2011 and 2010 was
$0.14 per share and a loss of $0.38 per share, respectively. A reconciliation of GAAP results to
non-GAAP results, as adjusted to exclude certain non-cash or special items, is provided at the end
of this release.
Operating revenue for the second quarter of 2011 increased 15.5% over the second quarter of 2010.
Excluding fuel surcharge revenue, revenue increased 7.7% over the second quarter of 2010, driven by
a 4.3% increase in trucking volumes and a 4.7% increase in average trucking rates. These increases
contributed to a 4.8% increase in productivity, measured by weekly trucking revenue per tractor in
the 2011 quarter over the 2010 quarter.
The increases in volumes and pricing were the primary
reasons for the 100 basis point improvement in Adjusted Operating Ratio, and were partially offset
by increases in fuel and equipment maintenance expenses.
Jerry Moyes, Chief Executive Officer, commented, We are proud of the efforts of our team in
achieving our highest second quarter operating income of the last five years while continuing to
maintain excellent customer service, as evidenced by our 12 Carrier of the Year awards so far this
year. We are pleased to see rate improvement in line with our expectations and plan to continue
our focus on cost control and disciplined execution.
Net income in accordance with GAAP for the second quarter of 2011 was $19.6 million, or $0.14 per
diluted share, compared to a net loss of $23.1 million, or $0.38 per share, in the second quarter
of the prior year. The results in accordance with GAAP for the second quarter of 2011 include
non-cash charges of $4.3 million pre-tax for the amortization of certain intangible assets recorded
in our 2007 going-private transaction and $4.0 million pre-tax in derivative interest expense for
the amortization of previous losses recorded in accumulated other comprehensive income related to
the interest rate swaps we terminated in December 2010. The results in accordance with GAAP for
the second quarter of 2010 include non-cash charges of $4.9 million pre-tax for the amortization of
the same intangibles, as well as $5.7 million pre-tax in derivative interest expense for the change
in market value of the interest rate swaps.
We will be filing a Current Report on Form 8-K with the Securities and Exchange Commission to
include this press release as well as other supplemental financial information subsequent to the
issuance of this press release.
In this press release, in addition to the GAAP results, we present financial results excluding the
impact of some or all of the above items in measures such as adjusted operating income and
operating ratio, and adjusted EPS. Such measures are not presented in accordance with GAAP and
should be considered in addition to, not as a substitute for, or superior to, measures of financial
performance in accordance with GAAP. The calculation of each measure, including a reconciliation
to the most closely related GAAP measure and the reasons management believes each non-GAAP measure
is useful, are included in the attached schedules.
Conference Call and Web Cast
Swift will hold a live conference call with a slide presentation to discuss these results at 1:00
p.m. Eastern time on Thursday, July 21, 2011. Participants may access the call using the following
dial-in numbers: U.S./Canada: (866) 379-9391; International/Local: (706) 634-0901; Confirmation ID:
84216818. The slides presented during the call, as well as a link for the replay, will be
available via our investor relations website: http://ir.swifttrans.com/ under the Event Calendar
section.
General Information
Swift is based in Phoenix, Arizona. As of June 30, 2011, Swift operated a tractor fleet of
approximately 16,900 units comprised of 12,800 tractors driven by company drivers and 4,100
owner-operator tractors, a fleet of 49,300 trailers, and 5,700 intermodal containers from 34 major
terminals positioned near major freight centers and traffic lanes in the United States and Mexico.
Swift offers customers the opportunity for one-stop shopping for their truckload transportation
needs through a broad spectrum of services and equipment. Swifts extensive suite of services
includes general, dedicated, and cross-border U.S./Mexico truckload services through dry van,
temperature-controlled, flatbed, and specialized trailers, in addition to rail intermodal and
non-asset based freight brokerage and logistics management services, making it an attractive choice
for a broad array of customers.
Contact Info:
Jason Bates, Vice President Finance, and Investor Relations Officer
or
Ginnie Henkels, Executive Vice President and Chief Financial Officer
Office: 602-269-9700
Jason Bates, Vice President Finance, and Investor Relations Officer
or
Ginnie Henkels, Executive Vice President and Chief Financial Officer
Office: 602-269-9700
2
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Unaudited) | ||||||||||||||||
(Amounts in thousands, except per share data) | ||||||||||||||||
Operating revenue |
$ | 850,470 | $ | 736,185 | $ | 1,609,359 | $ | 1,391,015 | ||||||||
Operating expenses: |
||||||||||||||||
Salaries, wages and employee benefits |
202,556 | 186,918 | 398,032 | 364,721 | ||||||||||||
Operating supplies and expenses |
58,766 | 54,221 | 115,870 | 102,051 | ||||||||||||
Fuel |
168,537 | 115,494 | 318,818 | 221,576 | ||||||||||||
Purchased transportation |
223,680 | 197,789 | 417,717 | 373,491 | ||||||||||||
Rental expense |
19,224 | 19,493 | 37,213 | 38,396 | ||||||||||||
Insurance and claims |
27,876 | 29,479 | 50,601 | 49,686 | ||||||||||||
Depreciation and amortization of
property and equipment |
51,553 | 48,403 | 101,911 | 108,422 | ||||||||||||
Amortization of intangibles |
4,617 | 5,199 | 9,344 | 10,677 | ||||||||||||
Impairments |
| | | 1,274 | ||||||||||||
Gain on disposal of property and
equipment |
(700 | ) | (1,757 | ) | (2,955 | ) | (3,205 | ) | ||||||||
Communication and utilities |
6,335 | 6,132 | 12,795 | 12,554 | ||||||||||||
Operating taxes and licenses |
15,459 | 13,625 | 30,717 | 26,990 | ||||||||||||
Total operating expenses |
777,903 | 674,996 | 1,490,063 | 1,306,633 | ||||||||||||
Operating income |
72,567 | 61,189 | 119,296 | 84,382 | ||||||||||||
Other (income) expenses: |
||||||||||||||||
Interest expense |
36,631 | 62,768 | 74,132 | 125,364 | ||||||||||||
Derivative interest expense |
4,003 | 18,292 | 8,683 | 42,006 | ||||||||||||
Interest income |
(471 | ) | (283 | ) | (938 | ) | (503 | ) | ||||||||
Other |
(664 | ) | (1,469 | ) | (1,175 | ) | (1,840 | ) | ||||||||
Total other (income) expenses, net |
39,499 | 79,308 | 80,702 | 165,027 | ||||||||||||
Income (loss) before income taxes |
33,068 | (18,119 | ) | 38,594 | (80,645 | ) | ||||||||||
Income tax expense (benefit) |
13,485 | 4,960 | 15,806 | (4,565 | ) | |||||||||||
Net income (loss) |
$ | 19,583 | $ | (23,079 | ) | $ | 22,788 | $ | (76,080 | ) | ||||||
Basic earnings (loss) per share |
$ | 0.14 | $ | (0.38 | ) | $ | 0.16 | $ | (1.27 | ) | ||||||
Diluted earnings (loss) per share |
$ | 0.14 | $ | (0.38 | ) | $ | 0.16 | $ | (1.27 | ) | ||||||
Shares used in per share calculations |
||||||||||||||||
Basic |
139,479 | 60,117 | 138,807 | 60,117 | ||||||||||||
Diluted |
140,716 | 60,117 | 139,812 | 60,117 | ||||||||||||
3
ADJUSTED EPS RECONCILIATION (UNAUDITED) (a)
THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Diluted earnings (loss) per share |
$ | 0.14 | $ | (0.38 | ) | $ | 0.16 | $ | (1.27 | ) | ||||||
Adjusted for: |
||||||||||||||||
Income tax expense (benefit) |
0.10 | 0.08 | 0.11 | (0.08 | ) | |||||||||||
Income (loss) before income taxes |
0.24 | (0.30 | ) | 0.28 | (1.34 | ) | ||||||||||
Non-cash impairments(b) |
| | | 0.02 | ||||||||||||
Other special non-cash items(c) |
| | | 0.12 | ||||||||||||
Mark-to-market adjustment of interest
rate
swaps(d) |
| 0.09 | | 0.28 | ||||||||||||
Amortization of certain intangibles(e) |
0.03 | 0.08 | 0.06 | 0.17 | ||||||||||||
Amortization of unrealized losses on
interest rate
swaps(f) |
0.03 | | 0.06 | | ||||||||||||
Adjusted income (loss) before income
taxes |
0.29 | (0.13 | ) | 0.40 | (0.75 | ) | ||||||||||
Provision for income tax (benefit)
expense
at normalized effective rate |
0.11 | (0.05 | ) | 0.16 | (0.29 | ) | ||||||||||
Adjusted EPS |
$ | 0.18 | $ | (0.08 | ) | $ | 0.24 | $ | (0.46 | ) | ||||||
(a) | We define Adjusted EPS as (1) income (loss) before income taxes plus (i) amortization of
the intangibles from our 2007 going-private transaction, (ii) non-cash impairments, (iii)
other special non-cash items, (iv) excludable transaction costs, (v) the mark-to-market
adjustment on our interest rate swaps that is recognized in the statement of operations in a
given period, and (vi) the amortization of previous losses recorded in accumulated other
comprehensive income related to the interest rate swaps we terminated upon our IPO and
refinancing transactions in December 2010; (2) reduced by income taxes at 39%, our normalized
effective tax rate; (3) divided by weighted average diluted shares outstanding. We believe the
presentation of financial results excluding the impact of the items noted above provides a
consistent basis for comparing our results from period to period and to those of our peers due
to the non-comparable nature of the intangibles from our going-private transaction, the
historical volatility of the interest rate derivative agreements and the non-operating nature
of the impairment charges, transaction costs and other adjustment items. Adjusted EPS is not
presented in accordance with GAAP and should be considered in addition to, not as a substitute
for, or superior to, measures of financial performance in accordance with GAAP. The numbers
reflected in the above table are calculated on a per share basis and may not foot due to
rounding. |
|
(b) | Revenue equipment with a carrying amount of $3.6 million was written down to its fair value
of $2.3 million, resulting in an impairment charge of $1.3 million in the first quarter of
2010. |
|
(c) | Incremental pre-tax depreciation expense of $7.4 million reflecting managements revised
estimates regarding salvage value and useful lives for approximately 7,000 dry van trailers,
which management decided during the first quarter of 2010 to scrap over the next few years. |
|
(d) | Mark-to-market adjustment of interest rate swaps of $5.7 million and $16.8 million in the
three and six months ended June 30, 2010, respectively, reflects the portion of the change in
fair value of these financial instruments which was recorded in earnings and excludes any
portion recorded in accumulated other comprehensive income under cash flow hedge accounting. |
|
(e) | Amortization of certain intangibles reflects the non-cash amortization expense of $4.3
million and $4.9 million for the three months ended June 30, 2011 and 2010, respectively, and
$8.8 million and $10.1 million for the six months ended June 30, 2011 and 2010, respectively,
relating to certain intangible assets identified in the 2007 going-private transaction through
which Swift Corporation acquired Swift Transportation Co. |
|
(f) | Amortization of unrealized losses on interest rate swaps reflects the non-cash amortization
expense of $4.0 million and $8.7 million for the three and six months ended June 30, 2011,
respectively, included in derivative interest expense in the consolidated statements of
operations and is comprised of previous losses recorded in accumulated other comprehensive
income related to the interest rate swaps we terminated upon our IPO and concurrent
refinancing transactions in December 2010. Such losses were incurred in prior periods when
hedge accounting applied to the swaps and are being expensed in relation to the hedged
interest payments through the original maturity of the swaps in August 2012. |
4
ADJUSTED OPERATING INCOME AND OPERATING RATIO RECONCILIATION (UNAUDITED) (a)
THREE AND SIX MONTHS ENDED JUNE 30, 2011 AND 2010
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
(Amounts in thousands) | ||||||||||||||||
Operating revenue |
$ | 850,470 | $ | 736,185 | $ | 1,609,359 | $ | 1,391,015 | ||||||||
Less: Fuel surcharge revenue |
178,316 | 112,103 | 316,133 | 200,919 | ||||||||||||
Revenue excluding fuel
surcharge revenue |
672,154 | 624,082 | 1,293,226 | 1,190,096 | ||||||||||||
Operating expense |
777,903 | 674,996 | 1,490,063 | 1,306,633 | ||||||||||||
Adjusted for: |
||||||||||||||||
Fuel surcharge revenue |
(178,316 | ) | (112,103 | ) | (316,133 | ) | (200,919 | ) | ||||||||
Non-cash impairments |
| | | (1,274 | )(b) | |||||||||||
Other items |
| | | (7,382 | )(c) | |||||||||||
Adjusted operating expense |
599,587 | 562,893 | 1,173,930 | 1,097,058 | ||||||||||||
Adjusted operating income |
$ | 72,567 | $ | 61,189 | $ | 119,296 | $ | 93,038 | ||||||||
Adjusted Operating Ratio (d) |
89.2 | % | 90.2 | % | 90.8 | % | 92.2 | % | ||||||||
Operating Ratio |
91.5 | % | 91.7 | % | 92.6 | % | 93.9 | % |
(a) | We define Adjusted Operating Ratio as (a) total operating expenses, less (i) fuel surcharge
revenue, (ii) non-cash impairment charges, (iii) certain other items, and (iv) excludable
transaction costs, as a percentage of (b) total revenue excluding fuel surcharge revenue. We
believe fuel surcharge is sometimes volatile and eliminating the impact of this source of
revenue (by netting fuel surcharge revenue against fuel expense) affords a more consistent
basis for comparing our results of operations. We also believe excluding impairments and other
special items enhances the comparability of our performance from period to period. Adjusted
Operating Ratio is not a recognized measure under GAAP. Adjusted Operating Ratio should be
considered in addition to, not as a substitute for, or superior to, measures of financial
performance in accordance with GAAP. |
|
(b) | Revenue equipment with a carrying amount of $3.6 million was written down to its fair value
of $2.3 million, resulting in an impairment charge of $1.3 million in the first quarter of
2010. |
|
(c) | Incremental pre-tax depreciation expense of $7.4 million reflecting managements revised
estimates regarding salvage value and useful lives for approximately 7,000 dry van trailers,
which management decided during the first quarter of 2010 to scrap over the next few years. |
|
(d) | We have not included adjustments to Adjusted Operating Ratio to reflect the non-cash
amortization expense of $4.3 million and $4.9 million for the three months ended June 30, 2011
and 2010, respectively, and $8.8 million and $10.1 million for the six months ended June 30,
2011 and 2010, respectively, relating to certain intangible assets identified in the 2007
going-private transaction through which Swift Corporation acquired Swift Transportation Co. |
5
OPERATING STATISTICS (UNAUDITED)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Trucking revenue (1,2) |
$ | 602,268 | $ | 551,644 | $ | 1,156,989 | $ | 1,055,151 | ||||||||
Weekly trucking revenue per tractor (2) |
$ | 3,051 | $ | 2,910 | $ | 2,957 | $ | 2,812 | ||||||||
Deadhead miles percentage |
11.76 | % | 11.90 | % | 11.94 | % | 12.06 | % | ||||||||
Average loaded length of haul (miles) |
428 | 436 | 429 | 437 | ||||||||||||
Average tractors available for dispatch |
||||||||||||||||
Company |
11,151 | 10,783 | 11,128 | 10,765 | ||||||||||||
Owner Operator |
4,032 | 3,798 | 4,002 | 3,747 | ||||||||||||
Total |
15,183 | 14,581 | 15,130 | 14,512 | ||||||||||||
Notes to Operating Statistics:
(1) | In thousands. |
|
(2) | Excludes fuel surcharge, rail, third party carrier, leasing, and other shop and miscellaneous
revenue. |
6