Knight Transportation on Wednesday, April 22, reported revenue and earnings for the first quarter ended March 31. For the quarter, revenue before fuel surcharge decreased 5.8 percent to $133.1 million from $141.3 million; primarily due to decreased fuel surcharge revenue, total revenue decreased 15.7 percent to $148.7 million from $176.4 million. Operating income of $19.4 million represented a 3.9 percent increase over $18.7 million. Net income increased 2.9 percent to $11.7 million from $11.4 million.
“During one of the most challenging first quarters that we can remember for the trucking industry, Knight grew operating income year-over-year, hauled more loads than the year-ago period, increased our financial strength and improved our operations,” said Kevin P. Knight, chairman and chief executive officer of the Phoenix-based company. “I am proud of our employees for the effort that drove these results.”
Knight said the rapid decline in industrywide shipment activity that was evident in the fourth quarter initially carried over into the first. “However, as the quarter progressed, we did experience some moderation in the pace of the decline as some sectors of the economy appeared to replenish very low inventory levels,” he said. “Importantly, we believe our multiple-truckload service offerings enabled us to grow our market share, as seen in our year-over-year growth in the number of loads hauled, particularly within Knight Refrigerated and our drayage activity through Knight Intermodal.”
Knight said price competition remained intense and that the company experienced a high level of bid activity in the quarter. “This activity has now tapered off to a more normal pace,” he said. “However, the security of our strong financial position, the high levels of localized service provided through our network of service centers and branches, along with our diversified customer base, helped to mitigate some of these pricing pressures. While we do not underestimate the pricing challenges ahead of us, we believe our model provides us with the flexibility to respond appropriately in this environment.”
Knight said the company produced an operating ratio — operating expenses, net of fuel surcharge, as a percentage of revenue before fuel surcharge — of 85.4 percent compared to 86.7 percent. “While we can be modestly encouraged by some modest seasonal recovery in business activity, it is not within our means to foresee when industry supply and demand fundamentals will come back into balance,” he said. “However, we are optimistic about our competitive position and our ability to execute our model. We believe we are in a strong financial position, and that our strategy for growth is sound. We believe that our level of profitability, fleet renewal strategy and use of owner-operators should enable us to internally finance attractive levels of fleet growth when demand conditions are right.”
Knight said the company increased its cash balances by $29.1 million and finished the quarter debt-free with $83.0 million in cash, cash equivalents and short-term investments after paying out $8.2 million for stock repurchase and shareholder dividends. “We believe this leaves us very well positioned for an eventual recovery, and sufficient financial strength to weather the intermediate term challenges and carry out our long-term profitable growth strategy,” he said.