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Knight Transportation (KNX) CEO Dave Jackson on Q1 2016 Results - Earnings Call Transcript

Q1 2016 Results Earnings Conference Call

April 20, 2016 04:30 PM ET

Executives

Adam Miller - CFO

Dave Jackson - President and CEO

Analysts

Brad Delco - Stephens

Kelly Dougherty - Macquarie

Tom Wadewitz - UBS

John Barnes - RBC Capital Markets

Todd Fowler - KeyBanc Capital Markets

Scott Group - Wolfe Research

Jason Seidl - Cowen & Company

Operator

Good afternoon, my name is Tracy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Knight Transportation First Quarter 2016 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you.

And your speakers for today’s call will be Dave Jackson, President and CEO and Adam Miller, CFO. Mr. Miller, the meeting is now yours.

Adam Miller

Thank you, Tracy. And good afternoon to everyone and thank you for joining our call. We have slides to accompany this call posted on our website at investor.knighttrans.com/events. The call scheduled to go until 5:30 p.m. Eastern Time. Following our commentary, we'll hope to answer as many questions as time will allow. If we’re not able to get to your questions due to time restrictions, you may call 602-606-6315 and we will return your call. Again, that number is 602-606-6315. And the rules for questions remain the same as in the past, one question per participant. If we don’t clearly answer the question, a follow-up question may be asked. But more often than not we end up with people in the queue that are not able to ask a question, so we ask again that we keep it to one question per participant.

So to begin, I’ll first refer you to the disclosure on Page 2. I'll also read the following. This conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions, and uncertainties that are difficult to predict. Investors are directed to the information contained in Item 1A, Risk Factors or Part 1 of the Company's Annual Report on Form 10-K filed with the United States SEC for a discussion of the risks that may affect the Company's future operating results. Our actual results may differ.

Now I'll begin by covering some of the numbers in detail including a brief recap of the first quarter starting with Slide 3. For the first quarter of 2016, we earned $0.28 per diluted share versus $0.36 in the same quarter last year. Later in the presentation I’ll go into greater detail on some items that negatively impacted our EPS this quarter, some of which are more onetime in nature. Our net income decreased 23.7% year-over-year to $22.6 million, while our operating income decreased 16.4% year-over-year to $38.7 million. Our Revenue excluding trucking fuel surcharge decreased 1.4% year-over-year to $253.6 million, and our total revenue decreased 6.3% year-over-year to $272.1 million.

Now onto Slide 4. We ended the quarter with over 730 million of stockholders' equity and over the last 12 months have returned over $92 million to shareholders through dividends and stock buyback, which amounts to over 4% of our current market cap. During the first quarter we repurchased 1.1 million shares of our stock for approximately $27 million. We currently have approximately 4.7 million shares authorized under our share repurchase plan and we will continue to evaluate buyback opportunities in the second quarter.

We continue to maintain a modern fleet with an average age of 1.7 years. And in the first quarter, we generated almost $56 million in free cash flow. We expect to continue to generate meaningful cash flow as we do not have plans to grow our fleet until we see signs that customer demand has come back in balance with supply. We currently have $106 million outstanding on our unsecured $300 million line of credit which leaves us with a meaningful amount of capacity for additional investments.