Knight-swift Transportation Holdings Inc. · NYSE:KNX
Knight-swift Transportation — Q4 2017 Earnings Presentation
25 slides from Knight-swift Transportation's earnings presentation, Jan 30, 2018
Slide 1: 4Q 2017 Earnings Call Presentation
4Q 2017 Earnings Call Presentation Exhibit 99??
Slide 2: Disclosure
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. Forward-looking statements are
Slide 3: Disclosure
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
Slide 4: Fourth Quarter 2017 Results
Adjustments • $364.2M income tax benefit recognized in Q4 • $10.3M of amortization expense (2017 merger-related intangibles only) • $1.9M legal reserves related to class action lawsuits Fourth Quarter 2017 Results (1) The reported results do not include the results of operations of Swift Transportat
Slide 5: Fourth Quarter 2017 Results
$- $200 $400 $600 $800 $1,000 $1,200 $1,400 4Q15 4Q16 4Q17 M ill io n s 4th Qtr Rev xFSC Knight Swift Pre-Merger Swift Post-Merger Fourth Quarter 2017 Results 5 (1) The Swift Historical Information has not been prepared in accordance with the rules of the Securities and Exchange Commission, includin
Slide 6: Strong Balance Sheet
Strong Balance Sheet • Accelerated capex in the fourth quarter to maximize tax benefits • Net debt of $894.9 million • Shareholder equity of $5.2 billion • $76.6 million of unrestricted cash and cash equivalents • Change in composition of capex funding as we move away from leasing equipment. Estimat
Slide 7: Operating Performance – Knight
Trucking • Average revenue per tractor increased 12.2% • Miles per truck decreased 1.6% Logistics • Brokerage revenue increased 8.8% • Brokerage gross margin remained flat at 16% Operating Performance – Knight (1) See GAAP to non-GAAP reconciliation in the schedules following this presentation. 7 Ad
Slide 8: Operating Performance - Swift
• Seeing OR improvements in each segment • Improving freight market and expense reduction • Continued challenge with a difficult driver market Operating Performance - Swift (1) See GAAP to non-GAAP reconciliation in the schedules following this presentation. 8 Adjusted Operating Ratio (1) 4Q17 Truck
Slide 9: Market Update
Market Update 9 • Improved GDP growth • Tax Cuts and Jobs Act • Driver shortage • ELD mandate • We expect contract rates will increase high single-digits to low double-digits throughout the year
Slide 10: Execution Strategy
Execution Strategy • Maintaining Knight and Swift distinct brands • Excel at safety and service • Excel at sourcing and developing qualified driving associates • Leverage capabilities of both brands to provide capacity to our markets • Improve yield by actively managing our markets • Achieve synergy
Slide 11: Synergies
Synergies • Realized savings from synergies are ahead of schedule • Cross-functional teams include leaders from both companies • Excitement and cooperation displayed • We still expect synergies of $150M by 2019 11
Slide 12: Appendix
Appendix 12
Slide 13: Adjusted Operating Income and Adjusted Operating Ratio
Non-GAAP Reconciliation —<—_— n (Unaudited): Adiosted Operating eae and Adjusted Operating Ratio unter Ended December 3, Year Ended December 3, TCO CCC“‘COOWGSCOC™ GAAP Presentation ‘Dollars thousands) ‘Total revenue $ 1,359,420 $ , 2,425,453 $ 1,118,034 ‘Total operating expenses (1,215,649) (254,36
Slide 14: Reconciliation footnotes
Non-GAAP Reconciliation (1) Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non- GAAP Adjusted Operating Ratio. (2) Our results of operations for the quarter and year ended December 31, PE aa lof peroneal September 8, 2017. Result
Slide 15: Adjusted Net Income and Adjusted EPS
Non-GAAP Reconciliation (Genet expense atibutable to Knott Swat x Income ble nce tees atti o Kh Sr F toe.002 § 34657 § _T0257E § 151855 Non cash ih iS ‘Other non-cash tems ~ acoruals for lass action watts © 19002480, 2.450 7 Merger intangibies 10.343 = 872 = 6 = ‘Omer merger-rlatd operating expenses
Slide 16: Non-GAAP Reconciliation footnotes
Non-GAAP Reconciliation a) lation G, AAP net eet to non-GAAP consolidated sadusted Net ibutable to Knight: luted earnings Eamings per ate to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted ‘Operating Ratio — footnote (2). Refer to Non-GAAP Reconciliation (Unaudited): Adju
Slide 17: Knight Trucking Segment Reconciliation
Non-GAAP Reconciliation GAAP Rec ition (Unaudited) Halle ii Operating Income and Adjusted Operating Ratio” Knight Trucking Segment oT 206 aT GAAP Presentation {Dolarsn thousands) Total revenue 245,164 $ 227,309 -$ 906,484 $ 900,368 Total operating expenses (207,469) (196,817) (814,186) __(764,139) p
Slide 18: Reconciliation footnotes
Non-GAAP Reconciliation a) i Regulation G, ing rat AAP Adjusted Operating Ratio. (2) Refer to *Non- (Unaudited): Adj per footnoie (4). (3) Refer to "Non- iat fit 7 fi Ratio” — footnote (4). Refer to "Non- lation (Unaudited): Adjust fi \d Adjusted Operating Ratio" ~ footnote (7).
Slide 19: Knight Logistics Segment
Non-GAAP Reconciliation Knight Logistics Segment 2017 2016 207, 2076 GAAP Presentation (Dollars in thousands) Total revenue $ $ 62,957 $ 234155 $ 226,912 Total operating expenses (58,803) (221,555) Operating income 54 St: Operating ratio Non-GAAP Presentation Total revenue $ 67,196 $ 62,957 $ 234,15
Slide 20: Swift Segment Adjusted Operating Income and Ratio
Non-GAAP Reconciliation AAP Reconciliation (Unaudited) Segment Adjusted Operating Income and Adjusted Operat ‘Swift Transportation Quarter Ended December 31, 2017 Swift Truckload Swift Dedicated — op Stgg ints GAAP Presentation thousands) Total revenue 493,21 $ 206,596 $ 106,395 Total operating expe
Slide 21: Reconciliation footnotes
Non-GAAP Reconciliation (1) Pursuant to the requirements of Regulation G, these i GAAP fing ratic non-GAAP Adjusted Operating Ratio. KNIGHT
Slide 22: Swift Segment Reconciliation, Year Ended 2017
Non-GAAP Reconciliation Non-GAAP Reconciliation audited): Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued‘ GAAP Presentation Total operating expenses Operating ratio 1-GAAP Presentation Total revenue uel surcharge Revenue, net of fuel surcharge Total operating expenses Adj
Slide 23: Adjusted Operating Ratio footnotes
Non-GAAP Reconciliation 1) Adjusted Operating Ratio. (2) The reported results do not include the results of operations of Swift and its subsidiaries on and prior to the merger with Knight 8, 2017 i i .
Slide 24: Adjusted Operating Ratio Swift and Knight
Non-GAAP Reconciliation Non-GAAP Rec« Shee regan (Operating income ‘Operating ratio Non-GAAP Presentation revenue Fuel surcharge Revenue, net of fuel surcharge Total operating expenses justed for: Fuel surcharge i @ Accruals for class action lawsuits © ‘Amortization of intangibles © ‘Adjusted Operat
Slide 25: Reconciliation footnotes
Non-GAAP Reconciliation a @ Impairment loss of $0.8 milion. milion. 62,2 mil £$0.3 milion. npal O) 4 ie the merger ation 3d includ but is not limited to, jabilties acquired, lying ditional information becomes available. “Amortiz the 2007 ‘Transportation Co. IGH SuirT As MANSPORTATION 7 FR AAGAT
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