Knight-swift Transportation Holdings Inc. · NYSE:KNX
Knight-swift Transportation — Q4 2018 Earnings Presentation
31 slides from Knight-swift Transportation's earnings presentation, Jan 29, 2019
Slide 1: KNX 4Q 2018 Earnings Presentation
Exhibit 99.2 KNX 4Q 2018 Earnings Presentation
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. Such forward-looking statements
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: KNX Overview
KNX Overview Trucking ~ 80% of Revenue Asset Light ~ 20% of Revenue • Dry Van, Refrigerated, Dedicated, Flatbed, • Knight Logistics and Swift Logistics Drayage, and Expedited service offerings • ~$500M in annual revenue (2018) • Includes contiguous U.S., Mexico, and Canada • Q4 year over year revenu
Slide 5: Fourth Quarter 2018 Comparative Results
Fourth Quarter 2018 Comparative Results (1) (dollars in thousands, except per share data) Quarter Ended December 31, 2018 2017 Change Total Revenue $1,394,640 $1,359,420 2.6% Revenue xFSC $1,242,625 $1,218,188 2.0% Operating Income $206,777 $143,771 43.8% Adj. Operating Income (2) $221,658 $156,112
Slide 6: Year-to-Date 2018 Comparative Results
Year-to-Date 2018 Comparative Results Year-to-date Revenue xFSC growth of 2% and Adjusted Operating Income growth of 90% 2018 Rev xFSC by Quarter 2018 Adj. Op Income by Quarter (2) $1,400 $230 $1,200 $190 Millions Millions $1,000 $150 $800 $600 $110 $400 $70 $200 $30 $- $(10) 1Q17 1Q18 2Q17 2Q18 3Q1
Slide 7: Significant Value Creation
Significant Value Creation Swift Adjusted Pretax Income (1)(2) (in millions) $375 • Swift’s 2018 Return on Net Tangible Assets of 16.9% is a 49% $300 improvement over the next $225 highest year (11.3% in 2015) $150 FY12 FY13 FY14 FY15 FY16 FY17 FY18 • Swift is generating meaningful Swift Return on N
Slide 8: Operating Performance – Trucking
Operating Performance – Trucking Trucking Adjusted Operating Ratio (1) • Combined 490 basis point improvement in Adjusted Operating Ratio with 4Q18 4Q17 Change improvements in each segment Knight Trucking 78.1% 81.6% -350 bps • Adjusted Operating Income grew 33% Swift Truckload 75.9% 84.6% -870 bps
Slide 9: Operating Performance – Asset Light
Operating Performance – Asset Light Adjusted Operating Ratio (1) 4Q18 4Q17 Change • Combined we had 31% year over Knight Logistics 90.7% 94.0% -330 bps year growth in total revenue with improvements in all areas Swift Logistics 87.7% 91.4% -370 bps • Meaningful year over year margin Swift Intermodal
Slide 10: Capital Deployment
Capital Deployment $179M used Generated for Share $882M of Repurchases Cash from $103M used Operations for Acquisitions Paid out $43M in Reduced Net Cash Dividends Net Debt by Capex of $48M $530M • Free Cash Flow of $352M (Cash from Operations less Net Cash Capex) • Additionally reduced off balance
Slide 11: Historical Leverage Ratio
Historical Leverage Ratio Swift’s Lease-Adjusted Leverage Ratio has improved 55% from 2016 Swift Leverage History(1) $2,500 3.50 2.94 3.00 2.79 3.00 $2,000 2.61 2.85 2.78 2.50 2.52 $1,500 2.02 2.00 2.24 1.99 1.50 $1,000 1.98 1.27 Leverage Ratio Leverage Debt in Millionsin Debt 1.00 $500 1.24 0.83 0.
Slide 12: 2019 Market Outlook
2019 Market Outlook • Market dynamics to remain orderly • Normal seasonal trends to play out during 2019 • Contract rate increases to be in the mid single digits • Driver market to remain challenging • Opportunities to grow Brokerage and Intermodal • Actively pursue acquisition opportunities 12
Slide 13: Q1 & Q2 2019 Guidance
Q1 & Q2 2019 Guidance • Expected Adjusted EPS for the first quarter 2019 of $0.52 - $0.55 • Expected Adjusted EPS for the second quarter 2019 of $0.62 - $0.66 Guidance Assumptions • Tractor count to remain stable • Rate improvements in the mid-single digits • Q1 and Q2 year over year Adjusted Operat
Slide 14: Future Reporting
Future Reporting • Beginning in Q1 2019, we expect to consolidate our Trucking Logistics Intermodal reporting to three reportable segments (Trucking, Logistics, & Knight Knight Swift Intermodal) Trucking Brokerage Intermodal • New segments will allow for Swift Swift Knight easier comparability acros
Slide 15: Appendix
Appendix 15
Slide 16: Non-GAAP Reconciliation: Adjusted Operating Income and Ratio
Non-GAAP Reconciliation EE ——————————— a... AAP Reconciliation (Unaudited). Adjusted Operating Income and Adjusted Operating Ratio “2 ‘Quarter Ended December 31, Year Ended December 31, 2018 2017 2018 2017 GAAP Presentation (Dollars in thousands) Total revenue $ 1,304,640 $ 1,359,420 $ 5,344,066 $ 2
Slide 17: Reconciliation footnotes
Non-GAAP Reconciliation ns (1) (4) (5) (6) (7) (8) Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non- GAAP Adjusted Operating Ratio. For information regarding comparability of the reported results due to mergers and acquisitions
Slide 18: Adjusted Net Income and Adjusted EPS Reconciliation
Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited). Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS ‘ ‘Quarter Ended Docembar 31, ‘Year Endod December 3, 2018 2017 Ed En (Dollars fn thousands) GAAP: Net income attributable to Knight Swift $ 151696 $ 447,564 $ 419,264 $ 484
Slide 19: Reconciliation footnotes
Non-GAAP Reconciliation ns (1) (2) (3) (4) (6) (6) (7) (8) « ¢ ( (9) Pursuant to the requirements of Regulation G, these tables reconcile consolidated GAAP net income attributable to Knight-Swift to non-GAAP consolidated Adjusted net income attributable to Knight-Swift and consolidated GAAP diluted
Slide 20: Non-GAAP Reconciliation: Knight, Swift, and Combined Q4
Non-GAAP Reconciliation ns Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio Knight, Swift, and Combined “” Quarter Ended December 31, 2018 GAAP Presentation Total revenue Total operating expenses ‘Operating income Operating ratio Non-GAAP Presentation Total
Slide 21: 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) “Impairments” in the fourth quarter of 2018 reflects a non-cash impairment loss related to the Company airplane of
Slide 22: Adjusted Operating Income and Ratio: Knight, Swift, Combined
Non-GAAP Reconciliation Adjusted Operating Income and Adjusted Operating Ratio Knight, Swift, and Combined Quarter Ended September 30, 2018 Quarter Ended September 30, 2017 Knight ‘wt Etiminations Knight Swit Knight Prevmetger _Postimerger_ _‘Guarer’—__Kniaht-Swit GAAP Presentation ‘Dollars n thousa
Slide 23: Reconciliation footnotes
Non-GAAP Reconciliation ns (1) Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio. (2). The Swift Historical Information has not been prepared in accordance with the rules of the Securities and Excha
Slide 24: Non-GAAP Reconciliation: Quarter Ended June 30
Non-GAAP Reconciliation ns Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio Knight, Swift, and Combined “”® GAAP Presentation Total revenue Total operating expenses Operating income Operating ratio. Non-GAAP Presentation Total revenue Fuel surcharge Revenue
Slide 25: Reconciliation footnotes
Non-GAAP Reconciliation ns (1) Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio, (2) The Swift Historical Information has not been prepared in accordance with the rules of the Securities and Exchan
Slide 26: Non-GAAP Reconciliation: Quarter Ended March 31
Non-GAAP Reconciliation ns Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio Knight, Swift, and Combined“? Quarter Ended March 31, 2018 Quarter Ended March 31, 2017 Rant ‘Swit Ravan Sa Katoh Swit Knights GAAP Presentation (Doles thousands) Total revenue $ 32
Slide 27: Non-GAAP Reconciliation: Trucking Segments
Non-GAAP Reconciliation ns ‘Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio Trucking Segments uate Decanter, 2018 curr. Dacor 312017 a a Sa Sg Sa Tot, aa ont moins “Htc ‘ly aa ones notiea “Hi GAAP Presentation ‘Doar thse Teta revenue $ 200487 § 420,906 § 1
Slide 28: Reconciliation footnotes
Non-GAAP Reconciliation ns (1) Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio. (2). During the fourth quarter of 2017, we incurred expenses related to certain class action action lawsuits involvi
Slide 29: Non-GAAP Reconciliation: Asset Light Segments
Non-GAAP Reconciliation ns Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio Asset Light Segments Quartor-to-Date Dacombor 31,2018 Quartorto-Date Docombor 31,2017 Logics Logistics __Mermodal_ seat ight _Louisies__Logistes_—_‘mermodal_ cet Lght GAAP Presentat
Slide 30: Return on Net Tangible Assets - Swift Only
Non-GAAP Reconciliation nc: ‘Non-GAAP Reconciliation (Unaudite Return on Net Tangible Assets - Swift Only“? December a 27 28 oo wae a wa em (Bolas thousands) Total Assets $6,524,403 $6543.79 $2,745,666 $2,919,667 $ 2.802.721 $ 2,909,008 $2,791,981 $ 2,814,347 Adjusted fo: Deferred income tax assets
Slide 31: Adjusted Income Before Income Taxes and Adjusted Net Income - Swift Only
Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited) Adjusted Income Before Income Taxes and Adjusted Net Income - Swift Only ‘ ‘Year Ended December 3, aie Ea Ed 70S Ea ae Ea {Daas n thowsands) ‘GAAP: Income before income taxes $312,710 1011629 -214,969 316,786 250,626 256,405 201,609 Adjuste
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