Knight-swift Transportation Holdings Inc. · NYSE:KNX
Knight-swift Transportation — Q1 2019 Earnings Presentation
25 slides from Knight-swift Transportation's earnings presentation, Apr 24, 2019
Slide 1: KNX Q1 2019 Earnings Presentation
Exhibit 99.2 KNX Q1 2019 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, • Logistics Drayage, and Expedited service offerings • $436M in annual revenue Q1’19 TTM • Includes contiguous U.S., Mexico, and Canada • Access to over 30,000 carriers • Multiple brands
Slide 5: First Quarter 2019 Comparative Results
First Quarter 2019 Comparative Results (1) (dollars in thousands, except per share data) Quarter Ended March 31, 2019 2018 Change Total Revenue $1,204,535 $1,271,132 (5.2)% Revenue xFSC $1,078,138 $1,124,172 (4.1)% Operating Income $116,299 $93,744 24.1% Adj. Operating Income (2) $126,992 $104,253 2
Slide 6: First Quarter 2019 Comparative Results
First Quarter 2019 Comparative Results Q1 Rev xFSC by Quarter(1) Q1 Adj. Op Income by Quarter(1)(2) $1,300 $1,250 $130 Millions $1,200 Millions $110 $1,150 $1,100 $90 $1,050 $1,000 $70 $950 $900 $50 $850 $800 $30 1Q17 1Q18 1Q19 1Q17 1Q18 1Q19 (1) Historical information prior to the Swift merger in S
Slide 7: Significant Value Creation
Significant Value Creation (1)(2) TTM vs Adjusted Pretax Income prior years $700 (in millions) 626M 599M $600 535M • Knight-Swift continues 479M $500 to generate 392M $400 meaningful income 313M growth while $300 diversifying its asset- $200 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 3/3
Slide 8: Operating Performance – Trucking
Operating Performance – Trucking Trucking Financial Metrics • 220 bps improvement in Adj. Q1 19 Q1 18 Change Operating Ratio Revenue excluding fsc $ 865,630 $ 908,254 (4.7)% • 15% growth in Adjusted Operating Income $ 115,175 $ 100,251 14.9% Operating Income Adjusted Operating Income(1) $ 115,524 $1
Slide 9: Operating Performance – Logistics
Operating Performance – Logistics Logistics Financial Metrics Q1 19 Q1 18 Change • 84.0% increase in Operating Revenue ex Intersegment $ 87,191 $ 86,051 1.3% Income to $7.3M Operating Income $ 7,283 $ 3,959 84.0% Operating Ratio 91.8% 95.6% (380)bps • 1.3% improvement in revenue excluding intersegme
Slide 10: Operating Performance – Intermodal
Operating Performance – Intermodal Intermodal Financial Metrics Q1 19 Q1 18 Change • 5.0% growth in Revenue Revenue ex Intersegment $ 115,677 $ 110,130 5.0% excluding intersegment Operating Income $ 2,361 $ 3,948 (40.2)% transactions Operating Ratio 98.0% 96.4% 160 bps • 11.5% increase in revenue pe
Slide 11: 1Q19 Capital Deployment
1Q19 Capital Deployment • $194M of Free Cash Flow (Cash from Operations less Net Cash Capex) • $19M reduction in operating lease liabilities $243 Million Cash from Operations $187 Million Reduction in Net Debt $49 Million Net Cash CapEx $11 Million Quarterly Dividend Paid 11
Slide 12: Historical Leverage Ratio
Historical Leverage Ratio Achieved post merger target leverage ratio in 6 quarters Leverage History(1) 2,500 3.00 2.79 2.61 2.85 2,000 2.50 2.24 2.02 2.00 1,500 1.99 1.98 1.27 1.50 1,000 1.07 1.00 1.24 Leverage Ratio Leverage Debt in Millionsin Debt 500 0.83 0.50 0.63 - 12/31/2014 12/31/2015 12/31/2
Slide 13: 2019 Market Outlook
2019 Market Outlook • Opportunities to grow Logistics and Intermodal • Actively pursue acquisition opportunities • Fewer and less attractive non-contract opportunities • Contract rates continue to be positive • Signs of capacity rationalization 13
Slide 14: Q2 & Q3 2019 Guidance
Q2 & Q3 2019 Guidance • Expected Adjusted EPS for the second quarter 2019 of $0.62 - $0.64 • Expected Adjusted EPS for the third quarter 2019 of $0.62 - $0.66 Guidance Assumptions • Tractor count to remain stable • Contract rate improvements remain positive with fewer non-contract opportunities • Q2
Slide 15: Appendix
Appendix 15
Slide 16: Non-GAAP Reconciliation: Adjusted Operating Income and Adjusted Operating Ratio
Non-GAAP Reconciliation SS ee ees Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Ai ‘Quarter Ended March 31, ~ 218 —=«OB (recast) | GAAP Presentation {Dollars in thousands) Total revenue $ 1,204,535 $ 1,271,132 Total operating expenses (1,088,236) (1,177,388) Operating income $11
Slide 17: Non-GAAP Reconciliation: Adjusted Net Income and Adjusted EPS
Non-GAAP Reconciliation SS ee ees Non-GAAP Reconciliation (Unaudited): Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS '* Quarter Ended March 31, 2019 2018 (Dollars In thousands) GAAP: Net income attributable to Knight-Swift $ 87,938 $ 70,364 Adjusted for: Income tax expense attrib
Slide 18: Adjusted EPS Reconciliation
Non-GAAP Reconciliation Note: Because the numbers reflected in the table below are calculated on a per share basis, they may not foot due to rounding. Quarter Ended March 31, GAAP: Eamings per diluted share Adjusted for: Income tax expense attributable to Knight-Swift Income before income taxes attr
Slide 19: Segment Adjusted Operating Income: Trucking
Non-GAAP Reconciliation SS ee ees Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio Trucking Segment *? GAAP Presentation Total revenue Total operating expenses Operating income Operating ratio Non-GAAP Presentation Total revenue Trucking fuel surcha
Slide 20: Segment Adjusted Operating Income: Logistics
Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued Quarter Ended March 31, Logistics Segment '* 2019 2018 (recast) GAAP Presentation (Dollars in thousands) Total revenue $ 88952 $ 89,189 Total operating expenses (81
Slide 21: Segment Adjusted Operating Income: Intermodal
Non-GAAP Reconciliation SS ee ees Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued Quarter Ended March 31, Intermodal Segment '? 2019 2018 (recast) GAAP Presentation (Dollars in thousands) Total revenue $ 116,367 $ 110,267 Total operatin
Slide 22: Return on Net Tangible Assets
Non-GAAP Reconciliation Return on Net Tangible Assets ” March 31, December 31. 2018 2018 2018 2017 2016 2015 2044 2013 (Dollars in thousands) Total Assets Consolidated: Post-merger 8,081,142 7,656,086 7,911,885 7,683,442 _ = = _ Knight: Pre-merger = = = = 1,078,525 1,120,232 1,082,285 807,121 ‘Swift
Slide 23: Return on Net Tangible Assets (continued)
Non-GAAP Reconciliation December 31. we wT Tie wis wi Eo Total Liabilities Consolidated: Post-merger 2,536,519 2,346,894 2,449,166 2,443,072 - - - - Knight: Pre-merger - - — — 289,794 379,860 403,010 252,588 Swift. Pre-merger - - = — 2073411 2,302,540 2,422,427 «2,525,421 Adjusted for: Revolving lin
Slide 24: Adjusted Income Before Income Taxes and Adjusted Net Income
Non-GAAP Reconciliation SS ee ees Non-GAAP Reconciliation (Unaudited): Adjusted Income Before Income Taxes and Adjusted Net Income ® ® “Three Months YearEnded Three Months Twelve Months ndec December 31, Ended Ended March 31, 2019 2018 March 31, 2018 March 31, 2019 (Dollars in thousands) GAAP: Net i
Slide 25: Adjusted Income Before Income Taxes and Adjusted Net Income: Knight, Swift Combined
Non-GAAP Reconciliation Eee |AAP Reconciliation (Unaudited). Income Taxes and Adjusted Net Knight Swift Combined Year Ended December 31, Year Ended December 31, Year Ended December 31, WT —iSS~aSSCSC*~“~‘ A SSC*‘ikS*~*~‘i SC«SSSCSC~iSS:CSC*CiSSCSC*C*~aSC~«SSC*C« (Dollars in thousands) [olefin] $ 130
Knight-Swift Transportation Holdings — Q1 2019 Earnings Presentation on 6ix