Knight-swift Transportation Holdings Inc. · NYSE:KNX
Knight-swift Transportation — Q3 2019 Earnings Presentation
24 slides from Knight-swift Transportation's earnings presentation, Oct 23, 2019
Slide 1: KNX 3Q19 Earnings Presentation
Exhibit 99.2 KNX 3Q19 Earnings Presentation 1
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 Revenue Q3'19 TTM • 85.1% TTM Trucking Adjusted (millions)(1) Operating Ratio Trucking Intermodal $482 $4,080 • $278M TTM free cash flow Logistics • 15.3% TTM Return on Net $392 Tangible Assets • $208M returned to investors in Adj Op. Income Q3'19 TTM dividends and share (millions)(1) r
Slide 5: Third Quarter 2019 Comparative Results
Third Quarter 2019 Comparative Results (dollars in thousands, except per share data) Quarter Ended September 30, 2019 2018 Change Total Revenue $1,200,522 $1,346,611 (10.8)% Revenue xFSC $1,090,210 $1,212,020 (10.1)% Operating Income $102,953 $144,280 (28.6)% Adj. Operating Income (1) $113,712 $156,
Slide 6: Operating Performance – Trucking
Operating Performance – Trucking Trucking Financial Metrics (dollars in thousands) • 87.5% Adjusted Operating Ratio Q3’19 Q3’18 Change in Q3 2019 compared to 84.9% Revenue xFSC $ 876,385 $ 936,301 (6.4)% the previous year Operating Income $ 109,409 $ 140,592 (22.2)% • Tractor count of 18,899 during
Slide 7: Operating Performance – Logistics
Operating Performance – Logistics Logistics Financial Metrics (dollars in thousands) Q3’19 Q3’18 Change • 95.6% Adjusted Operating Revenue ex Intersegment $ 83,631 $ 111,397 (24.9)% Ratio during Q3 2019 Operating Income $ 3,692 $ 10,151 (63.6)% compared to 90.9% during the Operating Ratio 95.7% 91.0
Slide 8: Operating Performance – Intermodal
Operating Performance – Intermodal Intermodal Financial Metrics (dollars in thousands) Q3’19 Q3’18 Change • Market conditions pressuring Revenue ex Intersegment $ 108,758 $ 130,166 (16.4)% rate and volumes Operating Income/(Loss) $ (2,652) $ 9,688 (127.4)% • 6.8% reduction in revenue per Operating R
Slide 9: Significant Value Creation
Significant Value Creation TTM vs Adjusted Pretax Income (1)(2) prior years (in millions) $700 • $599M $587M Knight-Swift $600 $535M continues to $500 $479M $392M $400 generate $313M $300 meaningful income $200 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 9/30/2019 • 15.3% TTM Return TTM o
Slide 10: 2019 Capital Deployment
2019 Capital Deployment • $155M of YTD Free Cash Flow (Cash from Operations less Net Cash Capex) • $88M reduction in operating lease liabilities $612 Million Cash from Operations Investment in the Shareholder Business Returns • $458 Million Net • $87 Million Share Cash CapEx Repurchases • $31 Millio
Slide 11: Historical Leverage Ratio
Historical Leverage Ratio Maintaining Target Leverage Ratio of 1.0-1.25X EBITDA Leverage History(1) 2,500 2.79 2.61 3.00 2.85 2,000 2.02 2.50 1.27 2.00 1,500 2.24 1.99 1.19 1.50 1.98 1,000 1.00 1.24 Debt Debt in Millions 0.85 Leverage Ratio 500 0.83 0.50 - 12/31/2014 12/31/2015 12/31/2016 12/31/2017
Slide 12: 2020 Market Outlook
2020 Market Outlook Signs of industry capacity reductions • Significantly less new truck and trailer orders • Increased new truck order cancellations • Weak used equipment market • Transportation failures on the rise • Driver employment trending negative 1st Half of 2020 • Freight market continues t
Slide 13: Q4 2019 & Q1 2020 Guidance
Q4 2019 & Q1 2020 Guidance • Expected Adjusted EPS for the fourth quarter 2019 of $0.62 - $0.65 • Expected Adjusted EPS for the first quarter 2020 of $0.42 - $0.46 Guidance Assumptions • Revenue per loaded mile will be negative year over year as we lap prior year contract rate increases with less fa
Slide 14: Appendix
Appendix 14
Slide 15: Non-GAAP Reconciliation: Adjusted Operating Income and Ratio
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited) Adjusted Operating Income and Adjusted Operating Rai ‘Quariorto-Date September 30, Year-to-Date September 30, 2019 2048 (recast) 2019 2018 (recast) GAAP Presentation (Dollars in thousands) Total revenue $ 1,200,522
Slide 16: Non-GAAP Reconciliation: Adjusted Net Income and Adjusted EPS
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconc: Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS ‘” ‘Quarier-to-Date September 30, ‘Year-to-Date September 30, 2019 2018 2010 2018 (Dollars In thousands) GAAP: Net income attributable to Knight-Swift $ 74619 $ 105,881
Slide 17: Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS
Non-GAAP Reconciliation Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS ‘? ‘Quarter-to-Date September 30, Year-to-Date September 30, 2019 2018 2019 2018 GAAP: Earnings per diluted share $ 044 060 $ 140 $ 1.50 Adjusted for: Income tax expense attributable to Knight-Swift 0.44 0.49 0
Slide 18: Segment Adjusted Operating Income and Ratio – Trucking
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited) Segment Adjusted Operating Income and Adjusted Operating Rat ‘Guarierto-Date September 30, Yearto-Date September 30, Trucking Segment 2019 2018 (recast) 2019 2018 (recast) GAAP Presentation (Dollars in thousands) To
Slide 19: Segment Adjusted Operating Income and Ratio – Logistics
Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited). Segment Adjusted Operating Income and Adjusted Operating Rati Logistics Segment GAAP Presentation Total revenue Total operating expenses Operating income Operating ratio Non-GAAP Presentation Total revenue Intersegment transactions Revenue
Slide 20: Segment Adjusted Operating Income and Ratio – Intermodal
Non-GAAP Reconciliation Quarter-to-Date September 30, Year-to-Date September 30, Intermodal Segment 2019 2018 (recast) 2019 2018 (recast) GAAP Presentation (Dollars in thousands) Total revenue $ 108,937 $ 130,369 $ 343499 $ 360,683 Total operating expenses (111,589) (120,681) (339,598) (342,567) Ope
Slide 21: Return on Net Tangible Assets
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited) Return on Net Tangible Assets Total Assets Consolidated: Post-merger Knight: Pre-merger ‘Swift: Pre-merger Adjusted for: Deferred income tax assets Consolidated: Post-merger Knight. Pre-merger ‘Swift. Pre-merger Int
Slide 22: Return on Net Tangible Assets (Continued)
Non-GAAP Reconciliation Noi ;AAP Reconciliation (Unaudited) Return on Net Tangible Assets “ - (Continued) September 30, December 31, Toe 208 Ec iT En Ea 2a Ec ‘(Doitars mn thousandsy Total Liabilities Consolidated: Post-merger 2,716,814 2,535,880 2,449,166 2,443,072 — Ee = — Knight: Pre-merger — _ —
Slide 23: Adjusted Income Before Income Taxes and Adjusted Net Income
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited). Adjusted Income Before Income Taxes and Adjusted Net Income ma) 219 2018 (Dollars in thousands) GAAP: Net income attributable to Knight-Swift $ 241,762 419,264 267,568 393,458 Adjusted for: Income tax expense attri
Slide 24: Adjusted Income Before Income Taxes – Knight, Swift and Combined
Non-GAAP Reconciliation eae, Non-GAAP Reconciliation (Unaudited) Adjusted Income Before Income Taxes and Adjusted Net Income - Knight, Swift and Combined? Knight Swit Combined ‘Year Ended December 3, Year EndedDecembersh Year Ended December 31, iT 26 25 Ea BT Ea 2018 2a Ea 218 25, 28 Datars Urowsand
Knight-Swift Transportation Holdings — Q3 2019 Earnings Presentation on 6ix