Knight-swift Transportation Holdings Inc. · NYSE:KNX
Knight-swift Transportation — Q2 2019 Earnings Presentation
24 slides from Knight-swift Transportation's earnings presentation, Jul 24, 2019
Slide 1: KNX Q2 2019 Earnings Presentation
KNX Q2 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 Proven Leader in the Industry Multiple Product Offerings • History of industry leading margins Trucking ~ 80% of Revenue • Consistent free cash flow - $240M • Dry Van, Refrigerated, Dedicated, Flatbed, Q2 TTM Drayage, and Expedited Service Offerings • Return on Net Tangible Assets of •
Slide 5: Second Quarter 2019 Comparative Results
Second Quarter 2019 Comparative Results (dollars in thousands, except per share data) Quarter Ended June 30, 2019 2018 Change Total Revenue $1,242,083 $1,331,683 (6.7)% Revenue xFSC $1,122,754 $1,191,022 (5.7)% Operating Income $108,593 $124,242 (12.6)% Adj. Operating Income (1) $136,967 $134,929 1.
Slide 6: Operating Performance – Trucking
Operating Performance – Trucking Trucking Financial Metrics • 70 bps improvement in Adj. (dollars in thousands) Operating Ratio Q2’19 Q2’18 Change Revenue xFSC $ 900,648 $ 941,117 (4.3)% • Year over year Adj. OR Operating Income $ 125,772 $ 126,657 (0.7)% improvement in all of the Swift (1) trucking
Slide 7: Operating Performance – Logistics
Operating Performance – Logistics Logistics Financial Metrics (dollars in thousands) Q2’19 Q2’18 Change • 8.8% increase in Operating Revenue ex Intersegment $ 80,304 $ 96,401 (16.7)% Income to $5.0M Operating Income $ 5,021 $ 4,615 8.8% • 10.3% reduction in revenue Operating Ratio 93.9% 95.3% (140)b
Slide 8: Operating Performance – Intermodal
Operating Performance – Intermodal Intermodal Financial Metrics (dollars in thousands) Q2’19 Q2’18 Change • Market conditions pressuring Revenue ex Intersegment $ 117,727 $ 119,830 (1.8)% rate and volumes Operating Income $ 4,192 $ 4,480 (6.4)% • 1.8% reduction in Revenue Operating Ratio 96.5% 96.3%
Slide 9: Significant Value Creation
Significant Value Creation (1)(2) TTM vs Adjusted Pretax Income prior years $700 (in millions) 630M 599M $600 535M • Knight-Swift continues 479M $500 to generate 392M $400 meaningful income 313M growth $300 $200 12/31/2014 12/31/2015 12/31/2016 12/31/2017 12/31/2018 6/30/2019 • 17.4% TTM Return on T
Slide 10: 2019 Capital Deployment
2019 Capital Deployment • $143M of YTD Free Cash Flow (Cash from Operations less Net Cash Capex) • $60M reduction in operating lease liabilities $363 Million Cash from Operations Investment in the Shareholder Business Returns • $220 Million Net • $87 Million Share Cash CapEx Repurchases • $21 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 3.00 2.61 2.85 2.02 2,000 2.50 1.27 2.24 1.22 2.00 1,500 1.99 1.98 1.50 1,000 1.00 Debt Debt in Millions 1.24 Leverage Ratio 500 0.83 0.82 0.50 - 12/31/2014 12/31/2015 12/31/2016 12/31/2017
Slide 12: 2019 Market Outlook
2019 Market Outlook • Signal of industry capacity reductions • Significantly less new truck and trailer orders • Increase in new truck order cancellations • Used equipment market continues to soften • Carrier bankruptcies increasing • Revenue continues to be pressured • Fewer and less attractive non
Slide 13: Q3 & Q4 2019 Guidance
Q3 & Q4 2019 Guidance • Expected Adjusted EPS for the third quarter 2019 of $0.54 - $0.57 • Expected Adjusted EPS for the fourth quarter 2019 of $0.73 - $0.77 Guidance Assumptions • Revenue per loaded mile will turn negative year over year as contract rate increases lap year over year comparisons an
Slide 14: Appendix
Appendix 14
Slide 15: Reconciliation (Unaudited)
Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited). Quarter-to-Date June 30, Year-to-Date June 30, 2019 2018 (recast) 2019 2018 (recast) GAAP Presentation (Dollars in thousands) Total revenue $ 1,242,083 $ 1,331,683 $2,446,618 $ 2,602,815 Total operating expenses (1,133,490) _ (1,207,441) _
Slide 16: Reconciliation: Adjusted Net Income Attributable to Knight-Swift
Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS '? Quarter-to-Date June 30, Year-to-Date June 30, 2019 2018 2019 2018 (Dollars in thousands) GAAP: Net income attributable to Knight-Swift $ 79,205 $ 91,323 $ 167,143 $ 161,
Slide 17: Adjusted EPS Reconciliation
Non-GAAP Reconciliation and Adjusted EPS '? Note: Because the numbers reflected in the table below are calculated on a per share basis, they may not foot due to rounding ‘Quarter-to-Date June 30, Year-to-Date June 30, 2019 2018 2019 2018 GAAP: Earnings per diluted share $ 046 $ 051 $ 0.97 $ 0.90 Adj
Slide 18: Segment Adjusted Operating Income – Trucking
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited). Segment Adjusted Operating Income and Adjusted Operating Ratio Continued Quarter-to-Date June 30, Year-to-Date June 30, Trucking Segment 2019 2016 (recast) 2019 2018 (recast) GAAP Presentation (Dollars in thousands
Slide 19: Segment Adjusted Operating Income – Logistics
Non-GAAP Reconciliation SSS —————— ny Non-GAAP Reconciliation (Unaudited) Segment Adjusted Operating Income and Adjusted Operating Rat Continued *? Quarter-to-Date June 30, Year-to-Date June 30, Logistics Segment 3019 —~=«2018 (recast) 2019 —~—«2018 (recast) | GAAP Presentation (Dollars in thousands
Slide 20: Segment Adjusted Operating Income – Intermodal
Non-GAAP Reconciliation ae ————————EEEoI———E———E ‘AAP Reconciliation (Unaudited) Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued *? Quarter-to-Date June 30, Year-to-Date June 30, Intermodal Segment 3019 ~—«2018 (recast) _ 2019 2018 (recast) GAAP Presentation (Dollars in th
Slide 21: Return on Net Tangible Assets
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited): Return on Net Tangible Assets ‘) June 30, December 31, 28 2078 Eg 207 278 2015 2014 205 ‘Dollars in thousands) Total Assets Consolidated: Post-merger 8,213,584 7,753,741 7,911,885 7,683,442 = _ _ = Knight: Pre-merg
Slide 22: Return on Net Tangible Assets (continued)
Non-GAAP Reconciliation in (Unaudited) Return on Net Tangible Assets une 30, December 31 En) 78 Tai WT Tie 7S Tia 7 Total Liabilities Consolidated: Post-merger 2,681,564 2,357,357 2,449,168 2,443,072 = = = = Knight: Pre-merger = = = — 289,794 379,860 403,010 252,588 Swift: Pre-merger = = = — 2,073,4
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? ?) Siz Months Year Ended Six Months =r sune'orzo19 °°’? sune'Sorzose June 30,2019 ‘Dollars in thousands) GAAP: Net income attributable to Knight-Swift $1
Slide 24: Adjusted Income Before Income Taxes – Knight, Swift and Combined
Non-GAAP Reconciliation ae ————————EEEoI———E———E Non-GAAP Reconciliation (Unaudited) Adjusted Income Before Income Taxes and Adjusted Net Income - Knight, Swift and Combined Knight switt Combined Year Ended December 31, Year Ended December 31, Your Ended December 31, aT 216 205 Be zr 206 2015 Eg iT
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