QUOTE AND NEWS
SeekingAlpha  Apr 24  Comment 
Knight Transportation, Inc. (KNX) Q1 2014 Earnings Conference Call April 23, 2014, 04:30 PM ET Executives Kevin Knight - Chairman and Chief Executive Officer David Jackson - President Adam Miller - Chief Financial Officer ...
TheStreet.com  Apr 14  Comment 
NEW YORK (TheStreet) -- Shares of Knight Transportation are up 3.77% to $23.95 on Monday after the truckload transportation service raised its Q1 EPS guidance to $0.22-$0.23 from $0.19-$0.21. "During the quarter we experienced greater demand...
DailyFinance  Apr 9  Comment 
Knight Transportation, Inc. (NYSE: KNX) expects to release its 2014 first quarter earnings on Wednesday, April 23, 2014, shortly before market open. Knight will be holding a live conference call with analysts and investors to...
DailyFinance  Apr 7  Comment 
Knight Transportation, Inc. (NYSE: KNX), one of North America’s largest and most diversified truckload transportation companies, is proud to announce being named one of America’s 100 Most Trustworthy Companies by Forbes...
TheStreet.com  Feb 19  Comment 
Story updated at 10 a.m. to reflect market activity. NEW YORK (TheStreet) -- Wunderlich Securities downgraded Knight Transportation to "hold" from "buy" Wednesday. Knight Transportation fell 0.9% to $21.49 in morning trading. Despite the...
TheStreet.com  Feb 19  Comment 
NEW YORK (TheStreet) -- CHANGE IN RATINGSBunge Ltd. was upgraded to buy at TheStreet Ratings.Cabot Microelectronics was upgraded at DA Davidson to buy from neutral. Twelve-month price target is $50. Company could be a takeover target, DA...
StreetInsider.com  Feb 5  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Dividends/Knight+Transportation%2C+Inc.+%28KNX%29+Declares+%240.06+Quarterly+Dividend%3B+1.1%25+Yield/9130537.html for the full story.
StreetInsider.com  Feb 5  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/USA+Truck+%28USAK%29%2C+Knight+Transportation+%28KNX%29+Enter+Litigation+Settlement/9127324.html for the full story.
SeekingAlpha  Jan 30  Comment 
Knight Transportation (KNX) Q4 2013 Earnings Call January 29, 2014 4:30 pm ET Executives Adam Miller - Chief Financial Officer, Principal Accounting Officer, Secretary and Treasurer David A. Jackson - President Kevin P. Knight -...
StreetInsider.com  Jan 29  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Earnings/Knight+Transportation+%28KNX%29+Tops+Q4+EPS+by+4c/9100170.html for the full story.




 
TOP CONTRIBUTORS

Knight Transportation (NYSE: KNX) is a trucking firm that ships consumer goods, food and beverage, and paper products. As a truckload carrier, Knight Transportation contracts an entire trailer-load to a single customer, as opposed to less-than-truckload firms who consolidate freight from several customers in one trailer-load. Knight concentrates on the short-to-medium haul dry van market (contents are non-perishable), with an average haul length of 470 miles.[1] The company temperature-controlled truckload carrier services, which transports refrigerated goods. Knight Transportation's regional approach allows it to achieve greater freight volumes since ~80% of all truckload freight moves in the short-to-medium lengths of haul. In addition, shorter routes mean more regular maintenance checkups and fewer equipment breakdowns. To complement its primary trucking business, the company provides brokerage services (5.7% of revenue) for customers with shipments that don’t fit the company’s offerings.

Knight Transportation’s management minimizes operating costs by employing late model equipment (the company's tractor fleet has an average age of 1.6 years), which ensures less breakdowns and delays. The firm also pays careful attention to efficient asset utilization (e.g. not letting a tractor sit under a trailer to be loaded or unloaded for long periods of time). The advantages of the short-to-medium haul market and Knight’s emphasis on cost reduction have helped the company generate one of the best operating ratios in the industry.

The firm's ability to efficiently coordinate customer freight movement lets Knight Transportation drivers typically spend three nights a week at home, compared to two nights or less for drivers of other regional-haul trucking companies. Knight is also one of only two trucking firms in the nation to offer its drivers stock options. These factors explain why the company's driver turnover rate averages 50% at a time when the industry average is well over 100%.

As a transportation company, Knight Transportation’s earnings are closely tied to the overall health of the economy. In a sluggish economy, the demand for goods decreases, and when that happens, the need to freight items falls. Trucking companies like Knight Transport suffer from these economic pressures. In 2009, the company's net revenue fell 15% due to lower freight volume.[2]

Company Overview

Knight’s trucking operations focus on the short-to-medium haul dry van market. The advantages of this regional approach and Knight’s emphasis on cost reduction have helped the company generate one of the best operating ratios in the industry, averaging ~83% over the last five years.[3]

  • Trucking (94.3% of revenue): Knight Transport uses predominantly dry vans (~94% of the company’s trailer fleet) and some refrigerated vans (~6% of the company’s trailer fleet) to haul consumer goods, food and beverage products, and paper products. Knight concentrates on the short-to-medium haul market, with an average haul length of 470 miles. The firm also offers dedicated contract services (when trucking firms contract out a portion of their equipment and employees to one client for a specified time). Compared to other types of truckload shipping, dedicated contract services are less sensitive to fuel price volatility because clients pay a fuel surcharge for all miles driven, regardless of whether the trucks are empty, off-route, or idling.
  • Brokerage (5.7% of revenue): When customers have shipments that don’t fit Knight Transport’s trucking services, the company’s brokerage unit locates independent contractors who can move the goods.

Business Growth

FY 2009 (ended December 31, 2009)[2]

  • Total revenue fell 15% to $652 million. Revenue before fuel surcharges fell 4% to $571 million.
  • Fuel surcharge decreased 53% to $80 million. The company suffered from lower freight volumes from low demand. The average length of haul decreased 9.3% to 470 miles.
  • Net income fell 10% to $50.5 million.
  • The company operated an average of 3,744 tractors, 26 fewer than the previous year.

Trends and Forces

Knight’s Business is Susceptible to Economic Conditions

As a transportation company, Knight relies on a healthy economy to keep goods moving about the country. A slowing economy and low consumer demand causes a total volume drop in shipments that hurts Knight’s earnings. In 2009, the company's net revenue fell by 15% due to lower freight volume.[2] Additionally, many customers use a bidding system, which tends to keep prices fairly competitive. For instance, when Wal-Mart Stores (WMT) needs freight shipped, it asks several shipping firms to submit how much payment they are willing to accept. The lowest bid usually wins the contract. When shipping volume decreases in a weakening economy, small competitors bid down prices in order to win loads so that they can cover the cost of their tractors.

Emphasis on Driver Retention Partly Shields Knight Transport From Labor Supply Risks

The driver market is the tightest it has been in 20 years, with turnover rate exceeding 100% in some large trucking companies. According to the American Trucking Association, the trucking industry faced a national shortage of 20,000 drivers in 2007, a number that will swell to 111,000 by 2014. In such an environment, Knight Transportation's emphasis on driver retention helps the firm attract experienced drivers. The company's concentration on local and regional trucking means shorter routes and higher job satisfaction because drivers spend less time on the road and are able to stay closer to their families. And thanks to the firm's ability to efficiently coordinate customer freight movement, Knight Transport drivers typically spend three nights a week at home, compared to two nights or less for drivers of other regional-haul trucking companies. Knight Transportation is also one of only two trucking firms in the nation to offer its drivers stock options. These factors explain why the company's driver turnover rate averages 50% at a time when the industry average is well over 100%.

Competition

Knight Transportation competes with a range of regional and national transportation and logistics companies. The trucking industry is highly fragmented because of low barriers to entry. There are roughly 360,000 trucking companies (96% operate fewer than 28 tractors and 82% operate fewer than 6). Knight Transportation's most direct competition is with Heartland Express (HTLD), a truckload carrier that also operates in the short-to-medium haul dry van market. Other key competitors in the truckload segment include:

Knight Transportation also competes with numerous less-than-truckload firms who consolidate cargo from several different customers in one trailer-load. They include:

References

  1. KNX 2009 10-K "Operations" pg. 2-3
  2. 2.0 2.1 2.2 KNX 2009 10-K "Selected Financial Data" pg. 17
  3. KNX 2009 10-K "General" pg. 1
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