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 Knight Transportation Reports Third Quarter 2016 Revenue and Earnings
   Wednesday, October 26, 2016 4:01:00 PM ET

Knight Transportation, Inc. (KNX ), one of North America’s largest and most diversified truckload transportation companies, today reported revenue and net income for the third quarter ended September 30, 2016.

The following table reflects key financial highlights for the third quarter and first nine months of 2016 and 2015.

 
(dollars in thousands, except per share data)                                               Three Months Ended September 30,                                                                                           Nine Months Ended September 30,
                                                                                                              ---------------------------------------------------------------------------------------------------------------                                                               -------------------------------------------------------------------------------------------------------------------------
                                                                                                                  2016        2015        Chg                                                                       2016        2015             Chg
                                                                                                              -------------------- -------                      -------------------- -------                      -----------                                                               -------------------- -------                      -------------------- -------                      ---------------------
Total Revenue                                                                                                                    $ 280,530                                         $ 300,122                       -6.5    %                                                                                   $ 828,936                                         $ 892,225                            -7.1 %
Revenue, excluding trucking fuel surcharge                                                                                       $ 256,243                                         $ 269,930                       -5.1    %                                                                                   $ 763,684                                         $ 795,767                            -4.0 %
                                                                                                                                                                                                                                                                                                                                                                                                 
Operating Income                                                                                                                 $  36,934                                         $  46,426                      -20.4    %                                                                                   $ 113,742                                         $ 134,348                           -15.3 %
Adjusted Operating Income(1)                                                                                                     $  36,934                                         $  46,426                      -20.4    %                                                                                   $ 113,742                                         $ 141,511                           -19.6 %
                                                                                                                                                                                                                                                                                                                                                                                                 
Net Income, attributable to Knight                                                                                               $  23,350                                         $  30,283                      -22.9    %                                                                                   $  70,595                                         $  87,484                           -19.3 %
Adjusted Net Income, attributable to Knight(2)                                                                                   $  23,350                                         $  30,283                      -22.9    %                                                                                   $  70,595                                         $  91,879                           -23.2 %
                                                                                                                                                                                                                                                                                                                                                                                                 
Earnings per diluted share                                                                                                       $    0.29                                         $    0.37                      -21.7    %                                                                                   $    0.87                                         $    1.06                           -17.6 %
Adjusted earnings per diluted share(2)                                                                                           $    0.29                                         $    0.37                      -21.7    %                                                                                   $    0.87                                         $    1.11                           -21.5 %
 

The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on September 2, 2016, which was paid on September 30, 2016.

Dave Jackson, President and Chief Executive Officer, commented on the quarter, "The freight environment remained moderate in the third quarter of 2016 when compared to the same quarter last year. We continued to see improvement in our asset utilization and experienced more favorable supply/demand dynamics as the third quarter progressed. We are beginning to see more non-contract opportunities in the first few weeks of October. With significantly declining new truck orders, the weak used equipment market, and additional regulatory burdens expected to phase in during the next year, we expect continued improvement in the supply/demand relationship in the coming quarters.

"Our focus remains on improving the productivity of our assets in our trucking segment and expanding load volumes and margins in our logistics segment. During the third quarter, when compared to the same quarter last year, we improved our miles per tractor 1.6% and grew our brokerage load volumes 7.0%. In certain markets, capacity began to tighten during the quarter, which resulted in our brokerage gross margins contracting by 140 basis points.

"Our earnings per diluted share for the quarter were $0.29, compared to our earnings per diluted share of $0.37 in the same quarter last year. During the quarter, revenue per loaded mile, excluding fuel surcharge, decreased 2.1% while our non-paid empty mile percentage increased 30 basis points, which negatively impacted our results by approximately $0.04 per share when compared to the same period last year. Less gain on sale of revenue equipment, increased net fuel cost, and lower other income also negatively impacted our results by approximately $0.02 per share. Driver pay continues to be inflationary when compared to the same quarter last year, which resulted in a $0.01 per share impact during the quarter. The effective income tax rate for the quarter was 38.4% versus 37.2% for the third quarter of 2015, which negatively impacted our results by approximately $0.01 per share."

The following table reflects our consolidated financial performance and that of our trucking and our logistics segments for the third quarter and first nine months of 2016 and 2015.

 
(dollars in thousands)                                                                                       Three Months Ended September 30,                                                                                                                                          Nine Months Ended September 30,
                                                                                                          --------------------------------------------------------------------------------------------------------------------------------------------------------                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              2016          2015          Chg                                                                      2016          2015                          Chg
                                                                                                          -------------------- ------- --------------------                      -------------------- ------- --------------------                      ----------                                                               -------------------- ------- --------------------                      -------------------- ------- --------------------                                 ---------------------
Consolidated
------------------------------------------
Revenue, excluding trucking fuel surcharge                                                                                   $ 256,243                                                              $ 269,930                                            -5.1   %                                                                                   $ 763,684                                                              $ 795,767                                         -4.0 %
Operating Income                                                                                                             $  36,934                                                              $  46,426                                           -20.4   %                                                                                   $ 113,742                                                              $ 134,348                                                           -15.3 %
Adjusted Operating Income(1)                                                                                                 $  36,934                                                              $  46,426                                           -20.4   %                                                                                   $ 113,742                                                              $ 141,511                                                           -19.6 %
Adjusted Operating Ratio(1)                                                                                                       85.6                    %                                              82.8                    %                        280 bps                                                                                        85.1                    %                                              82.2                    %                                              290 bps
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Trucking Segment
------------------------------------------
Revenue, excluding trucking fuel surcharge                                                                                   $ 204,269                                                              $ 211,816                                            -3.6   %                                                                                   $ 607,611                                                              $ 626,389                                                            -3.0 %
Operating Income                                                                                                             $  34,439                                                              $  42,710                                           -19.4   %                                                                                   $ 105,647                                                              $ 122,800                                                           -14.0 %
Adjusted Operating Income(3)                                                                                                 $  34,439                                                              $  42,710                                           -19.4   %                                                                                   $ 105,647                                                              $ 129,963                                                           -18.7 %
Adjusted Operating Ratio(3)                                                                                                       83.1                    %                                              79.8                    %                        330 bps                                                                                        82.6                    %                                              79.3                    %                                              330 bps
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
Logistics Segment
------------------------------------------
Revenue                                                                                                                      $  51,974                                                              $  58,114                                           -10.6   %                                                                                   $ 156,073                                                              $ 169,378                                                            -7.9 %
Operating Income                                                                                                             $   2,495                                                              $   3,716                                           -32.9   %                                                                                   $   8,095                                                              $  11,548                                                           -29.9 %
Operating Ratio                                                                                                                   95.2                    %                                              93.6                    %                        160 bps                                                                                        94.8                    %                                              93.2                    %                                              160 bps
 

In the third quarter, the trucking segment achieved an adjusted operating ratio of 83.1% compared to 79.8% from the same quarter last year. Revenue per tractor, excluding fuel surcharge, decreased 0.8%, year over year, attributable to a 2.1% decrease in average revenue, excluding fuel surcharge, per loaded mile, a 1.6% increase in average miles per tractor, and a 30 basis point increase in non-paid empty mile percentage. Increased driver related expenses, higher net fuel expense, less gain on sale of revenue equipment, and higher claims costs negatively impacted our operating results when compared to the same period last year. We remain focused on improving the productivity of our assets, developing our freight network, and intensely controlling our costs.

During the third quarter of 2016, the logistics segment produced an operating ratio of 95.2% compared to 93.6% for the same quarter last year, with revenue declining 10.6%. Our logistics segment consists of brokerage, intermodal, and other logistics services. The year over year revenue decline in the third quarter was primarily a result of exiting our agriculture sourcing business in the first quarter of 2016. Compared to the same quarter last year, our gross margin percentage in our brokerage business contracted 140 basis points while load volumes increased 7.0%. Brokerage revenue declined 4.5% when compared to the same quarter last year as increased load volume was offset by a 10.7% decline in revenue per load as a result of lower fuel surcharge, a shorter length of haul, and lower non-contract pricing. We plan to continue to invest in and grow our logistics service offerings, which require comparatively little capital investment, as we seek to continue to improve our return on capital.

Attracting and retaining safe, high-quality driving associates remains a priority. Our driver development and training programs remain a focus area for our management team, and we feel well positioned to continue to make progress around the development of our driving associates in the coming quarters.

The used equipment market remained soft during the quarter and resulted in gain on sale of revenue equipment in the third quarter of 2016 of $1.6 million, compared to $2.3 million in the third quarter of 2015. The average age of our tractor fleet is 2.0 years, which has increased from 1.8 years from the second quarter of 2016. With rising new equipment prices and a weak used equipment market, we have extended the expected trade cycle of our tractors. We have been proactive in managing our preventative maintenance program with a goal of mitigating the additional maintenance cost associated with a slightly older fleet.

During the third quarter of 2016 we repurchased 117,044 shares of our common stock for $3.3 million. We currently have approximately 4.3 million shares available under our stock repurchase authorization. Over the last twelve months ended September 30, 2016, we have returned $59.5 million to our shareholders in the form of quarterly dividends and stock repurchases. We ended the quarter with $3.9 million of cash, $52.0 million of long-term debt, and $764.6 million of shareholders’ equity. During the first three quarters of the year our net capital expenditures were $76.1 million, while our cash flow from operations was $189.2 million. We expect to continue to generate meaningful free cash flow (which we define as cash flow from operations minus net capital expenditures) as we do not plan to grow our tractor fleet until we see significant strength in customer demand combined with stronger non-contract and contract rate markets.

The company will hold a conference call on October 26, 2016, at 4:30 PM EDT, to further discuss its results of operations for the quarter ended September 30, 2016. The dial in number for this conference call is 1-855-733-9163. Slides to accompany this call will be posted on the company’s website and will be available to download prior to the scheduled conference time. To view the presentation, please visit http://investor.knighttrans.com/events, "Third Quarter 2016 Conference Call Presentation."

Adjusted operating income, adjusted operating ratio, adjusted net income attributable to Knight, adjusted earnings per diluted share (EPS), and free cash flow are non-GAAP financial measures and are not intended to replace financial measures calculated in accordance with GAAP. These non-GAAP financial measures supplement our GAAP results in evaluating certain parts of our business. We believe that using these measures affords a more consistent basis for comparing our results of operations from period to period. The information required by Item 10(e) of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and Regulation G under the Securities Exchange Act of 1934, including a reconciliation to their most directly comparable financial measures calculated in accordance with GAAP, is included in the tables at the end of this press release.

Knight Transportation, Inc. is a provider of multiple truckload transportation and logistics services using a nationwide network of business units and service centers in the U.S. to serve customers throughout North America. In addition to operating one of the country’s largest tractor fleets, Knight also contracts with third-party equipment providers to provide a broad range of truckload services to its customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors.

 
INCOME STATEMENT DATA:
 
                                                              Three Months Ended September 30,                 Nine Months Ended September 30,
                                                                                                                          2016                 2015                                                                                2016                 2015
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
                                                                                                                                                                  (Unaudited, in thousands, except per share amounts)
REVENUE:
  Revenue, before fuel surcharge                                                                                             $ 256,243            $ 269,930                                                                           $ 763,684            $ 795,767
  Fuel surcharge                                                                                                                24,287               30,192                                                                              65,252               96,458
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
TOTAL REVENUE                                                                                                                  280,530              300,122                                                                             828,936              892,225
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
                                                                                                                                                                                                                                                 
OPERATING EXPENSES:
    Salaries, wages and benefits                                                                                                82,688               85,514                                                                             250,732              249,921
    Fuel expense - gross                                                                                                        34,616               39,795                                                                              94,815              120,247
    Operations and maintenance                                                                                                  19,781               20,390                                                                              56,886               62,065
    Insurance and claims                                                                                                         9,251                8,149                                                                              26,330               25,076
    Operating taxes and licenses                                                                                                 4,546                3,373                                                                              14,645               13,954
    Communications                                                                                                                 976                  849                                                                               3,224                3,066
    Depreciation and amortization                                                                                               29,129               28,204                                                                              86,486               82,728
    Purchased transportation                                                                                                    57,069               62,115                                                                             168,772              182,279
    Miscellaneous operating expenses                                                                                             5,540                5,307                                                                              13,304               18,541
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
           Total operating expenses                                                                                            243,596              253,696                                                                             715,194              757,877
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
                                                                                                                                                                                        
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
    Income from operations                                                                                                      36,934               46,426                                                                             113,742              134,348
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
                                                                                                                                                                                                                                                 
                                                                                                                                                                                                                                                 
    Interest income                                                                                                                 83                  140                                                                                 259                  377
    Interest expense                                                                                                             (182)                (220)                                                                               (742)                (714)
    Other income                                                                                                                 1,389                2,335                                                                               4,602                7,234
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
    Income before income taxes                                                                                                  38,224               48,681                                                                             117,861              141,245
INCOME TAXES                                                                                                                    14,558               17,946                                                                              46,202               52,379
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
Net income                                                                                                                      23,666               30,735                                                                              71,659               88,866
Net income attributable to noncontrolling interest                                                                               (316)                (452)                                                                             (1,064)              (1,382)
                                                                                                                  -------------------- --------------------                                                                -------------------- --------------------
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION                                                                              $ 23,350             $ 30,283                                                                            $ 70,595             $ 87,484
                                                                                                                  ==================== ====================                                                                ==================== ====================
                                                                                                                                                                                                                                                 
     Basic Earnings Per Share                                                                                                   $ 0.29               $ 0.37                                                                              $ 0.88               $ 1.07
     Diluted Earnings Per Share                                                                                                 $ 0.29               $ 0.37                                                                              $ 0.87               $ 1.06
                                                                                                                                                                                                                                                 
     Weighted Average Shares Outstanding - Basic                                                                                80,040               81,127                                                                              80,284               81,678
     Weighted Average Shares Outstanding - Diluted                                                                              80,792               82,005                                                                              80,985               82,714
                                                                                                                                                                                                                                                 
 
BALANCE SHEET DATA:
                                                                           09/30/16                              12/31/15
                                                                                                                         -----------------------------                                                                 ------------------------------
ASSETS                                                                                                                                                                      (Unaudited, in thousands)
Cash and cash equivalents                                                                                                                   $     3,886                                                                                   $      8,691
Trade receivables, net of allowance for doubtful accounts                                                                                       131,489                                                                                        131,945
Notes receivable, net of allowance for doubtful accounts                                                                                            574                                                                                            648
Prepaid expenses                                                                                                                                 16,671                                                                                         17,320
Assets held for sale                                                                                                                             18,347                                                                                         29,327
Other current assets                                                                                                                              8,507                                                                                         14,215
Income Tax Receivable                                                                                                          8,845             41,967
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Current Assets                                                                                                                       188,319                                                                                        244,113
                                                                                                                                                                                                                        
Property and equipment, net                                                                                                                     813,179                                                                                        803,643
Notes receivable, long-term                                                                                                                       3,198                                                                                          3,419
Goodwill                                                                                                                                         47,035                                                                                         47,050
Intangible Assets, net                                                                                                                            2,700                                                                                          3,075
Other assets and restricted cash                                                                                              32,783             18,932
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Long-term Assets                                                                                                                     898,895                                                                                        876,119
                                                                                                                                                                                                                        
     Total Assets                                                                                                                           $ 1,087,214                          $  1,120,232
                                                                                                                         ==================== ========= ==================== ==================== ==================== ==================== ==========
                                                                                                                                                                                                                        
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable                                                                                                                            $    18,904                                                                                   $     14,818
Accrued payroll and purchased transportation                                                                                                     21,262                                                                                         23,776
Accrued liabilities                                                                                                                              16,539                                                                                         21,609
Claims accrual - current portion                                                                                                                 20,288                                                                                         19,471
Dividend payable - current portion                                                                                               298                349
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Current Liabilities                                                                                                                   77,291                                                                                         80,023
                                                                                                                                                                                                                        
Claims accrual - long-term portion                                                                                                               12,336                                                                                         11,508
Long-term dividend payable and other liabilities                                                                                                  1,854                                                                                          2,164
Deferred tax liabilities                                                                                                                        177,201                                                                                        174,165
Long-term debt                                                                                                                52,000            112,000
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Long-term Liabilities                                                                                                                243,391                                                                                        299,837
                                                                                                                                                                                                                        
     Total Liabilities                                                                                                       320,682            379,860
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
                                                                                                                                                                                                                        
Common stock                                                                                                                                        800                                                                                            810
Additional paid-in capital                                                                                                                      219,593                                                                                        205,648
Accumulated other comprehensive income                                                                                                                -                                                                                          2,573
Retained earnings                                                                                                            544,192            529,367
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Knight Transportation Shareholders’ Equity                                                                                           764,585                                                                                        738,398
     Noncontrolling interest                                                                                                   1,947              1,974
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Shareholders’ Equity                                                                                              766,532            740,372
                                                                                                                         -------------------- --------- -------------------- -------------------- -------------------- -------------------- ----------
     Total Liabilities and Shareholders’ Equity                                                                                             $ 1,087,214                          $  1,120,232
                                                                                                                         ==================== ========= ==================== ==================== ==================== ==================== ==========
                                                                                                                                                                                                                        
 
                                                        Three Months Ended September 30,                                                        Nine Months Ended September 30,             
                                                                                                                2016                           2015                                                 % Change                                                                                                                                                                                                                                                   2016                           2015                                                  % Change
                                                                                                               ------                         ------                                                                                                                                                                                                                                                                                                         -------                        -------
                                                                                                          (Unaudited)                                                                                                                                                                                                                                                                                                                (Unaudited)
OPERATING STATISTICS
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Average Revenue Per Tractor*                                                                                 $ 43,501                       $ 43,863                                                    -0.8 %                                                                                                                                                                                                                                             $ 129,444                      $ 130,398                                                      -0.7 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Non-paid Empty Mile Percent                                                                                      12.4 %                         12.1 %                                                   2.5 %                                                                                                                                                                                                                                                  12.4 %                         11.7 %                                                     6.0 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Average Length of Haul                                                                                            500                            505                                                    -1.0 %                                                                                                                                                                                                                                                   500                            505                                                      -1.0 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Adjusted Operating Ratio (1)                                                                                     85.6 %                         82.8 %                                                                                                                                                                                                                                                                                                          85.1 %                         82.2 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Average Tractors - Total                                                                                        4,696                          4,829                                                                                                                                                                                                                                                                                                           4,694                          4,804
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Average Trailers - Total                                                                                       12,325                         12,021                                                                                                                                                                                                                                                                                                          12,194                         11,668
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Net Capital Expenditures (in thousands)                                                                      $ 40,660                       $ 69,242                                                                                                                                                                                                                                                                                                       $  76,056                      $ 108,852
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
Cash Flow From Operations (in thousands)                                                                     $ 55,639                       $ 49,172                                                                                                                                                                                                                                                                                                       $ 189,163                      $ 156,639
 
* Includes trucking segment revenue excluding fuel surcharge.
 
 
GAAP to Non-GAAP Reconciliation Schedules:
(1)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-GAAP reconciliation
Adjusted operating income, operating ratio, and adjusted operating
ratio reconciliation (a)
 
                                                                                      Three Months Ended September 30,                                                                 Nine Months Ended September 30,
                                                                                                                         2016            2015                                                                      2016                 2015
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                  (Unaudited, in thousands)
 
Total revenue                                                                                                         $ 280,530       $ 300,122                                              $ 828,936                  $ 892,225
Less: Trucking fuel surcharge                                                                                            24,287          30,192                                                                    65,252                     96,458
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Revenue, excluding trucking fuel surcharge                                                                            $ 256,243       $ 269,930                                                                 $ 763,684                  $ 795,767
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Operating expense                                                                                                       243,596                                                                  253,696                                                                   715,194                                                                             757,877
Adjusted for:
     Trucking fuel surcharge                                                                                           (24,287)                                                                 (30,192)                                                                  (65,252)                                                                            (96,458)
     Accrual for class action lawsuits (b)                                                                                    -               -                                                                         -                    (7,163)
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Adjusted operating expenses                                                                                             219,309         223,504                                                                   649,942                    654,256
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Adjusted operating income                                                                                              $ 36,934        $ 46,426                                                                 $ 113,742                  $ 141,511
                                                                                                                      ========= ==================== ==================== ==================== =========                                                                 ========= ==================== ==================== ==================== ====================
Operating ratio                                                                                                           86.8%                                                                    84.5%                                                                     86.3%                                                                               84.9%
Adjusted operating ratio (a)                                                                                              85.6%                                                                    82.8%                                                                     85.1%                                                                               82.2%
 
 
(2)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-GAAP reconciliation
Adjusted net income attributable to Knight and adjusted earnings per
diluted share reconciliation:
 
                                                                                                                                               Three Months Ended September 30,                                                                                                                          Nine Months Ended September 30,
                                                                                                                         2016            2015                                                                      2016                 2015
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                     (Unaudited, in thousands, except per share amounts)
                                                                                                                                                                                                                                                                                                                                                   
Net Income attributable to Knight                                                                                      $ 23,350                                                                 $ 30,283                                                                  $ 70,595                                                                            $ 87,484
Adjusted for:
     Accrual for class action lawsuits (net of tax)(b)                                                                        -               -                                                                         -                      4,395
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Adjusted net income attributable to Knight                                                                             $ 23,350        $ 30,283                                                                  $ 70,595                   $ 91,879
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                                   
Weighted Average Shares Outstanding - Diluted                                                                            80,792                                                                   82,005                                                                    80,985                                                                              82,714
                                                                                                                                                                                                                                                                                                                                                   
Earnings per diluted share                                                                                               $ 0.29                                                                   $ 0.37                                                                    $ 0.87                                                                              $ 1.06
Adjusted for:
     Accrual for class action lawsuits (b)                                                                                    -               -                                                                         -                       0.05
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Adjusted earnings per diluted share                                                                                      $ 0.29          $ 0.37                                                                    $ 0.87                     $ 1.11
                                                                                                                      ========= ==================== ==================== ==================== =========                                                                 ========= ==================== ==================== ==================== ====================
 
 
(3)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-GAAP reconciliation
Operating ratio and adjusted operating ratio for trucking segment (a)
 
                                                                                                                                               Three Months Ended September 30,                                                                                                                          Nine Months Ended September 30,
                                                                                                                         2016            2015                                                                      2016                 2015
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                  (Unaudited, in thousands)
Trucking
Total revenue                                                                                                         $ 228,556                                                                $ 242,008                                                                 $ 672,863                                                                           $ 722,847
Less: Trucking fuel surcharge                                                                                            24,287          30,192                                                                    65,252                     96,458
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Revenue, excluding trucking fuel surcharge                                                                            $ 204,269       $ 211,816                                                                 $ 607,611                  $ 626,389
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Operating expense                                                                                                       194,117                                                                  199,298                                                                   567,216                                                                             600,047
Adjusted for:
     Trucking fuel surcharge                                                                                           (24,287)                                                                 (30,192)                                                                  (65,252)                                                                            (96,458)
     Accrual for class action lawsuits (b)                                                                                    -               -                                                                         -                    (7,163)
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Adjusted operating expenses                                                                                             169,830         169,106                                                                   501,964                    496,426
                                                                                                                      --------- -------------------- -------------------- -------------------- ---------                                                                 --------- -------------------- -------------------- -------------------- --------------------
Adjusted operating income                                                                                              $ 34,439        $ 42,710                                                                 $ 105,647                  $ 129,963
                                                                                                                      ========= ==================== ==================== ==================== =========                                                                 ========= ==================== ==================== ==================== ====================
Operating ratio                                                                                                           84.9%                                                                    82.4%                                                                     84.3%                                                                               83.0%
Adjusted operating ratio                                                                                                  83.1%                                                                    79.8%                                                                     82.6%                                                                               79.3%
 

(a) Operating ratio as reported in this press release is based upon total operating expenses, net of fuel surcharge, as a percentage of revenue before fuel surcharge. We measure our revenue, before fuel surcharge, and our operating expenses, net of fuel surcharge, because we believe that eliminating this sometimes volatile source of revenue affords a more consistent basis for comparing our results of operations from period to period.

(b) During the second quarter of 2015 we accrued $7.2 million of expense ($4.4 million after-tax) related to two class action lawsuits involving employment related claims.

This press release contains 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. These statements generally may be identified by their use of terms or phrases such as "expects," "estimates," "anticipates," "projects," "believes," "plans," "intends," "may," "will," "should," "could," "potential," "continue," "future," and terms or phrases of similar substance. Forward-looking statements are based upon the current beliefs and expectations of our management and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Accordingly, actual results may differ from those set forth in the forward-looking statements. Readers should review and consider the factors that may affect future results and other disclosures by the Company in its press releases, stockholder reports, Annual Report on Form 10-K, and other filings with the Securities and Exchange Commission. We disclaim any obligation to update or revise any forward-looking statements to reflect actual results or changes in the factors affecting the forward-looking information.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20161026005429r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20161026005429/en/

SOURCE: Knight Transportation, Inc.

Knight Transportation, Inc. 
David A. Jackson, President and CEO 
or 
Adam W. Miller, CFO 
602-606-6315


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