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Knight-Swift Transportation Holdings Inc.$38.94($.12)(.31%)

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 Knight Transportation Reports Second Quarter 2017 Revenue and Earnings
   Wednesday, July 26, 2017 4:01:03 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 second quarter ended June 30, 2017.

Key financial highlights for the second quarter and first six months of 2017 and 2016 were as follows:

(dollars in thousands, except per share data)                                                                Three Months Ended June 30,                                                                                                                             Six Months Ended June 30,
                                                                                                              -------------------------------------------------------------------------------------------------------------------------------------------                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 2017             2016              Chg                                                                     2017             2016                    Chg
                                                                                                              -----------                                                               -----------                                             ---------                                                               -----------                                                               -----------                                             ---------------------
Total Revenue                                                                                                  $ 273,243                                                                 $ 276,318                                               -1.1 %                                                                  $ 544,425                                                                 $ 548,406                                                    -0.7 %
Revenue, excluding trucking fuel surcharge                                                                     $ 247,022                                                                 $ 253,859                                               -2.7 %                                                                  $ 492,002                                                                 $ 507,442                                                    -3.0 %
Operating Income                                                                                               $  28,410                                                                 $  38,081                                              -25.4 %                                                                  $  51,048                                                                 $  76,808                                                   -33.5 %
Adjusted Operating Income(1)                                                                                   $  32,588                                                                 $  38,081                                              -14.4 %                                                                  $  55,226                                                                 $  76,808                                                   -28.1 %
Net Income attributable to Knight                                                                              $  17,970                                                                 $  24,918 *                                            -27.9 %                                                                  $  32,847                                                                 $  47,935 *                                                 -31.5 %
Adjusted Net Income, attributable to Knight(2)                                                                 $  20,577                                                                 $  24,918 *                                            -17.4 %                                                                  $  35,454                                                                 $  47,935 *                                                 -26.0 %
Earnings per diluted share                                                                                     $    0.22                                                                 $    0.31                                              -28.3 %                                                                  $    0.40                                                                 $    0.59                                                   -31.6 %
Adjusted earnings per diluted share(2)                                                                         $    0.25                                                                 $    0.31                                              -17.8 %                                                                  $    0.44                                                                 $    0.59                                                   -26.1 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                           
* The second quarter and first six months of 2016 was recast
to reflect the impact of the Company’s adoption of ASU 2016-09,
Compensation-Stock Compensation (Topic 718): Improvement to Employee
Share-based Payment Accounting, to simplify several aspects of the
accounting for employee share-based payment transactions, including
the income tax consequences. The standard was early adopted in the
fourth quarter of 2016, and impacted the income statement by
reducing the income tax expense, while reducing additional paid-in
capital in the balance sheet for all periods of 2016.
 

The company previously announced a quarterly cash dividend of $0.06 per share to shareholders of record on June 2, 2017, which was paid on June 23, 2017.

Dave Jackson, President and Chief Executive Officer, commented on the quarter, "The freight environment began to show signs of improvement as we experienced more non-contract opportunities during the second quarter of 2017 as compared to the same quarter last year. Our revenue per loaded mile increased slightly year over year, which marks the first year over year improvement since the third quarter of 2015. The 2017 bid season has been competitive, similar to 2016, however, we expect the recent capacity tightness and non-contract pricing strength to lead to an improved rate environment. This quarter our tractor utilization was negatively impacted by a 3.4% decline in average length of haul and a difficult experienced driver recruiting market. We expect these challenges to continue into the third quarter, however, our leadership remains focused on improving the productivity of our assets, expanding our brokerage business, and enhancing our cost control measures.

"Our diluted earnings per share for the second quarter were $0.22, which includes $4.2 million ($2.6 million after-tax) of expenses related to the pending merger with Swift Transportation. Excluding the merger-related expenses, our diluted earnings per share for the second quarter were $0.25, which compares to $0.31 per diluted share in the second quarter of 2016. A number of factors impacted our results on a year over year basis. The decline in our miles per tractor negatively impacted our results by $0.02 per diluted share. An increase in driver payroll expenses negatively impacted our results by approximately $0.02 per diluted share, while lower gain on sale and other income year over year also negatively impacted our results by approximately $0.02."

The following chart reflects our consolidated financial performance and that of our trucking and our logistics segments for the second quarter and first six months of 2017 and 2016.

(dollars in thousands)                                                                                              Three Months Ended June 30,                                                                                                                                                     Six Months Ended June 30,
                                                                                                          ----------------------------------------------------------------------------------------------------------------------------------------------------------------                                                               -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              2017              2016              Chg                                                                      2017              2016                       Chg
                                                                                                          ------------                                                               ------------                                                               ----------                                                               ------------                                                               ------------                                                               -----------------------------
Consolidated
------------------------------------------
Revenue, excluding trucking fuel surcharge                                                                $ 247,022                                                                  $ 253,859                                                                     -2.7 %                                                                $ 492,002                                                                  $ 507,442                                                                     -3.0 %
Operating Income                                                                                          $  28,410                                                                  $  38,081                                                                    -25.4 %                                                                $  51,048                                                                  $  76,808                                                                    -33.5 %
Adjusted Operating Income(1)                                                                              $  32,588                                                                  $  38,081                                                                    -14.4 %                                                                $  55,226                                                                  $  76,808                                                                    -28.1 %
Adjusted Operating Ratio(1)                                                                                    86.8 %                                                                     85.0 %                                                                180 bps                                                                       88.8 %                                                                     84.9 %                                                                390 bps
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Trucking Segment
------------------------------------------
Revenue, excluding trucking fuel surcharge                                                                $ 194,049                                                                  $ 203,930                                                                     -4.8 %                                                                $ 386,509                                                                  $ 403,343                                                                     -4.2 %
Operating Income                                                                                          $  25,762                                                                  $  35,286                                                                    -27.0 %                                                                $  46,022                                                                  $  71,208                                                                    -35.4 %
Adjusted Operating Income(3)                                                                              $  29,940                                                                  $  35,286                                                                    -15.2 %                                                                $  50,200                                                                  $  71,208                                                                    -29.5 %
Adjusted Operating Ratio(3)                                                                                    84.6 %                                                                     82.7 %                                                                190 bps                                                                       87.0 %                                                                     82.3 %                                                                470 bps
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
Logistics Segment
------------------------------------------
Revenue                                                                                                   $  52,973                                                                  $  49,929                                                                      6.1 %                                                                $ 105,493                                                                  $ 104,099                                                                      1.3 %
Operating Income                                                                                          $   2,648                                                                  $   2,795                                                                     -5.3 %                                                                $   5,026                                                                  $   5,600                                                                    -10.3 %
Operating Ratio                                                                                                95.0 %                                                                     94.4 %                                                                 60 bps                                                                       95.2 %                                                                     94.6 %                                                                 60 bps
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

In the second quarter, the trucking segment achieved an adjusted operating ratio of 84.6% compared to 82.7% for the same quarter last year. The operating ratio was negatively impacted by a decrease in revenue per tractor, excluding fuel surcharge, of 2.9%, year over year, attributable to a 0.3% increase in average revenue per loaded mile, a 3.0% decrease in average miles per tractor, and a 20 basis point increase in our non-paid empty mile percentage. Driver related costs and lower gain on sale continue to present cost headwinds. We remain focused on developing our freight network and improving the productivity of our assets.

Our logistics segment consists of brokerage, intermodal, and other logistics services. During the second quarter of 2017, the logistics segment increased revenue 6.1% and produced an operating ratio of 95.0% compared to 94.4% for the same quarter last year. Brokerage revenue increased 12.1% in the second quarter of 2017 when compared to the same quarter last year as load volume increased 12.4%. The gross margin percentage decreased to 14.3% in the current quarter compared to 16.8% in the same quarter last year. We plan to continue to invest in our logistics service offerings, which should continue to improve our return on capital compared with asset-based operations.

The used equipment market remained soft during the quarter and resulted in $0.8 million of gain on sale of revenue equipment in the second quarter of 2017, compared to $2.7 million in the same quarter of 2016. The average age of our tractor fleet is 2.6 years, which has increased from 1.8 years in the second quarter of 2016. With rising new equipment prices and a weak used equipment market, we extended the expected trade cycle of our tractors and reduced our average tractor count by 2.0% when compared to the second quarter of 2016. Managing our fleet size and age, and resulting capital investments in the trucking segment, will continue to be part of our strategy to maintain investment returns as much as possible through fluctuations in the supply-demand environment.

Over the last twelve months ended June 30, 2017, we have returned $22.9 million to our shareholders in the form of quarterly dividends and stock repurchases. We ended the quarter with $88.7 million of cash and cash equivalents, no long-term debt, and $816.3 million of shareholders’ equity. Our net capital expenditures during the second quarter were $11.0 million, while our cash flow from operations was $52.2 million.

The company will hold a conference call on July 26, 2017, at 4:30 PM EDT, to further discuss its results of operations for the quarter ended June 30, 2017. 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, "Second Quarter 2017 Conference Call Presentation."

Adjusted operating ratio is a non-GAAP financial measure and is not intended to replace financial measures calculated in accordance with GAAP. This non-GAAP financial measure supplements our GAAP results in evaluating certain parts of our business. We believe that using this measure 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 the most directly comparable financial measure 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 June 30,                                                                                                                                                                                      Six Months Ended June 30,
                                                                                                                                         2017                                                                                                             2016                                                                                           2017                                                                                                             2016
                                                                                                                  --------------------------------------------------                                                               --------------------------------------------------                                             --------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                  (Unaudited, in thousands, except per share amounts)
REVENUE:
   Revenue, before fuel surcharge                                                                                                    $ 247,022                                                                                                        $ 253,859                                                                                      $ 492,002                                                                                                        $ 507,442
   Fuel surcharge                                                                                                    26,221                                                                     22,459                                                   52,423                                                                     40,964  
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
TOTAL REVENUE                                                                                                       273,243                                                                    276,318                                                  544,425                                                                    548,406  
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
OPERATING EXPENSES:
   Salaries, wages and benefits                                                                                                         79,944                                                                                                           84,440                                                                                        162,454                                                                                                          168,043
   Fuel expense - gross                                                                                                                 33,719                                                                                                           33,429                                                                                         68,952                                                                                                           60,200
   Operations and maintenance                                                                                                           20,596                                                                                                           19,094                                                                                         41,249                                                                                                           37,104
   Insurance and claims                                                                                                                  8,294                                                                                                            8,257                                                                                         16,865                                                                                                           17,080
   Operating taxes and licenses                                                                                                          4,615                                                                                                            4,612                                                                                          9,046                                                                                                           10,099
   Communications                                                                                                                        1,018                                                                                                            1,043                                                                                          2,204                                                                                                            2,248
   Depreciation and amortization                                                                                                        29,371                                                                                                           28,955                                                                                         59,053                                                                                                           57,357
   Purchased transportation                                                                                                             58,299                                                                                                           53,918                                                                                        116,924                                                                                                          111,703
   Miscellaneous operating expenses                                                                                                      4,799                                                                                                            4,489                                                                                         12,452                                                                                                            7,764
   Merger-related costs                                                                                               4,178                                                                          -                                                    4,178                                                                          -  
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
      Total operating expenses                                                                                      244,833                                                                    238,237                                                  493,377                                                                    471,598  
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                  --------------------------------------------------                                                               --------------------------------------------------                                             --------------------------------------------------                                                               --------------------------------------------------
   Income from operations                                                                                            28,410                                                                     38,081                                                   51,048                                                                     76,808  
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
   Interest income                                                                                                                         130                                                                                                               82                                                                                            189                                                                                                              176
   Interest expense                                                                                                                        (54 )                                                                                                           (258 )                                                                                         (136 )                                                                                                           (559 )
   Other income                                                                                                         601                                                                      1,927                                                    1,322                                                                      3,213  
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
   Income before income taxes                                                                                                           29,087                                                                                                           39,832                                                                                         52,423                                                                                                           79,638
INCOME TAXES                                                                                                         10,828                                                                     14,618   *                                               19,058                                                                     30,955   *
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Net income                                                                                                                              18,259                                                                                                           25,214                      *                                                                  33,365                                                                                                           48,683                      *
Net income attributable to noncontrolling interest                                                                     (289 )                                                                                        (296 )                                                                      (518 )                                                                                        (748 )
                                                                                                                  -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                              -------------------- ------- --------------------                                                                -------------------- ------- --------------------
NET INCOME ATTRIBUTABLE TO KNIGHT TRANSPORTATION                                                                                     $  17,970                                                                                     $  24,918   *                                                               $  32,847                                                                                     $  47,935   *
                                                                                                                  ==================== ======= ====================                                                                ==================== ======= ====================                                              ==================== ======= ====================                                                                ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
   Basic Earnings Per Share                                                                                                          $    0.22                                                                                                        $    0.31                                                                                      $    0.41                                                                                                        $    0.60
   Diluted Earnings Per Share                                                                                                        $    0.22                                                                                                        $    0.31                                                                                      $    0.40                                                                                                        $    0.59
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
   Weighted Average Shares Outstanding - Basic                                                                                          80,520                                                                                                           80,105                                                                                         80,416                                                                                                           80,407
                                                                                                                                        81,349                                                                                                           80,983                                                                                         81,276                                                                                                           81,191
   Weighted Average Shares Outstanding - Diluted
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                  
BALANCE SHEET DATA:
                                                                                                                                                                                                                                             06/30/17                                                                                                                                 12/31/16
                                                                                                                                                                                                                                  -------------------------------                                                                                                         --------------------------------
ASSETS                                                                                                                                                                                                                                                                                                    (Unaudited, in thousands)
Cash and cash equivalents                                                                                                                                                                                                                            $    88,706                                                                                                                             $      8,021
Trade receivables, net of allowance for doubtful accounts                                                                                                                                                                                                127,252                                                                                                                                  142,167
Notes receivable, net of allowance for doubtful accounts                                                                                                                                                                                                     646                                                                                                                                      560
Prepaid expenses                                                                                                                                                                                                                                          11,703                                                                                                                                   13,244
Assets held for sale                                                                                                                                                                                                                                      13,845                                                                                                                                    9,634
Other current assets                                                                                                                                                                                                                                       8,208                                                                                                                                    8,159
Income Tax Receivable                                                                                                                                                                                                                  11,280                                                                                                                 8,406
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
   Total Current Assets                                                                                                                                                                                                               261,640                                                                                                               190,191
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                           
Property and equipment, net                                                                                                                                                                                                                              759,896                                                                                                                                  802,858
Notes receivable, long-term                                                                                                                                                                                                                                2,618                                                                                                                                    3,047
Goodwill                                                                                                                                                                                                                                                  47,021                                                                                                                                   47,031
Intangible Assets, net                                                                                                                                                                                                                                     2,325                                                                                                                                    2,575
Other assets and restricted cash                                                                                                                                                                                                       25,908                                                                                                                32,823
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
Total Long-term Assets                                                                                                                                                                                                                                   837,768                                                                                                                                  888,334
                                                                                                                                                                                                                                                                                                                                                                           
   Total Assets                                                                                                                                                                                                                                      $ 1,099,408                                                                                                                             $  1,078,525
                                                                                                                                                                                                                                  ==================== =========                                                                                                          ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                           
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable                                                                                                                                                                                                                                     $    12,775                                                                                                                             $     18,006
Accrued payroll and purchased transportation                                                                                                                                                                                                              27,008                                                                                                                                   25,017
Accrued liabilities                                                                                                                                                                                                                                       21,429                                                                                                                                   16,722
Claims accrual - current portion                                                                                                                                                                                                                          19,905                                                                                                                                   18,633
Dividend payable - current portion                                                                                                                                                                                                        287                                                                                                                   272
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
   Total Current Liabilities                                                                                                                                                                                                                              81,404                                                                                                                                   78,650
                                                                                                                                                                                                                                                                                                                                                                           
Claims accrual - long-term portion                                                                                                                                                                                                                        14,167                                                                                                                                   13,290
Long-term dividend payable and other liabilities                                                                                                                                                                                                           1,781                                                                                                                                    1,854
Deferred tax liabilities                                                                                                                                                                                                                                 183,518                                                                                                                                  178,000
Long-term debt                                                                                                                                                                                                                              -                                                                                                                18,000
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
   Total Long-term Liabilities                                                                                                                                                                                                                           199,466                                                                                                                                  211,144
                                                                                                                                                                                                                                                                                                                                                                           
   Total Liabilities                                                                                                                                                                                                                  280,870                                                                                                               289,794
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
                                                                                                                                                                                                                                                                                                                                                                           
Common stock                                                                                                                                                                                                                                                 806                                                                                                                                      802
Additional paid-in capital                                                                                                                                                                                                                               231,551                                                                                                                                  223,267
Retained earnings                                                                                                                                                                                                                     583,988                                                                                                               562,404
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
   Total Knight Transportation Shareholders’ Equity                                                                                                                                                                                                      816,345                                                                                                                                  786,473
   Noncontrolling interest                                                                                                                                                                                                              2,193                                                                                                                 2,258
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
   Total Shareholders’ Equity                                                                                                                                                                                                         818,538                                                                                                               788,731
                                                                                                                                                                                                                                  -------------------- ---------                                                                                                          -------------------- ----------
   Total Liabilities and Shareholders’ Equity                                                                                                                                                                                                        $ 1,099,408                                                                                                                             $  1,078,525
                                                                                                                                                                                                                                  ==================== =========                                                                                                          ==================== ==========
                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                                                                                                                                           
                                                                                                                                                                                                          
                                                                                                                                                                      Three Months Ended June 30,                                                                                                                                                                                 Six Months Ended June 30,
                                                                                                           2017             2016                % Change                                                                          2017            2016                % Change
                                                                                                        -----------                                                               -----------                                                                                                                                ------------                                          ------------
                                                                                                                                             (Unaudited)                                                                                                                                                                                                 (Unaudited)
OPERATING STATISTICS
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Average Revenue Per Tractor**                                                                           $ 42,176                                                                  $ 43,414                                                     -2.9 %                                                                        $  83,335                                             $  85,943                                                     -3.0 %
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Non-paid Empty Mile Percent                                                                                 12.5 %                                                                    12.3 %                                                    1.6 %                                                                             12.5 %                                                12.5 %                                                    0.0 %
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Average Length of Haul                                                                                       488                                                                       505                                                     -3.4 %                                                                              493                                                   500                                                     -1.4 %
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Adjusted Operating Ratio (1)                                                                                86.8 %                                                                    85.0 %                                                                                                                                      88.8 %                                                84.9 %
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Average Tractors - Total                                                                                   4,601                                                                     4,697                                                                                                                                       4,638                                                 4,693
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Average Trailers - Total                                                                                  12,310                                                                    12,289                                                                                                                                      12,377                                                12,128
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Net Capital Expenditures (in thousands)                                                                 $ 11,013                                                                  $ 23,678                                                                                                                                   $  22,588                                             $  35,396
                                                                                                                                                                                                                                                                                                                                                                                                                                            
Cash Flow From Operations (in thousands)                                                                $ 52,207                                                                  $ 66,183   *                                                                                                            $ 117,691                                             $ 135,558   *                                            
                                                                                                                                                                                                                                                                                                                                                                                                                                            

* Recast to reflect the impact of the Company’s adoption of ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvement to Employee Share-based Payment Accounting, to simplify several aspects of the accounting for employee share-based payment transactions, including the income tax consequences. The standard was early adopted in the fourth quarter of 2016, and impacted the income statement by reducing the income tax expense and therefore net income, while reducing additional paid-in capital in the balance sheet for all periods of 2016.

** 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 June 30,                                                                                                                                                                                                        Six Months Ended June 30,
                                                                                                                                    2017                                                                                                             2016                                                                                                             2017                                                                                                             2016
                                                                                                             --------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                                   (Unaudited, in thousands)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Total revenue                                                                                                                   $ 273,243                                                                                                        $ 276,318                                                                                                        $ 544,425                                                                                                        $ 548,406
Less: Trucking fuel surcharge                                                                                   26,221                                                                     22,459                                                                     52,423                                                                     40,964  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Revenue, excluding trucking fuel surcharge                                                                                      $ 247,022                                                                                     $ 253,859                                                                                     $ 492,002                                                                                     $ 507,442  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Operating expense                                                                                                                 244,833                                                                                                          238,237                                                                                                          493,377                                                                                                          471,598
Adjusted for:
   Trucking fuel surcharge                                                                                                        (26,221 )                                                                                                        (22,459 )                                                                                                        (52,423 )                                                                                                        (40,964 )
   Merger-related costs(b)                                                                                      (4,178 )                                                                                           -                                                                     (4,178 )                                                                                           -  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Adjusted operating expenses                                                                                    214,434                                                                    215,778                                                                    436,776                                                                    430,634  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Adjusted operating income                                                                                                       $  32,588                                                                                     $  38,081                                                                                     $  55,226                                                                                     $  76,808  
                                                                                                             ==================== ======= ====================                                                                ==================== ======= ====================                                                                ==================== ======= ====================                                                                ==================== ======= ====================
Operating ratio                                                                                                                      89.6 %                                                                                                           86.2 %                                                                                                           90.6 %                                                                                                           86.0 %
Adjusted operating ratio                                                                                                             86.8 %                                                                                                           85.0 %                                                                                                           88.8 %                                                                                                           84.9 %
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
(2)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-GAAP reconciliation
Adjusted net income attributable to Knight and adjusted earnings per
diluted share reconciliation:
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                 Three Months Ended June 30,                                                                                                                                                                                                        Six Months Ended June 30,
                                                                                                                                    2017                                                                                                             2016                                                                                                             2017                                                                                                             2016
                                                                                                             --------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                      (Unaudited, in thousands, except per share amounts)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Net Income attributable to Knight                                                                                               $  17,970                                                                                                        $  24,918                                                                                                        $  32,847                                                                                                        $  47,935
Adjusted for:
   Merger-related costs (net of tax)(b)                                                                          2,607                                                                          -                                                                      2,607                                                                          -  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Adjusted net income attributable to Knight                                                                                      $  20,577                                                                                     $  24,918                                                                                     $  35,454                                                                                     $  47,935  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Weighted Average Shares Outstanding - Diluted                                                                                      81,349                                                                                                           80,983                                                                                                           81,276                                                                                                           81,191
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
Earnings per diluted share                                                                                                      $    0.22                                                                                                        $    0.31                                                                                                        $    0.40                                                                                                        $    0.59
Adjusted for:
   Merger-related costs(b)                                                                                        0.03                                                                          -                                                                                     $    0.03                                                                          -  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Adjusted earnings per diluted share                                                                                             $    0.25                                                                                     $    0.31                                                                                     $    0.44                                                                                     $    0.59  
                                                                                                             ==================== ======= ====================                                                                ==================== ======= ====================                                                                ==================== ======= ====================                                                                ==================== ======= ====================
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
(3)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Non-GAAP reconciliation
Operating ratio and adjusted operating ratio for trucking segment(a)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                 Three Months Ended June 30,                                                                                                                                                                                                        Six Months Ended June 30,
                                                                                                                                    2017                                                                                                             2016                                                                                                             2017                                                                                                             2016
                                                                                                             --------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------                                                               --------------------------------------------------
                                                                                                                                                                                                                                                                                                   (Unaudited, in thousands)
Trucking
Total revenue                                                                                                                   $ 220,270                                                                                                        $ 226,389                                                                                                        $ 438,932                                                                                                        $ 444,307
Less: Trucking fuel surcharge                                                                                   26,221                                                                     22,459                                                                     52,423                                                                     40,964  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Revenue, excluding trucking fuel surcharge                                                                                      $ 194,049                                                                                     $ 203,930                                                                                     $ 386,509                                                                                     $ 403,343  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Operating expense                                                                                                                 194,508                                                                                                          191,103                                                                                                          392,910                                                                                                          373,099
Adjusted for:
   Trucking fuel surcharge                                                                                                        (26,221 )                                                                                                        (22,459 )                                                                                                        (52,423 )                                                                                                        (40,964 )
   Merger-related costs(b)                                                                                      (4,178 )                                                                                           -                                                                     (4,178 )                                                                                           -  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Adjusted operating expenses                                                                                    164,109                                                                    168,644                                                                    336,309                                                                    332,135  
                                                                                                             -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------                                                                -------------------- ------- --------------------
Adjusted operating income                                                                                                       $  29,940                                                                                     $  35,286                                                                                     $  50,200                                                                                     $  71,208  
                                                                                                             ==================== ======= ====================                                                                ==================== ======= ====================                                                                ==================== ======= ====================                                                                ==================== ======= ====================
Operating ratio                                                                                                                      88.3 %                                                                                                           84.4 %                                                                                                           89.5 %                                                                                                           84.0 %
Adjusted operating ratio                                                                                                             84.6 %                                                                                                           82.7 %                                                                                                           87.0 %                                                                                                           82.3 %
 
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(a) Adjusted 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 2017, we recorded approximately $4.2 million of direct and incremental costs ($2.6 million after-tax) related to the proposed merger with Swift. These costs were primarily incurred for legal and professional fees associated with the transaction.

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=20170726006160r1&sid=cmtx6&distro=nx&

View source version on businesswire.com: http://www.businesswire.com/news/home/20170726006160/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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