Knight Cuts Fourth-Quarter Earnings Forecast
Knight Transportation Inc. lowered its fourth-quarter earnings estimate by about 15%, citing more moderate rate increases, fewer spot market opportunities, additional driver pay increases and reduced gains on used equipment sales.
Knight, based in Phoenix, now expects earnings of 31 cents to 33 cents per share, compared with its earlier estimate of 36 cents to 38 cents per share. A 2015 freight market in which capacity was not as tight as last year was linked to 3 cents to 4 cents per share of the shortfall. An additional 1 cent to 2 cents was the result of the driver pay adjustments and the weaker used-equipment market.
The fourth-quarter earnings announcement at Knight, which will trail last year’s results of 40 cents per share, was made as industry analysts have been cutting their final 2015 quarter-earnings forecasts for other truckload carriers in expectation that their results also will be weaker than last year.
“In 2014 ,we experienced a 5% increase in revenue per total mile sequentially from third quarter to fourth quarter,” Knight’s statement said. “This was a result of a freight environment with tight capacity and significant non-contract opportunities. In 2015, as a result of excess capacity entering the market, we are experiencing a more typical sequential improvement in revenue per mile from the third quarter to fourth quarter that would compare closer to 2012 and 2013. Volumes in the fourth quarter remain similar to 2014.”
Knight CEO Dave Jackson said, “The current freight environment presents some challenges, largely as a result of truckload capacity growth, that we believe is temporary and short term in nature. We believe our model positions us well for the opportunities we expect in coming quarters.”
Knight, which ranks No. 31 on the Transport Topics Top 100 list of the largest U.S. and Canadian for-hire carriers, is expected to announce fourth-quarter earnings Jan. 27.
“We have been cutting EPS estimates on a variety of trucking names recently, so Knight's announcement is not a total surprise to us, especially given its business model,” Thom Albrecht, a BB&T Capital Markets analyst, said an investor note.
