Knight Transportation revenues for the quarter ended March 31 increased 5.9%, to $176.4 million, the motor carrier announced.
Revenue, before fuel surcharge, decreased 2.4%, to $141.3 million from $144.8 million for the same quarter of 2007. Net income decreased to $11.4 million from $16.6 million for the same period of 2007. Net income per diluted share for the quarter was $0.13, compared to $0.19 for the same period of 2007.
“The challenging truckload freight environment continued in the first quarter and was accompanied with diesel fuel prices reaching unprecedented highs,” said Kevin Knight, chairman and chief executive officer. “Despite one of the most difficult operating environments in our company’s history, we achieved a consolidated operating ratio of 86.7%. Our dry van operation achieved an operating ratio of 85.9%.
"Pricing and equipment utilization continued to be negatively affected as the supply of for-hire trucks outpaced freight demand in our regional markets. For the quarter, average freight revenue per tractor declined 6.1% on 1.2% more average tractors, as compared to the first quarter of 2007. In the quarter, our empty mile factor improved to 11.9% from 13.1%, an improvement of 9.2%, despite a slightly shorter average length of haul. The decrease in asset productivity was the most significant factor that negatively impacted the first quarter. Lower revenue per tractor less efficiently covered fixed costs, leading to increases in salaries, depreciation, and certain other expenses as a percentage of revenue. Although freight demand in the quarter did not exceed that of the same quarter a year ago, we did experience a narrowing of the year over year difference as the quarter progressed.
“High fuel prices were very challenging in the quarter. The U.S. national average diesel fuel prices for the quarter increased by $0.96 per gallon in the first quarter of 2008 versus the first quarter of 2007. The highest fuel prices were experienced at the end of the quarter and have continued into April with a current week national average of $4.14 per gallon.
"A softening market for used tractors and trailers also affected our results. Gain on sale of equipment was $672,000 for the first quarter of 2008 versus $1.5 million for the first quarter of 2007.
“During the quarter, we reduced our total tractor count by 84 tractors. Year over year, the average fleet size grew by 44 tractors. In the short term, we will closely evaluate our fleet size and make adjustments as needed to provide customers the service they expect while generating adequate returns. Included in the evaluation of fleet size is the opportunity to improve existing levels of equipment utilization.
"We continue to execute and refine our strategic growth plan, which includes the opening of new service centers and branches. We have recently opened our fifth refrigerated service center in Dallas, Texas and we expect to open during the second quarter two additional dry van service centers, one in the Northeast and another in the Southeast. With 27 dry van service centers, 13 brokerage branches and five refrigerated service centers, we are still in the early stages of the roll-out of what we expect to be the strongest truckload service center network in North America.
“We believe that the supply of for-hire trucks has ceased to expand and, in fact, is now retracting. Continued high fuel prices and continued pressure on freight pricing and fuel surcharges, should expedite the retraction towards market equilibrium. In addition, we hope that the various forms of stimulus to the broader economy, that were not present a year ago, will have a positive impact on freight demand as the year progresses. Although it is difficult to predict the timing with any certainty, we expect a reduction of trucking capacity and increase in economic activity to have a positive impact on freight rates and equipment utilization over time."