For the quarter, total revenue increased 5.9%, to $176.4 million from $166.5 million for the same quarter of 2007. Revenue before fuel surcharge decreased 2.4%, to $141.3 million from $144.8 million for the same quarter of 2007.
The company previously announced a cash dividend of $.03 per share to shareholders of record on March 7, 2008, which was paid on March 28, 2008.
"The challenging truckload freight environment continued in the first quarter and was accompanied with diesel fuel prices reaching unprecedented highs," said Chairman and CEO Kevin P. Knight. "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%."
He noted that pricing and equipment utilization continued to be negatively affected as the supply of for-hire trucks outpaced freight demand in the company's 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. Knight's 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.
A softening market for used tractors and trailers also affected the company's 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, Knight reduced its 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," Knight said. "Included in the evaluation of fleet size is the opportunity to improve existing levels of equipment utilization.
"Over the long term, we are optimistic about our competitive position in the industry and expect that proper execution of our decentralized growth model will position us to emerge from the downturn with the ability to add more capacity and gain more market share."
Knight recently opened its fifth refrigerated service center, in Dallas, and expects during the second quarter to open two more 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," Knight said.
During the quarter, the company used $18.1 million of its cash to repurchase 1,218,500 shares, under the authorization to repurchase up to 3 million shares given by the Board of Directors in November 2007.
"Looking forward, 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."