Kitty Hawk (AMEX:KHK)
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Kitty Hawk, Inc. (AMEX:KHK), the parent company of Kitty Hawk Cargo,
Inc., Kitty Hawk Ground, Inc. and Kitty Hawk Aircargo, Inc., today
reported results for the third quarter of 2006. Revenue for the third
quarter of 2006 was $57.9 million, an increase of 42.3% as compared to
the $40.7 million reported for the third quarter of 2005. Approximately
$1.2 million of the increase in revenue for the third quarter was
attributable to the Company’s expedited air
freight product and $14.2 million of the increase was attributable to
the expedited ground freight product. Kitty Hawk introduced its
expedited ground freight product in October 2005. Kitty Hawk generated a
net loss allocable to common stockholders for the third quarter of 2006
of $6.3 million, or a loss of $0.12 per diluted common share, 29% less
than the loss reported for the second quarter of 2006. For the third
quarter of 2005, Kitty Hawk reported a net loss of $409,000 or a loss of
$0.01 per diluted common share.
“During the third quarter we made progress
toward our goal of diversifying our product offering and revenue,”
said Robert W. Zoller. “Ground product revenue
accounted for approximately 24% of third quarter revenue as compared to
no revenue from this product offering during the third quarter of 2005.
“We have worked toward developing new
marketing and sales synergies, scheduling efficiencies and improved cost
controls. We continued to emphasize optimizing our ground transportation
services, including matching customer service requirements and available
capacity as well as transitioning to a higher percentage of
owner-operator, in-house and lower-cost regional contract trucks. While
we have more work to do, we are now effectively cross selling to the
customers of the ACT operations that we acquired in late June as well as
attracting new domestic and international customers to the Kitty Hawk
brand as demonstrated by a year-over-year chargeable weight increase of
319%. In addition, the number of active ground customer accounts has
nearly doubled since the first of the year,”
Mr. Zoller added.
“We are also beginning the initial integration
of our new information technology system for improved customer booking,
tracking, communications, billings and collection. This new system is
designed to transform our information technology into a competitive
advantage for the Company and provide our customers with ease of use
that is as good as or better than, other scheduled freight network
systems. We expect to begin generating benefits from the installation
during the first quarter of 2007,” Mr. Zoller
said.
“Our traditional seasonal upswing appears to
be weaker than historic levels. However, we are continuing to position
the company for improved performance in the future. We expect business
development efforts to generate results during the fourth quarter, and
are continuing to focus on high-level customer service, yield
improvement, capacity management and cost control,”
concluded Mr. Zoller.
Scheduled freight revenue for the third quarter of 2006 was $55.1
million, an increase of 38.7% compared to the third quarter of 2005.
Third quarter 2006 system chargeable weight (accounting for associated
oversize and special handling requirements) increased 319% as compared
to the third quarter of 2005 and average yield decreased 65%, both
resulting from the launch of the Company's new expedited ground product
which has significantly greater volumes and lower yields than the
Company's expedited air products. Expedited ground product revenues
during the third quarter of 2006 were $14.2 million.
Transportation expense for the second quarter increased $13.5 million or
398.8% from the quarter ended September 30, 2005. This increase is
primarily due to a $12.6 million increase related to our network
trucking expense including purchased transportation costs and owner
operator expenses due to providing our expedited ground freight product,
higher fuel surcharges charged by the third party truck carriers and
costs to operate the assets acquired from ACT. Kitty Hawk’s
aircraft fuel averaged $2.32 per gallon as compared to $2.01 per gallon
for the quarter ended September 30, 2005, an increase of 15.7%. Aircraft
fuel expense increased $1.2 million. The increase resulted from an
increase in the average cost of aircraft fuel of $2.0 million partially
offset by a $0.8 million decrease in fuel consumption. Operating the
trucks acquired from ACT in the network during the third quarter of 2006
contributed $0.8 million to the increase in reported total fuel expense.
Important information about the Company’s
results from operations and other subsequent events that should be read
in conjunction with this release, including an update of a previously
disclosed proposed daytime network for portions of November and December
and a recent amendment to the Company’s
credit facility are included in the Form 10-Q for the period ended
September 30, 2006 filed by the Company earlier today.
Conference Call Information
Management will host a conference call on Tuesday, November 14, 2006 at
5:00 p.m. Eastern time to review the financial results. To access the
call, dial 800-257-7063, or 303-205-0044 for international callers. To
listen to the live web cast go to www.kittyhawkcompanies.com
under the Investor Relations area of the web site. A replay of the
conference call will be available approximately one hour after the
call's conclusion and through midnight ET November 22 by dialing
800-405-2236 for domestic callers or 303-590-3000 for international
callers, both using the passcode 11075445#.
About Kitty Hawk, Inc.
www.kittyhawkcompanies.com
As a recognized leader in customer service, Kitty Hawk is the premier
provider of guaranteed, mission-critical, scheduled overnight air and
scheduled time-definite expedited ground freight transportation to major
business centers and surrounding communities throughout North America,
including, Alaska, Hawaii, Toronto, Canada, and San Juan, Puerto Rico.
With more than 30 years experience in the aviation and air freight
industries, Kitty Hawk plays a key connecting role in the global supply
chain. Kitty Hawk serves the logistics needs of more than 550 freight
forwarders, integrated carriers, logistics companies and major airlines
with its extensive integrated air and ground network, fleet of Boeing
737-300SF and 727-200 cargo aircraft, as well as a 239,000 square-foot
cargo warehouse, U.S. Customs clearance and sort facility at its Fort
Wayne, Indiana hub. In 2005, Kitty Hawk became the North American launch
customer for the fuel-efficient and environmentally-friendly Boeing
737-300SF cargo aircraft. Kitty Hawk's scheduled freight network and
award-winning, guaranteed overnight time-definite service are ideal for
heavy-weight shipments (over 150 lbs.), special goods with unique
dimensions, perishables, animals and other valuable shipments.
Statement under the Private Securities Litigation Reform Act:
This report may contain forward-looking statements that are intended to
be subject to the safe harbor protection provided by Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. These statements relate to future events or future financial and
operating performance and involve known and unknown risks and
uncertainties that may cause actual results or performance to be
materially different from those indicated by any forward-looking
statements. In some cases, you can identify forward-looking statements
by terminology such as "forecast," "may," "will," "could," "should,"
"expect," "intends," "plan," "believe," "potential" or other similar
words indicating future events or contingencies. Some of the things that
could cause actual results to differ from expectations are: economic
conditions; the impact of high fuel prices; our inability to
successfully implement and operate our expanded scheduled
airport-to-airport expedited ground freight network; our inability to
successfully operate and integrate the Air Container Transport operation
and to retain their customers; failure of key suppliers and vendors to
perform; our inability to attract sufficient customers at economical
prices for our expanded ground network; unforeseen increases in
liquidity and working capital requirements related to our expanded
ground network; potential competitive responses from other operators of
nationwide airport-to-airport ground freight networks; the continued
impact of terrorist attacks, global instability and potential U.S.
military involvement; the Company's significant lease obligations and
indebtedness; the competitive environment and other trends in the
Company's industry; changes in laws and regulations; changes in the
Company's operating costs including fuel; changes in the Company's
business plans; interest rates and the availability of financing;
limitations upon financial and operating flexibility due to the terms of
our credit facility; liability and other claims asserted against the
Company; labor disputes; the Company's ability to attract and retain
qualified personnel; and inflation. For a discussion of these and other
risk factors, see the Company's most recent Annual Report on Form 10-K
and Quarterly Reports on Form 10-Q filed with the Securities and
Exchange Commission. All of the forward-looking statements are qualified
in their entirety by reference to the risk factors discussed therein.
These risk factors may not be exhaustive. The Company operates in a
continually changing business environment, and new risk factors emerge
from time to time. Management cannot predict such new risk factors, nor
can it assess the impact, if any, of such new risk factors on the
Company's business or events described in any forward-looking
statements. The Company disclaims any obligation to publicly update or
revise any forward-looking statements after the date of this report to
conform them to actual results.
KITTY HAWK, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
Three months ended September 30,
Nine months ended September 30,
2006
2006
2006
2005
(in thousands, except share and per share data)
Revenue:
Scheduled freight network
$ 55,093
$ 39,724
$ 139,443
$ 108,028
ACMI
19
400
949
932
Miscellaneous
2,809
566
3,084
1,810
Total revenue
57,921
40,690
143,476
110,770
Cost of revenue:
Flight expense
8,465
8,134
25,222
21,415
Transportation expense
16,863
3,381
38,678
10,226
Fuel expense
15,869
13,874
43,223
39,059
Maintenance expense
4,136
3,219
11,747
8,271
Freight handling expense
9,718
6,472
26,671
19,277
Depreciation and amortization
1,041
966
2,570
2,791
Operating overhead expense
5,001
3,152
11,320
8,974
Total cost of revenue
61,093
39,198
159,431
110,013
Gross profit (loss)
(3,172)
1,492
(15,955)
757
General and administrative expense
2,713
1,898
7,291
5,974
Operating loss
(5,885)
(406)
(23,246)
(5,217)
Other (income) expense:
Interest expense
169
66
311
209
Other, net
(28)
(63)
(510)
(750)
Net loss
(6,026)
(409)
(23,047)
(4,676)
Preferred stock dividends
291
—
881
—
Net loss allocable to common stockholders
$ (6,317)
$ (409)
$ (23,928)
$ (4,676)
Basic loss per share
$ (0.12)
$ (0.01)
$ (0.46)
$ (0.09)
Diluted loss per share
$ (0.12)
$ (0.01)
$ (0.46)
$ (0.09)
Weighted average common shares outstanding - basic
53,853,833
51,582,032
52,517,887
51,403,186
Weighted average diluted common shares outstanding - diluted
53,853,833
51,582,032
52,517,887
51,403,186
KITTY HAWK, INC. AND SUBSIDIARIES
BALANCE SHEET
September 30, 2006
December 31, 2005
(in thousands)
Cash and cash equivalents
$ 2,395
$ 26,650
Total assets
48,573
56,934
Notes payable and long-term obligations
10,373
2,304
Stockholders' equity
$ 6,091
$ 27,407
Kitty Hawk, Inc. (AMEX:KHK), the parent company of Kitty Hawk
Cargo, Inc., Kitty Hawk Ground, Inc. and Kitty Hawk Aircargo, Inc.,
today reported results for the third quarter of 2006. Revenue for the
third quarter of 2006 was $57.9 million, an increase of 42.3% as
compared to the $40.7 million reported for the third quarter of 2005.
Approximately $1.2 million of the increase in revenue for the third
quarter was attributable to the Company's expedited air freight
product and $14.2 million of the increase was attributable to the
expedited ground freight product. Kitty Hawk introduced its expedited
ground freight product in October 2005. Kitty Hawk generated a net
loss allocable to common stockholders for the third quarter of 2006 of
$6.3 million, or a loss of $0.12 per diluted common share, 29% less
than the loss reported for the second quarter of 2006. For the third
quarter of 2005, Kitty Hawk reported a net loss of $409,000 or a loss
of $0.01 per diluted common share.
"During the third quarter we made progress toward our goal of
diversifying our product offering and revenue," said Robert W. Zoller.
"Ground product revenue accounted for approximately 24% of third
quarter revenue as compared to no revenue from this product offering
during the third quarter of 2005.
"We have worked toward developing new marketing and sales
synergies, scheduling efficiencies and improved cost controls. We
continued to emphasize optimizing our ground transportation services,
including matching customer service requirements and available
capacity as well as transitioning to a higher percentage of
owner-operator, in-house and lower-cost regional contract trucks.
While we have more work to do, we are now effectively cross selling to
the customers of the ACT operations that we acquired in late June as
well as attracting new domestic and international customers to the
Kitty Hawk brand as demonstrated by a year-over-year chargeable weight
increase of 319%. In addition, the number of active ground customer
accounts has nearly doubled since the first of the year," Mr. Zoller
added.
"We are also beginning the initial integration of our new
information technology system for improved customer booking, tracking,
communications, billings and collection. This new system is designed
to transform our information technology into a competitive advantage
for the Company and provide our customers with ease of use that is as
good as or better than, other scheduled freight network systems. We
expect to begin generating benefits from the installation during the
first quarter of 2007," Mr. Zoller said.
"Our traditional seasonal upswing appears to be weaker than
historic levels. However, we are continuing to position the company
for improved performance in the future. We expect business development
efforts to generate results during the fourth quarter, and are
continuing to focus on high-level customer service, yield improvement,
capacity management and cost control," concluded Mr. Zoller.
Scheduled freight revenue for the third quarter of 2006 was $55.1
million, an increase of 38.7% compared to the third quarter of 2005.
Third quarter 2006 system chargeable weight (accounting for associated
oversize and special handling requirements) increased 319% as compared
to the third quarter of 2005 and average yield decreased 65%, both
resulting from the launch of the Company's new expedited ground
product which has significantly greater volumes and lower yields than
the Company's expedited air products. Expedited ground product
revenues during the third quarter of 2006 were $14.2 million.
Transportation expense for the second quarter increased $13.5
million or 398.8% from the quarter ended September 30, 2005. This
increase is primarily due to a $12.6 million increase related to our
network trucking expense including purchased transportation costs and
owner operator expenses due to providing our expedited ground freight
product, higher fuel surcharges charged by the third party truck
carriers and costs to operate the assets acquired from ACT. Kitty
Hawk's aircraft fuel averaged $2.32 per gallon as compared to $2.01
per gallon for the quarter ended September 30, 2005, an increase of
15.7%. Aircraft fuel expense increased $1.2 million. The increase
resulted from an increase in the average cost of aircraft fuel of $2.0
million partially offset by a $0.8 million decrease in fuel
consumption. Operating the trucks acquired from ACT in the network
during the third quarter of 2006 contributed $0.8 million to the
increase in reported total fuel expense.
Important information about the Company's results from operations
and other subsequent events that should be read in conjunction with
this release, including an update of a previously disclosed proposed
daytime network for portions of November and December and a recent
amendment to the Company's credit facility are included in the Form
10-Q for the period ended September 30, 2006 filed by the Company
earlier today.
Conference Call Information
Management will host a conference call on Tuesday, November 14,
2006 at 5:00 p.m. Eastern time to review the financial results. To
access the call, dial 800-257-7063, or 303-205-0044 for international
callers. To listen to the live web cast go to
www.kittyhawkcompanies.com under the Investor Relations area of the
web site. A replay of the conference call will be available
approximately one hour after the call's conclusion and through
midnight ET November 22 by dialing 800-405-2236 for domestic callers
or 303-590-3000 for international callers, both using the passcode
11075445#.
About Kitty Hawk, Inc.
www.kittyhawkcompanies.com
As a recognized leader in customer service, Kitty Hawk is the
premier provider of guaranteed, mission-critical, scheduled overnight
air and scheduled time-definite expedited ground freight
transportation to major business centers and surrounding communities
throughout North America, including, Alaska, Hawaii, Toronto, Canada,
and San Juan, Puerto Rico. With more than 30 years experience in the
aviation and air freight industries, Kitty Hawk plays a key connecting
role in the global supply chain. Kitty Hawk serves the logistics needs
of more than 550 freight forwarders, integrated carriers, logistics
companies and major airlines with its extensive integrated air and
ground network, fleet of Boeing 737-300SF and 727-200 cargo aircraft,
as well as a 239,000 square-foot cargo warehouse, U.S. Customs
clearance and sort facility at its Fort Wayne, Indiana hub. In 2005,
Kitty Hawk became the North American launch customer for the
fuel-efficient and environmentally-friendly Boeing 737-300SF cargo
aircraft. Kitty Hawk's scheduled freight network and award-winning,
guaranteed overnight time-definite service are ideal for heavy-weight
shipments (over 150 lbs.), special goods with unique dimensions,
perishables, animals and other valuable shipments.
Statement under the Private Securities Litigation Reform Act:
This report may contain forward-looking statements that are
intended to be subject to the safe harbor protection provided by
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements relate to future
events or future financial and operating performance and involve known
and unknown risks and uncertainties that may cause actual results or
performance to be materially different from those indicated by any
forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "forecast," "may,"
"will," "could," "should," "expect," "intends," "plan," "believe,"
"potential" or other similar words indicating future events or
contingencies. Some of the things that could cause actual results to
differ from expectations are: economic conditions; the impact of high
fuel prices; our inability to successfully implement and operate our
expanded scheduled airport-to-airport expedited ground freight
network; our inability to successfully operate and integrate the Air
Container Transport operation and to retain their customers; failure
of key suppliers and vendors to perform; our inability to attract
sufficient customers at economical prices for our expanded ground
network; unforeseen increases in liquidity and working capital
requirements related to our expanded ground network; potential
competitive responses from other operators of nationwide
airport-to-airport ground freight networks; the continued impact of
terrorist attacks, global instability and potential U.S. military
involvement; the Company's significant lease obligations and
indebtedness; the competitive environment and other trends in the
Company\'s industry; changes in laws and regulations; changes in the
Company's operating costs including fuel; changes in the Company's
business plans; interest rates and the availability of financing;
limitations upon financial and operating flexibility due to the terms
of our credit facility; liability and other claims asserted against
the Company; labor disputes; the Company's ability to attract and
retain qualified personnel; and inflation. For a discussion of these
and other risk factors, see the Company's most recent Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities
and Exchange Commission. All of the forward-looking statements are
qualified in their entirety by reference to the risk factors discussed
therein. These risk factors may not be exhaustive. The Company
operates in a continually changing business environment, and new risk
factors emerge from time to time. Management cannot predict such new
risk factors, nor can it assess the impact, if any, of such new risk
factors on the Company's business or events described in any
forward-looking statements. The Company disclaims any obligation to
publicly update or revise any forward-looking statements after the
date of this report to conform them to actual results.
-0-
*T
KITTY HAWK, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS
Three months ended Nine months ended
September 30, September 30,
----------------------- -----------------------
2006 2006 2006 2005
----------- ----------- ----------- -----------
(in thousands, except share and per share data)
Revenue:
Scheduled freight
network $55,093 $39,724 $139,443 $108,028
ACMI 19 400 949 932
Miscellaneous 2,809 566 3,084 1,810
----------- ----------- ----------- -----------
Total revenue 57,921 40,690 143,476 110,770
Cost of revenue:
Flight expense 8,465 8,134 25,222 21,415
Transportation
expense 16,863 3,381 38,678 10,226
Fuel expense 15,869 13,874 43,223 39,059
Maintenance expense 4,136 3,219 11,747 8,271
Freight handling
expense 9,718 6,472 26,671 19,277
Depreciation and
amortization 1,041 966 2,570 2,791
Operating overhead
expense 5,001 3,152 11,320 8,974
----------- ----------- ----------- -----------
Total cost of
revenue 61,093 39,198 159,431 110,013
----------- ----------- ----------- -----------
Gross profit (loss) (3,172) 1,492 (15,955) 757
General and
administrative
expense 2,713 1,898 7,291 5,974
----------- ----------- ----------- -----------
Operating loss (5,885) (406) (23,246) (5,217)
Other (income)
expense:
Interest expense 169 66 311 209
Other, net (28) (63) (510) (750)
----------- ----------- ----------- -----------
Net loss (6,026) (409) (23,047) (4,676)
Preferred stock
dividends 291 -- 881 --
----------- ----------- ----------- -----------
Net loss allocable to
common stockholders $(6,317) $(409) $(23,928) $(4,676)
=========== =========== =========== ===========
Basic loss per share $(0.12) $(0.01) $(0.46) $(0.09)
=========== =========== =========== ===========
Diluted loss per share $(0.12) $(0.01) $(0.46) $(0.09)
=========== =========== =========== ===========
Weighted average
common shares
outstanding - basic 53,853,833 51,582,032 52,517,887 51,403,186
=========== =========== =========== ===========
Weighted average
diluted common shares
outstanding - diluted 53,853,833 51,582,032 52,517,887 51,403,186
=========== =========== =========== ===========
*T
-0-
*T
KITTY HAWK, INC. AND SUBSIDIARIES
BALANCE SHEET
September 30, December 31,
2006 2005
------------- ------------
(in thousands)
Cash and cash equivalents $ 2,395 $ 26,650
Total assets 48,573 56,934
Notes payable and long-term obligations 10,373 2,304
Stockholders' equity $6,091 $27,407
*T