Kitty Hawk, Inc. Reports Financial Results for the First Quarter of 2007
May 15 2007 - 3:05PM
Business Wire
Kitty Hawk, Inc. (AMEX:KHK), the parent company of Kitty Hawk
Cargo, Inc., Kitty Hawk Ground, Inc. and Kitty Hawk Aircargo, Inc.,
today reported financial results for the first quarter ended March
31, 2007. Revenue for the first quarter of 2007 was $42.0 million,
an increase of 4.7% from the $40.1 million reported for the first
quarter of 2006. Revenue from expedited ground freight products
more than doubled from the first quarter of 2006, reflecting the
acquisition of the assets of Air Container Transport (ACT) in June
2006. This increase offset a 20.8% decline in expedited air freight
revenue in the recent first quarter compared with the 2006 first
quarter. The Company reported a net loss of $11.6 million, or $0.22
per share, allocable to common stockholders in the first quarter of
2007 compared with a net loss of $8.7 million, or $0.17 per share,
allocable to common stockholders for the first quarter of 2006. The
net loss was primarily a result of reduced demand for expedited air
freight services. �Our first quarter results reflect the
industry-wide slowdown, as our customers in a variety of industries
face weak demand for their own products,� said Mel Keating,
Chairman of the Board of Kitty Hawk. �The Company remains focused
on driving additional cost-cutting measures, maximizing revenue
opportunities and continued operational excellence. The recent
launch of our new website is an example of an initiative that we
believe will enhance our competitive position through additional
customer service features.� First Quarter Review Scheduled freight
revenue for the first quarter of 2007 was $38.9 million, a decrease
of 2.9% compared to the first quarter of 2006. Revenue from
expedited ground freight increased from $3.1 million in the first
quarter of 2006 to $9.7 million in the recent first quarter. This
increase was offset by the decrease in expedited air freight
revenue which fell $7.7 million to $29.3 million from $37.0 million
in the first quarter last year. During the first quarter of 2007,
chargeable weight increased 142.0% reflecting the expansion of the
network through the ACT acquisition. This increase was offset by a
decline in the average yield of 57.3% in the first quarter of 2007
compared with the same period in 2006, primarily due to the change
in mix toward a higher volume of expedited ground freight volumes
which carry lower yields. The decrease in yields was partially
offset by a higher fuel surcharge charged to customers on the air
freight product. Flight expense in the recent first quarter
decreased 9.5% from the prior year�s first quarter, largely due to
lower aircraft lease expense, crew costs and aircraft insurance
expense due primarily to operating a reduced flight schedule in the
first quarter of 2007 as compared to the schedule operated in the
first quarter of 2006. Transportation expense for the first quarter
of 2007 increased 51.1% from the quarter ended March 31, 2006. This
increase was primarily due to higher network trucking expense to
provide our expedited ground freight product. Fuel expense
decreased 18.8% in the first quarter. Aircraft fuel cost averaged
$1.97 per gallon in the first quarter of 2007 as compared to $2.00
per gallon for the 2006 first quarter. During the recent first
quarter, the number of gallons of aircraft fuel used in the
scheduled freight network fell by 1.5 million primarily due to less
revenue hours flown in the network. Maintenance expense declined
2.2%. Freight handling expense increased by 5.0% due to a 142.3%
increase in chargeable weight offset by a 56.6% decrease in freight
handling expense per pound of chargeable weight. Operating overhead
grew 53.7%, primarily due to the ACT acquisition in June 2006.
Cash, restricted cash and short-term investments totaled $9.3
million at March 31, 2007. As of May 11, 2007, the Company had
drawn down $10.4 million on its Revolving Facility and had $4.0
million remaining in unused availability. The Board has authorized
James R. Kupferschmid, the Company�s chief financial officer, to
sign filings with the Securities and Exchange Commission, and
certifications related thereto, as the Company's principal
executive officer. Other than�signing such filings and
certifications as the Company's principal executive officer, Mr.
Kupferschmid's role and responsibilities have not changed About
Kitty Hawk, Inc. www.kittyhawkcompanies.com As a recognized leader
in customer service, Kitty Hawk is the premier provider of
guaranteed, mission-critical, overnight air, second morning-air and
expedited ground freight transportation to major business centers,
international freight gateways and surrounding communities
throughout North America, including, Alaska; Hawaii; Toronto,
Canada; and San Juan, Puerto Rico. Kitty Hawk�s scheduled freight
network and award-winning guaranteed overnight air or expedited
ground products are ideal for heavy-weight (over 150 lbs.),
high-value or high-security, special goods with unique dimensions,
perishables, animals and/or other shipments requiring special
handling. 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, domestic and
international airlines and logistics companies with its extensive
integrated air and ground network, fleet of Boeing 737-300SF and
727-200 cargo aircraft, as well as a 240,000-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. In late 2005 Kitty Hawk launched
its new coast-to-coast and border-to-border expedited ground
network reaching key business centers throughout the U.S., Canada
and Mexico. In early 2006 to manage the growing demand for its high
customer service ground freight product Kitty Hawk formed Kitty
Hawk Ground, Inc. In June 2006 Kitty Hawk Ground acquired and began
integrating the majority of the assets of 20-year-old Air Container
Transport (ACT), the dominant expedited airport-to-airport freight
trucking company operating from southwestern Canada to San Diego as
well as additional cities as far east as Texas and Illinois.
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; failure of key suppliers and vendors to
perform; our inability to attract sufficient customers at
economical prices for our air network or ground network; unforeseen
increases in liquidity and working capital requirements related to
our air and 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 revolving
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 release to
conform them to actual results. � KITTY HAWK, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS � � Three months ended March 31, 2007�
2006� � Revenue: Scheduled freight network $ 38,928� $ 40,087� ACMI
308� �� Miscellaneous 2,729� �� Total revenue 41,965� 40,087� Cost
of revenue: Flight expense 7,757� 8,568� Transportation expense
13,762� 9,108� Fuel expense 10,725� 13,204� Maintenance expense
3,652� 3,734� Freight handling expense 8,403� 8,000� Depreciation
and amortization 882� 753� Operating overhead expense 4,644� 3,021�
Total cost of revenue 49,825� 46,388� Gross loss (7,860) (6,301)
General and administrative expense 3,512� 2,302� Operating loss
(11,372) (8,603) Other (income) expense: Interest expense 70� 69�
Other, net (95) (288) Net loss (11,347) (8,384) Preferred stock
dividends accreted 291� 296� Net loss allocable to common
stockholders $ (11,638) $ (8,680) Basic loss per share $ (0.22) $
(0.17) Diluted loss per share $ (0.22) $ (0.17) Weighted average
common shares - basic 53,995,131� 51,675,408� Weighted average
diluted common shares outstanding - diluted 53,995,131� 51,675,408�
� KITTY HAWK, INC. AND SUBSIDIARIES BALANCE SHEET � March 31, 2007
December 31, 2006 (in thousands) � Cash and cash equivalents � $
4,158� � $ 9,589� Total assets 47,435� 53,823� Notes payable and
long-term obligations 9,441� 392� Stockholders' equity $ 7,521� $
14,898�
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