Knight-Swift Transportation Holdings Inc. (NYSE:KNX) Q2 2023 Earnings Conference Call July 20, 2023 4:30 PM ET Company Participants Adam Miller - Chief Financial Officer and Treasurer David Jackson - President and Chief Executive Officer Conference Call Participants Jack Atkins - Stephens Scott Group - Wolfe Research Ravi Shanker - Morgan Stanley Ben Mohr - Deutsche Bank Michael DiMattia - UBS Ken Hoexter - Bank of America Jason Seidl - TD Cowen Christian Wetherbee - Citi Operator Good afternoon. My name is ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________________________________________________________________________________________________________________________________________________ FORM 10-Q _________________________________________________________________________________________________________________________________________________________ ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended M ...

Knight-Swift Transportation Holdings Inc. (NYSE:KNX) Q1 2023 Earnings Conference Call April 20, 2023 4:30 PM ET Company Participants David Jackson - President and CEO Adam Miller - CFO Conference Call Participants Tom Wadewitz - UBS Jack Atkins - Stephens Ravi Shanker - Morgan Stanley Ken Hoexter - Bank of America Jordan Alliger - Goldman Sachs Bascome Majors - Susquehanna Operator Good afternoon. My name is JP, and I'll be your conference operator today. At this time I would like to welcome everyone to the ...

KNX Q1 2023 Comparative Results 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation 2 Excludes intersegment transactions 3 Includes 8,988 trailers related to leasing activities recorded within our non-reportable operating segments for the first quarter of 2023 | --- | --- | --- | --- | |-------|----------|----------|--------| | | Q1 2023 | Q1 2022 \n(Dollars in thousands) | Change | | Revenue xFSC | $213,929 | $214,675 | (0.3 %) | | Operating income | $26,582 | $26,377 | 0.8 % ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 __________________________________________________________________________________________________________________________________________________________ FORM 10-K __________________________________________________________________________________________________________________________________________________________ (mark one) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year en ...

Financial Data and Key Metrics Changes - In Q4 2022, the company generated revenue of $475.2 million, a decrease of 0.5% compared to Q3 2022 [26] - The total adjusted operating loss was $5.7 million, showing a sequential improvement of $15.8 million compared to Q3 [27] - Net debt at the end of Q4 was $481.9 million, up from $369.8 million at the end of 2021 [37] Business Line Data and Key Metrics Changes - Truckload revenue net of fuel was $397 million, a sequential decrease of approximately $5 million due to declining spot market rates [14] - The Brokerage segment generated revenue of $78 million, with performance remaining stable compared to Q3 [17] - The Dedicated division continued to perform strongly, resonating well with customers due to high service levels [16] Market Data and Key Metrics Changes - The company noted that many customers are still working through inventory destocking, impacting freight demand [12] - Spot rates continued to be at record discounts compared to contractual rates, with a gap of up to $1 per mile observed [28][55] - The company expects smaller carriers to exit the market, which may help improve rates as supply decreases [45][106] Company Strategy and Development Direction - The company executed a realignment plan in 2022, transitioning operations to focus on timely and cost-effective freight delivery [8] - For 2023, the company aims to add more contracted freight to its network and reduce spot market exposure [42] - The focus remains on managing expenses, deploying capital prudently, and reducing overall debt levels [42] Management's Comments on Operating Environment and Future Outlook - Management anticipates a soft market for at least the first half of 2023 due to high inventory levels and excess capacity [44] - There is confidence that operational improvements will position the company well for when the market turns [25][48] - The company expects to see improvements in utilization and profitability as the market conditions become more favorable [100][106] Other Important Information - The company plans to reduce net capital expenditures to less than $75 million in 2023, focusing on maintaining its current fleet [35] - Liquidity at the end of Q4 was $106.1 million, with expectations for improvement in 2023 due to lower capital expenditures and improved operating profitability [39][40] Q&A Session Summary Question: Spot versus cost of operations - Management acknowledged that the gap between spot and contracted rates has been significant, with a focus on selectively converting to contracts to improve results [55][56] Question: Spot versus contract mix - The company aims to reduce spot exposure to approximately 20% of the over-the-road division, indicating a methodical approach to securing contracts [81][82] Question: Utilization improvements - Management clarified that while total miles may have declined, improvements in utilization were noted in normal working weeks, driven by better driver management [86][88] Question: Profitability outlook - Management indicated that profitability for the Truckload business may take longer to achieve, contingent on improving market rates and reducing spot exposure [100][113]

Financial Performance (Q3 2022 vs Q3 2021) - Operating revenue increased from $491.14 million to $547.828 million[5] - Revenue, excluding fuel surcharge, increased from $451.824 million to $477.428 million[5] - Operating loss increased from $6.635 million to $22.74 million[5] - Net loss attributable to controlling interest increased from $5.478 million to $19.79 million[5] - Adjusted net loss attributable to controlling interest increased from a profit of $3.43 million to a loss of $19.63 million[5] - Truckload operating ratio increased from 98% to 105.6%[5] - Brokerage operating ratio decreased from 101.6% to 94.9%[5] - Overall operating ratio increased from 98.6% to 104.2%[5] Truckload Segment - Truckload revenue, net of fuel surcharge, increased 11.3%[15] - The company incurred $30.1 million in prior period claims and other costs[12] Brokerage Segment - Brokerage revenue declined 16.9% from $90.82 million to $75.487 million[17,33] - Load count decreased 33.6%[17] - Gross margin increased from 11.2% to 20.5%[33] Cost Reduction Initiatives - The company's Realignment Plan has identified $28 million in annualized cost reductions[38] - The company expects full year net capital expenditures of $150 million[45]

Financial Data and Key Metrics Changes - The company generated revenue of $477.4 million in Q3 2022, an increase of 5.7% year-over-year, driven by increased truckload revenues of $40.9 million, partially offset by a decrease in brokerage segment revenue of $15.3 million [24] - The total adjusted operating loss was $21.5 million, a decrease of $28.1 million from Q3 2021 and a decrease of $24 million sequentially from Q2 2022 [25] - Insurance and claims expense reached $43.9 million, significantly higher than the eight-quarter average of $23.1 million, primarily due to unexpected claims from prior years [26] Business Line Data and Key Metrics Changes - Truckload revenue net of fuel was $402 million, an increase of 11% year-over-year, attributed to higher truckload rates and an increase of 715 tractors compared to Q3 2021 [14] - The Brokerage segment generated revenue of $75 million, a decrease of 17% compared to Q3 2021, due to lower load counts as freight allocation prioritized the asset-based fleet [19] - The Dedicated division continued strong execution with high service levels, and there are opportunities for modest tractor count increases to enhance overall truckload earnings [18] Market Data and Key Metrics Changes - The overall market is experiencing a weak peak season compared to the previous two years, with excess capacity and declining spot rates [45] - Spot market rates have declined significantly, with a total decrease of approximately $0.70 per mile over the last three quarters [28] - The company expects smaller carriers to exit the market due to less profitable spot market opportunities, which may lead to a decline in used equipment prices [46] Company Strategy and Development Direction - The company announced a realignment plan aimed at improving operating profitability and cash flow, with an estimated $25 million in annualized cost reductions [8] - The focus is on getting back to the basics of trucking, enhancing service levels, and maintaining a disciplined capital allocation approach [10][48] - The company is prioritizing growth in the Dedicated segment while keeping overall truck count flat to improve profitability [70] Management's Comments on Operating Environment and Future Outlook - Management noted that the current market conditions are challenging, with expectations of a slow recovery in the market over the next couple of quarters [60] - The company is focused on improving utilization in the OTR fleet, which is crucial for enhancing operating results [48] - Management expressed confidence in the company's ability to navigate through the current environment by focusing on cost reductions and operational efficiency [96] Other Important Information - The company expects net capital expenditures to be below $100 million in 2023, reflecting a more conservative approach to capital allocation [33][42] - Liquidity at the end of Q3 2022 was $131.1 million, providing ample resources to fund operations and initiatives [39] Q&A Session Summary Question: Clarification on dedicated rates and spot rates - Management confirmed that dedicated rates are expected to be up 15% year-over-year while spot rates are down 10%, indicating a significant difference due to contract negotiations [52] Question: Actions to reduce debt and manage costs - Management highlighted opportunities to lower capital expenditures and divest non-core real estate assets to reduce overall debt [56][58] Question: Impact of insurance claims on future premiums - Management indicated that the recent spike in claims is not expected to significantly impact future insurance premiums due to the company's deductible structure [67] Question: Utilization challenges in a softer market - Management acknowledged that increasing utilization in a weaker market is difficult but expects slow incremental improvements as the market stabilizes [69] Question: Expectations for truckload rates next year - Management anticipates some downward pressure on contract rates in the early part of next year but believes that cost inflation will prevent significant rate declines [82] Question: Covenants and liquidity concerns - Management reassured that current liquidity levels are strong and that there are no immediate concerns regarding covenants [86]

U.S. XPRESS Earnings Call Supplement Third Quarter 2022 Disclaimer and Forward-Looking Statements Forward-Looking Statements This presentation (the "Presentation") contains forward‐looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward‐looking statements are made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995, as amended. These forward‐looking statemen ...

[PART I FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Knight-Swift Transportation Holdings Inc.'s unaudited condensed consolidated financial statements for the periods ended September 30, 2022, along with explanatory notes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of September 30, 2022, total assets increased to **$10.75 billion**, total liabilities decreased to **$3.93 billion**, and stockholders' equity rose to **$6.82 billion** Condensed Consolidated Balance Sheet Highlights (Unaudited) | Balance Sheet Item | Sep 30, 2022 (in thousands) | Dec 31, 2021 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $1,474,347 | $1,414,280 | | **Property and equipment, net** | $3,675,325 | $3,555,364 | | **Goodwill** | $3,518,589 | $3,515,135 | | **Total Assets** | **$10,747,367** | **$10,655,500** | | **Total Current Liabilities** | $912,352 | $1,074,816 | | **Total Liabilities** | **$3,930,754** | **$4,112,050** | | **Total Stockholders' Equity** | **$6,816,613** | **$6,543,450** | [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Q3 2022 saw total revenue increase to **$1.90 billion** while net income decreased, whereas year-to-date total revenue grew to **$5.68 billion** with increased net income Q3 2022 vs Q3 2021 Performance (Unaudited) | Metric | Q3 2022 (in thousands) | Q3 2021 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,896,839 | $1,642,445 | +15.5% | | Operating Income | $265,441 | $270,087 | -1.7% | | Net Income Attributable to Knight-Swift | $194,795 | $206,178 | -5.5% | | Diluted EPS | $1.21 | $1.23 | -1.6% | YTD 2022 vs YTD 2021 Performance (Unaudited) | Metric | YTD Sep 30, 2022 (in thousands) | YTD Sep 30, 2021 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $5,684,959 | $4,181,160 | +36.0% | | Operating Income | $889,305 | $623,461 | +42.6% | | Net Income Attributable to Knight-Swift | $622,624 | $488,772 | +27.4% | | Diluted EPS | $3.80 | $2.93 | +29.7% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2022, net cash from operating activities increased to **$1.10 billion**, while investing activities used less cash and financing activities reversed to a net outflow YTD Cash Flow Summary (Unaudited) | Cash Flow Activity | YTD Sep 30, 2022 (in thousands) | YTD Sep 30, 2021 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,099,195 | $817,524 | | Net cash used in investing activities | ($358,626) | ($1,548,757) | | Net cash (used in) provided by financing activities | ($748,829) | $873,309 | | **Net (decrease) increase in cash** | **($8,260)** | **$142,076** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations for the financial statements, covering business segments, acquisitions, debt, legal contingencies, and share repurchase plans - The company operates four reportable segments: Truckload, LTL, Logistics, and Intermodal. As of September 30, 2022, the company operated an average of **18,072 tractors** in its Truckload segment and **3,147 tractors** in its LTL segment[22](index=22&type=chunk) - In 2021, the company made several acquisitions, including MME and ACT (LTL segment), UTXL (Logistics segment), and Eleos (non-reportable), impacting year-over-year comparability[27](index=27&type=chunk) - On October 3, 2022, the company entered into an asset purchase agreement for **$30.0 million** to acquire revenue equipment and certain intangibles[46](index=46&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance for Q3 and YTD September 30, 2022, covering market trends, segment results, operating expenses, liquidity, and non-GAAP measures [Executive Summary and Key Highlights](index=27&type=section&id=Executive%20Summary%20and%20Key%20Highlights) For the nine months ended September 30, 2022, consolidated revenue grew **29.5%** and operating income improved **42.6%** to **$889.3 million**, with strong operating cash flow and shareholder returns - YTD consolidated revenue growth was **29.5%** (excluding fuel surcharge), with a **42.6%** improvement in consolidated operating income to **$889.3 million**[112](index=112&type=chunk) - The LTL segment achieved an **83.0% Adjusted Operating Ratio**, benefiting from strong yield and synergy capture[114](index=114&type=chunk) - The Logistics segment's operating income improved **125.9%** with a **44.6%** growth in load count[114](index=114&type=chunk) - During the YTD period, the company generated **$1.1 billion** in operating cash flows, repurchased **$299.9 million** of its shares, and paid **$59.0 million** in dividends[114](index=114&type=chunk) [Market Trends and Outlook](index=29&type=section&id=Market%20Trends%20and%20Outlook) The Q4 2022 outlook anticipates a moderating freight market, stable LTL demand, continued inflationary pressures, and projected net cash capital expenditures of **$525-$575 million** - The freight market outlook for Q4 2022 includes moderating consumer demand, a muted peak season, and stable LTL demand[122](index=122&type=chunk) - Company outlook for Q4 2022 includes rates inflecting negatively YoY, stable truck count, and year-over-year increases in LTL revenue and margin[122](index=122&type=chunk) - Expected net cash capital expenditures for the full year 2022 are in the range of **$525 – $575 million**, excluding potential acquisitions[122](index=122&type=chunk) [Segment Review](index=32&type=section&id=Segment%20Review) This section details the performance of the four reportable segments, highlighting varied results with strong improvements in LTL and Logistics, and mixed outcomes for Truckload and Intermodal Truckload Segment Performance - Q3 2022 vs Q3 2021 | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Revenue (ex. fuel, intersegment) | $967.8M | $933.2M | +3.7% | | Adjusted Operating Income | $176.1M | $206.9M | -14.9% | | Adjusted Operating Ratio | 81.8% | 77.8% | +400 bps | | Total miles per tractor | 19,391 | 20,233 | -4.2% | LTL Segment Performance - Q3 2022 vs Q3 2021 | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Adjusted Operating Income | $34.9M | $21.0M | +66.4% | | Adjusted Operating Ratio | 84.5% | 87.5% | -300 bps | | LTL revenue xFSR per hundredweight | $14.37 | $12.44 | +15.5% | Logistics Segment Performance - Q3 2022 vs Q3 2021 | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Adjusted Operating Income | $27.8M | $27.5M | +1.2% | | Gross margin percentage | 20.9% | 18.1% | +280 bps | | Revenue per load | $1,985 | $2,513 | -21.0% | Intermodal Segment Performance - Q3 2022 vs Q3 2021 | Metric | Q3 2022 | Q3 2021 | Change | | :--- | :--- | :--- | :--- | | Operating income | $12.8M | $9.5M | +34.5% | | Operating ratio | 90.2% | 91.5% | -130 bps | | Average revenue per load | $3,699 | $2,902 | +27.5% | | Load count | 35,354 | 38,856 | -9.0% | [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) As of September 30, 2022, the company maintained **$1.26 billion** in total unrestricted liquidity, with expected full-year net cash capital expenditures of **$525-$575 million** Sources of Liquidity as of Sep 30, 2022 | Source | Amount (in thousands) | | :--- | :--- | | Cash and cash equivalents | $194,082 | | Availability under 2021 Revolver | $924,754 | | Availability under 2021 RSA | $55,700 | | **Total unrestricted liquidity** | **$1,262,393** | - Net cash capital expenditures are expected to be in the range of **$525.0 – $575.0 million** for the full-year 2022, excluding potential acquisitions[240](index=240&type=chunk) - As of September 30, 2022, the company had **$200.0 million** remaining under its 2022 Share Repurchase Plan[246](index=246&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=58&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from variable interest rates and diesel fuel price fluctuations, with a **1%** interest rate increase potentially raising annual interest expense by **$14.7 million** - The company has exposure to variable interest rates. A hypothetical **1%** increase in interest rates would increase annual interest expense by **$14.7 million**, assuming borrowing levels as of September 30, 2022[258](index=258&type=chunk) - The company has commodity price risk related to diesel fuel. The weekly average diesel price increased to **$5.09/gallon** in Q3 2022 from **$3.36/gallon** in Q3 2021. While fuel surcharges mitigate this, the company is not fully hedged against price fluctuations[259](index=259&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2022, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report[260](index=260&type=chunk) - There were no changes in the company's internal control over financial reporting during the quarter ended September 30, 2022, that materially affected, or are reasonably likely to materially affect, internal controls[261](index=261&type=chunk) [PART II OTHER INFORMATION](index=60&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) Information on legal proceedings is incorporated from Note 9, with management assessing no material adverse effect on the company's financial position or operations - Details on legal proceedings are provided in Note 9 of the financial statements. Management believes that loss contingencies from these matters are unlikely to have a material adverse effect on the company's overall financial position[266](index=266&type=chunk) [Issuer Purchases of Equity Securities](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2022, the company did not repurchase common stock, with **$200.0 million** remaining available under the 2022 Share Repurchase Plan Share Repurchases - Q3 2022 | Period | Total Number of Shares Purchased (in thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | July 2022 | — | $ — | | August 2022 | — | $ — | | September 2022 | — | $ — | | **Total** | **—** | **$ —** | - As of September 30, 2022, approximately **$200.0 million** remained available for purchase under the 2022 Knight-Swift Share Repurchase Plan[268](index=268&type=chunk) [Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - Exhibits filed include CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906, and XBRL interactive data files[272](index=272&type=chunk)