Knight-Swift Transportation (US:KNX)2025-04-30 18:03Financial Performance - Consolidated operating income increased 224.3% to $66.7 million for the quarter ended March 31, 2025, compared to the same period last year [107]. - Net income attributable to Knight-Swift rose 1262.8% to $30.6 million for the quarter ended March 31, 2025 [107]. - Total revenue for the quarter was $1,824.4 million, slightly up from $1,822.5 million in the previous year [109]. - The company reported a $33.3 million increase in net income to $30.6 million in the first quarter of 2025, compared to a $2.6 million loss in the same period last year [128]. - Adjusted Operating Income increased by 59.7% year-over-year to $46,485, while GAAP Operating Income rose 92.7% to $44,600 [142]. - Adjusted Net Income attributable to Knight-Swift for Q1 2025 was $45,372,000, compared to $19,774,000 in Q1 2024 [207]. - Adjusted EPS for Q1 2025 was $0.28, up from $0.12 in Q1 2024 [208]. - Total revenue for Q1 2025 was $1,824,362,000, slightly up from $1,822,467,000 in Q1 2024 [212]. Segment Performance - Truckload segment achieved a 96.3% operating ratio, with revenue per loaded mile increasing 1.5% year-over-year for the first time in 10 quarters [108]. - LTL segment's operating ratio was 96.4%, with a 420 basis points year-over-year deterioration due to start-up costs and integration expenses [108]. - Logistics segment reported an 11.8% year-over-year revenue increase, with a gross margin of 18.1% [108]. - Intermodal segment's operating ratio was 102.0%, with a 1.1% decline in revenue per load year-over-year [108]. - Truckload Segment revenue increased by a low single-digit percent sequentially in the second quarter, with operating margins remaining stable [119]. - LTL Segment revenue, excluding fuel surcharge, grew by 25% - 30% year-over-year in the second quarter, driven by shipment count growth and yield improvement [119]. - Logistics Segment revenue decreased by a low single-digit percent sequentially in the second quarter, while the Adjusted Operating Ratio remained stable [125]. - Total revenue for the Truckload Segment was $1,192,550, a decrease of 5.6% from $1,263,015 in the same quarter of 2024 [216]. - Total revenue for the LTL Segment rose to $352,401, representing a 25% increase from $282,122 in the same quarter of 2024 [219]. - Total revenue for the Logistics Segment increased to $141,621, up 11.8% from $126,729 in the same quarter of 2024 [220]. Cash Flow and Liquidity - Generated $109.4 million in operating cash flows and $70.0 million in Free Cash Flow during the quarter [108]. - Free Cash Flow for the quarter ended March 31, 2025, was $69,991, reflecting a strong cash generation capability [222]. - Total unrestricted liquidity as of March 31, 2025, was $1,020,155, including cash and cash equivalents of $209,480 [223]. - Net cash provided by operating activities increased by $72,154 to $109,429 compared to the same quarter in 2024 [234]. - The working capital deficit improved to $193.8 million as of March 31, 2025, from $258.0 million as of December 31, 2024 [233]. Expenses and Costs - Salaries, wages, and benefits increased by $28,752,000 to $721,659,000, representing a 4.1% rise year-over-year [167]. - Fuel expenses decreased by $27,343,000 to $207,246,000, a decline of 11.7% compared to $234,589,000 in the previous year [170]. - Insurance and claims expenses dropped by $30,221,000 to $92,225,000, a decrease of 24.7% from $122,446,000 in Q1 2024 [176]. - Operating taxes and licenses increased by $3,037,000 to $34,366,000, reflecting a 9.7% rise year-over-year [181]. - Depreciation and amortization of property and equipment decreased by $4,386,000 to $177,479,000, a decline of 2.4% from $181,865,000 in the previous year [186]. - Amortization of intangibles increased by $703,000 to $19,246,000, a rise of 3.8% compared to $18,543,000 in Q1 2024 [189]. - Rental expense for Q1 2025 was $42,866,000, a decrease of 0.3% compared to Q1 2024 [190]. - Purchased transportation expense remained flat at $277,294,000, accounting for 15.2% of total revenue in Q1 2025 [194]. - Miscellaneous operating expenses decreased by 15.4% to $45,535,000, primarily due to an $8.9 million increase in gain on sales of property and equipment [197]. - Interest expense decreased by 2.5% to $40,203,000 in Q1 2025, attributed to lower interest rates despite higher debt balances [200]. - Income tax expense increased by 380.4% to $10,303,000, reflecting a higher pretax income with an effective tax rate of 25.4% [202]. Market Outlook and Strategic Initiatives - The company anticipates a cautious market outlook due to uncertainties in trade policy and potential impacts on freight volumes [114]. - The Truckload segment is expected to pursue opportunities through a decentralized operating model and further expand its network following the DHE Acquisition [123]. - The company anticipates an increase in depreciation and amortization expense as a percentage of revenue due to planned purchases of revenue equipment in 2025 [124]. - The company expects labor costs to remain inflationary, leading to potential future pay increases for driving associates [168]. - The company anticipates a lower pace of facility expansion in 2025 compared to 2024, focusing on revenue and margin expansion [151]. Debt and Financing - As of March 31, 2025, Knight-Swift had $209.5 million in unrestricted cash and $2.6 billion in outstanding debt [108]. - The 2021 Term Loan A-2 has an outstanding balance of $349.3 million, due September 2026 [236]. - The 2021 Term Loan A-3 has an outstanding balance of $769.5 million, due September 2026 [236]. - The 2023 Term Loan has an outstanding balance of $249.5 million, due September 2026 [236]. - Finance lease obligations total $566.9 million [236]. - The company reported a $10.4 million increase in cash used for acquisitions of leased properties [238]. - Net cash used in financing activities increased by $54.1 million, driven by an $87.0 million decrease in net borrowings on the 2021 Revolver [239]. Operational Challenges - The company experienced a qualified driver shortage, leading to increased compensation for driving associates [241]. - Operating expenses are sensitive to inflation, impacting costs for new equipment acquisition and maintenance [241]. - There have been no material changes in market risks as discussed in the previous annual report [243].