Knight-Swift Transportation (KNX) - 2025 Q2 - Quarterly Results

Q2 2025 Earnings Overview Knight-Swift Transportation Holdings Inc. reported its second quarter 2025 financial results, highlighting revenue growth and significant profitability improvements Key Financial Highlights Knight-Swift reported consolidated total revenue of $1.9 billion for Q2 2025, a 0.8% increase year-over-year, with operating income growing 14.4% to $72.6 million and significant EPS increases Q2 2025 Consolidated Financial Results (vs. Q2 2024) | Financial Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Total Revenue | $1,861.9M | $1,846.7M | +0.8% | | Operating Income | $72.6M | $63.5M | +14.4% | | Adjusted Operating Income | $103.8M | $88.5M | +17.2% | | Net Income (attributable to KNX) | $34.2M | $20.3M | +68.7% | | Adjusted Net Income (attributable to KNX) | $57.2M | $39.4M | +45.2% | | Diluted EPS | $0.21 | $0.13 | +61.5% | | Adjusted EPS | $0.35 | $0.24 | +45.8% | - The consolidated operating ratio for Q2 2025 was 96.1%, an improvement of 50 basis points, while the Adjusted Operating Ratio was 93.8%, an 80 basis point improvement over Q2 2024[2] CEO Commentary CEO Adam Miller emphasized leveraging cost initiatives to overcome a soft truckload market, noting progress in U.S. Xpress profitability and strong LTL volume growth despite integration costs - The company successfully navigated a soft truckload market by focusing on cost initiatives and operational agility, leading to sequential improvement in the Truckload segment's operating income and margin[7] - The LTL segment is experiencing strong customer response and shipment growth due to its service quality, but is also facing cost pressures from the integration of DHE and organic network expansion[7] - Customer uncertainty regarding the macroeconomic and policy landscape is making it challenging to forecast demand and plan for peak season activities[8] Other Financial Items (Income, Taxes, Dividend) Q2 2025 saw a significant increase in "Other income, net" to $13.2 million, a reduced effective tax rate, and a declared quarterly cash dividend of $0.18 per share - Other income, net was $13.2 million in Q2 2025, compared to $4.9 million in Q2 2024[8] - The effective tax rate for Q2 2025 was 29.2% on GAAP results and 28.0% on non-GAAP results, down from 37.2% and 31.1% respectively in Q2 2024[9] - The board of directors declared a quarterly cash dividend of $0.18 per share, which was paid on June 23, 2025[10] Segment Financial Performance This section details the financial and operational performance of Knight-Swift's individual business segments, including Truckload, LTL, Logistics, Intermodal, and other services Truckload Segment The Truckload segment significantly improved profitability with 87.5% Adjusted Operating Income growth and a 260 basis point Adjusted Operating Ratio improvement, driven by cost reductions and increased productivity Truckload Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue (ex-fuel/intersegment) | $1,073.3M | $1,102.8M | -2.7% | | Adjusted Operating Income | $58.4M | $31.2M | +87.5% | | Adjusted Operating Ratio | 94.6% | 97.2% | -260 bps | - The improvement in operating ratio was driven by cost-reduction efforts, with U.S. Xpress improving its margin by 300 basis points[4][13] - Productivity increased, with miles per tractor improving 4.0% year-over-year due to efforts to reduce underutilized assets[13] LTL Segment The LTL segment achieved strong 28.4% revenue growth but faced profitability challenges from DHE integration and network expansion, resulting in a 720 basis point deterioration in Adjusted Operating Ratio LTL Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue (ex-fuel surcharge) | $337.7M | $263.1M | +28.4% | | Adjusted Operating Income | $23.4M | $37.0M | -36.8% | | Adjusted Operating Ratio | 93.1% | 85.9% | +720 bps | - Key growth drivers included a 21.7% increase in shipments per day and a 9.9% increase in revenue per hundredweight (excluding fuel)[14] - The company opened three new service centers and replaced one during the quarter, contributing to a 27.5% year-over-year growth in door count[15] Logistics Segment The Logistics segment improved profitability with a 13.3% increase in Adjusted Operating Income and a 70 basis point improvement in Adjusted Operating Ratio, driven by gross margin gains despite lower load volume Logistics Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $128.3M | $131.7M | -2.6% | | Adjusted Operating Income | $6.7M | $5.9M | +13.3% | | Adjusted Operating Ratio | 94.8% | 95.5% | -70 bps | - Profitability was driven by operating efficiency and a 100 basis point improvement in gross margin, which reached 18.9%[4][17] - A 11.7% decline in load count was largely offset by a 10.6% increase in revenue per load[17] Intermodal Segment The Intermodal segment experienced a 13.8% revenue decline and an operating loss of $3.4 million due to weak import volumes, leading to a 104.1% operating ratio Intermodal Segment Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenue | $84.1M | $97.5M | -13.8% | | Operating Loss | $(3.4)M | $(1.7)M | -99.7% | | Operating Ratio | 104.1% | 101.8% | +230 bps | - The revenue decrease was primarily due to a 12.4% drop in load count, which was impacted by a decline in import volumes on the West coast[18] All Other Segments The "All Other" segments, including warehousing and leasing, reported strong results with 9.0% revenue growth and 73.6% operating income growth year-over-year All Other Segments Financials (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Revenue | $74.4M | $68.3M | | Operating Income | $6.7M | $3.9M | - The growth in revenue and operating income was primarily driven by the company's warehousing and leasing businesses[20] Financial Position and Outlook This section outlines Knight-Swift's liquidity, capital resources, and forward-looking earnings guidance, reflecting market uncertainties and strategic capital expenditure adjustments Liquidity and Capital Resources As of June 30, 2025, Knight-Swift maintained strong liquidity with $1.0 billion in cash and available liquidity, $2.6 billion in Net Debt, and $153.7 million in year-to-date Free Cash Flow Year-to-Date Cash Flow Summary (as of June 30) | Cash Flow Item (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $325,929 | $310,700 | | Net cash used in investing activities | $(189,617) | $(258,841) | | Net cash used in financing activities | $(161,586) | $(182,288) | - The company generated $153.7 million in Free Cash Flow for the year-to-date period ended June 30, 2025[23] - Full-year 2025 net cash capital expenditure guidance has been lowered to $525 million - $575 million, down from the original range of $575 million - $625 million[23] Q3 2025 Earnings Guidance Due to market uncertainty, Q3 2025 Adjusted EPS is projected between $0.36 and $0.42, with expectations for sequential improvements in Truckload and LTL segments - Q3 2025 Adjusted EPS is expected to range from $0.36 to $0.42[25] - Guidance highlights by segment for Q3 2025: - Truckload: Revenue to be up low single-digit percent sequentially - LTL: Revenue (ex-fuel) to grow 20% - 25% YoY, with Adjusted Operating Ratio improving 100-200 basis points sequentially - Logistics: Revenue and Adjusted Operating Ratio to be fairly stable sequentially - Intermodal: Load count to improve high single-digit percent sequentially[26][29] - The expected effective tax rate on adjusted income for Q3 2025 is approximately 27% to 28%[29] Financial Statements and Reconciliations This section provides the unaudited consolidated financial statements, including income statements and balance sheets, along with detailed segment operating statistics and non-GAAP financial reconciliations Condensed Consolidated Financial Statements This section presents the unaudited Condensed Consolidated Statements of Comprehensive Income and Balance Sheets for periods ending June 30, 2025, detailing the company's financial position and performance Year-to-Date Financial Summary (as of June 30, 2025) | Metric (in thousands) | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | | Total Revenue | $3,686,302 | $3,669,121 | | Operating Income | $139,279 | $84,015 | | Net Income Attributable to Knight-Swift | $64,882 | $17,665 | | Total Assets | $12,523,435 | N/A | | Total Liabilities | $5,390,517 | N/A | | Total Stockholders' Equity | $7,132,918 | N/A | Segment Operating Statistics This section provides unaudited operating statistics for each segment, offering insights into performance drivers such as miles per tractor, shipments per day, and load counts Q2 2025 Key Operating Metrics (vs. Q2 2024) | Segment & Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Truckload - Miles per tractor | 21,335 | 20,518 | +4.0% | | LTL - Shipments per day | 24,918 | 20,482 | +21.7% | | Logistics - Revenue per load | $2,025 | $1,831 | +10.6% | | Intermodal - Load count | 32,682 | 37,290 | -12.4% | Non-GAAP Financial Reconciliations This section explains and reconciles non-GAAP financial measures like Adjusted Operating Income and Adjusted EPS, used by management to assess core operating performance by excluding specific non-recurring or non-cash items - The company uses non-GAAP measures to improve comparability by removing items that, in management's opinion, do not reflect core operating performance, such as amortization, impairments, and certain legal or severance costs[40] Q2 2025 Reconciliation of GAAP Net Income to Adjusted Net Income | Item (in thousands) | Amount | | :--- | :--- | | GAAP: Net income attributable to Knight-Swift | $34,243 | | Amortization of intangibles (pre-tax) | $19,621 | | Impairments (pre-tax) | $10,584 | | Severance expense (pre-tax) | $941 | | Provision for income tax expense at effective rate | $(22,203) | | Non-GAAP: Adjusted Net Income Attributable to Knight-Swift | $57,179 |