PART I FINANCIAL INFORMATION Financial Statements The company's financial statements reflect stable total assets at $12.5 billion and increased net income and EPS for H1 2025 Condensed Consolidated Balance Sheets Balance Sheet Summary (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $1,444,018 | $1,448,741 | | Property and equipment, net | $4,616,069 | $4,703,385 | | Goodwill | $3,962,142 | $3,962,142 | | Total Assets | $12,523,435 | $12,698,532 | | Total Current Liabilities | $1,625,012 | $1,706,751 | | Total Liabilities | $5,390,517 | $5,581,727 | | Total Stockholders' Equity | $7,132,918 | $7,116,805 | | Total Liabilities and Stockholders' Equity | $12,523,435 | $12,698,532 | Condensed Consolidated Statements of Comprehensive Income Income Statement Summary (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | YTD 2025 | YTD 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $1,861,940 | $1,846,654 | $3,686,302 | $3,669,121 | | Operating Income | $72,616 | $63,460 | $139,279 | $84,015 | | Net Income Attributable to Knight-Swift | $34,243 | $20,300 | $64,882 | $17,665 | | Diluted EPS | $0.21 | $0.13 | $0.40 | $0.11 | | Dividends Declared per Share | $0.18 | $0.16 | $0.36 | $0.32 | Condensed Consolidated Statements of Cash Flows Cash Flow Summary - Year-to-Date (in thousands) | Cash Flow Activity | June 30, 2025 | June 30, 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) | | Net decrease in cash, restricted cash, and equivalents | ($25,274) | ($130,429) | Notes to Condensed Consolidated Financial Statements - The company operates four reportable segments: Truckload, LTL, Logistics, and Intermodal. As of June 30, 2025, the company operated an average of 21,610 tractors in its Truckload segment and 4,108 tractors in its LTL segment22 - On July 30, 2024, the company acquired the operating assets of Dependable Highway Express, Inc. (DHE) for a total consideration of $185.0 million, funded by borrowing on the 2021 Revolver. The goodwill from this acquisition is expected to be tax-deductible303132 - The effective tax rate for Q2 2025 was 29.2%, down from 37.2% in Q2 2024. For the year-to-date period, the rate was 27.5% in 2025 compared to 32.4% in 2024, primarily impacted by an increase in pre-tax income37 - On July 8, 2025, the company entered into a new $2.5 billion unsecured credit facility (the "2025 Debt Agreement"), which replaced the 2021 Debt Agreement and the 2023 Term Loan. This new facility includes a $1.5 billion revolver and two term loans totaling $1.0 billion5963 - As of June 30, 2025, the company had outstanding commitments to purchase revenue equipment of $416.4 million for the remainder of 202567 - No share repurchases were made during the quarter or year-to-date periods ended June 30, 2025. The company has $200.0 million remaining under its 2022 share repurchase plan74 Management's Discussion and Analysis of Financial Condition and Results of Operations Management reports significant operating income growth in H1 2025, driven by Truckload improvements, while LTL expansion costs pressured margins amid soft freight demand Executive Summary - Consolidated operating income increased 65.8% to $139.3 million, and net income attributable to Knight-Swift increased 267.3% to $64.9 million for the first half of 2025 compared to the same period in 2024112 - Truckload: Achieved a 96.3% operating ratio (95.1% adjusted) in H1 2025, with a 1.3% reduction in Adjusted Operating Expenses per mile113 - LTL: Operating ratio was 95.8% (93.6% adjusted) in H1 2025. Margins were negatively impacted by start-up costs from opening ten new locations113 - Logistics: Achieved a 96.0% operating ratio (95.2% adjusted) in H1 2025, with revenue increasing 4.4% year-over-year113 - Intermodal: Experienced a 103.0% operating ratio in H1 2025, with declines in both revenue per load (-1.3%) and load count (-4.3%)113 - Generated $325.9 million in operating cash flow and $153.7 million in Free Cash Flow during H1 2025. As of June 30, 2025, the company had $216.3 million in unrestricted cash113 Market Trends and Company Outlook - The second quarter experienced unprecedented trade actions, causing volatility and a general softness in freight demand, especially on the West coast, which differed from typical seasonal trends117118 - The company is expanding its LTL network and seeing robust volume growth, but this expansion, along with integration costs, is currently pressuring margins119 - Q3 2025 Outlook: - Truckload: Revenue up low single-digits sequentially - LTL: Revenue (ex-fuel) growth of 20-25% YoY; Adjusted Operating Ratio to improve 100-200 bps sequentially - Logistics: Revenue and Adjusted Operating Ratio to be fairly stable sequentially - Intermodal: Load count to improve high single-digits sequentially; operating loss to improve121122127 - Full-year 2025 net cash capital expenditures are expected to be in the range of $525 million to $575 million127 Results of Operations — Segment Review Segment Operating Income (Loss) - Q2 2025 vs Q2 2024 (in thousands) | Segment | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Truckload | $45,420 | $23,483 | | LTL | $18,333 | $33,049 | | Logistics | $5,547 | $4,759 | | Intermodal | ($3,429) | ($1,717) | | All Other Segments | $6,745 | $3,886 | | Total Operating Income | $72,616 | $63,460 | - Truckload (Q2): Adjusted Operating Ratio improved 260 bps to 94.6% YoY, driven by a 2.6% reduction in Adjusted Operating Expenses per mile. Miles per tractor improved 4.0% YoY147 - LTL (Q2): Revenue (ex-fuel) grew 28.4% YoY, with shipments per day up 21.7%. Adjusted Operating Ratio was 93.1%, a 110 bps sequential improvement from Q1 2025, but down from 85.9% in Q2 2024 due to expansion costs154 - Logistics (Q2): Adjusted Operating Ratio was 94.8%. Revenue decreased 2.6% YoY as an 11.7% decline in load count was mostly offset by a 10.6% increase in revenue per load163 - Intermodal (Q2): Operating ratio increased to 104.1%. The segment was significantly impacted by a 12.4% decrease in load count and a 1.6% decline in revenue per load168 Liquidity and Capital Resources Sources of Liquidity as of June 30, 2025 (in thousands) | Source | Amount | | :--- | :--- | | Cash and cash equivalents, excluding restricted cash | $216,320 | | Availability under 2021 Revolver | $784,961 | | Availability under 2023 RSA | $270 | | Total unrestricted liquidity | $1,001,551 | - Expected net cash capital expenditures for full-year 2025 are projected to be between $525 million and $575 million, primarily for replacing equipment and investing in the terminal network247 - On July 8, 2025, the company replaced its 2021 Revolver with a new 2025 Revolver maturing in 2030. As of that date, $810.0 million was available under the new facility248 - The company had a working capital deficit of $181.0 million as of June 30, 2025, primarily due to the current classification of the 2023 RSA, which it intends to refinance before its October 2025 maturity253 Quantitative and Qualitative Disclosures About Market Risk The company reports that there have been no material changes from the market risks previously disclosed in its 2024 Annual Report on Form 10-K - There have been no material changes from the market risks discussed in the section entitled "Quantitative and Qualitative Disclosures About Market Risk" set forth in Part II, Item 7A of our 2024 Annual Report263 Controls and Procedures Management, including the CEO and CFO, concluded the company's disclosure controls were effective as of June 30, 2025, with no material changes to internal controls during the quarter - The principal executive officer and principal financial officer have concluded that the company's disclosure controls and procedures are effective as of the end of the period covered by the report264 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls265 PART II OTHER INFORMATION Legal Proceedings Information regarding the company's legal proceedings is incorporated by reference from Note 9 of the condensed consolidated financial statements - Information about legal proceedings is detailed in Note 9 of the financial statements269 Risk Factors There have been no material changes to the risk factors previously disclosed in the company's 2024 Annual Report - The company refers to the risk factors described in its 2024 Annual Report, indicating no material changes270 Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase common stock in Q2 2025, retaining $200.0 million for future repurchases under its 2022 plan - No shares were repurchased during the period from April 1, 2025, to June 30, 2025271 - As of June 30, 2025, the approximate dollar value of shares that may yet be purchased under the plan is $200,041,000271 Other Information During the second quarter of 2025, no director or officer of the company adopted or terminated a Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025272 Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications by the CEO and CFO as required by the Sarbanes-Oxley Act of 2002 - Exhibits filed include CEO and CFO certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act275
Knight-Swift Transportation (KNX) - 2025 Q2 - Quarterly Report