Knight-Swift Transportation (US:KNX)2026-02-19 17:34Financial Performance - Consolidated total revenue for 2025 was $7.5 billion, a 0.8% increase from 2024[278]. - Consolidated net income attributable to Knight-Swift decreased by 43.9% to $65.9 million in 2025[278]. - The adjusted net income attributable to Knight-Swift for 2025 was $204.7 million, compared to $172.1 million in 2024, reflecting a growth of approximately 19%[367]. - The adjusted earnings per diluted share (EPS) for 2025 was $1.26, up from $1.06 in 2024, indicating a year-over-year increase of about 18.9%[368]. - The operating income for 2025 was reported at $216.1 million, down from $243.4 million in 2024, resulting in an operating ratio of 97.1% compared to 96.7% in the previous year[370]. - Impairments in 2025 amounted to $98.3 million, significantly higher than $19.0 million in 2024, impacting overall profitability[370]. Segment Performance - Truckload segment reported a 97.0% operating ratio in 2025, with a 2.8% decrease in revenue, excluding fuel surcharge[279]. - LTL segment achieved a 97.4% operating ratio in 2025, with a 20.6% increase in revenue, excluding fuel surcharge[279]. - Logistics segment had a 96.0% operating ratio in 2025, with a 4.7% increase in revenue per load[279]. - Intermodal segment reported a 102.1% operating ratio in 2025, with a 19.2% decrease in operating loss despite a 1.0% improvement in revenue per load[279]. - Total revenue for the Truckload segment decreased by 3.4% year-over-year to $4,865,034, while revenue excluding fuel surcharge and intersegment transactions decreased by 2.8% to $4,283,398[301]. - The LTL segment achieved a revenue increase of 19.7% year-over-year, totaling $1,478,508, with revenue excluding fuel surcharge rising by 20.6% to $1,281,975[308]. - Intermodal segment revenue decreased by 5.8% to $364.9 million in 2025, driven by a 6.7% decrease in load count, partially offset by a 1.0% increase in revenue per load[318][319]. - All Other Segments reported a revenue increase of 7.9% to $287.5 million, with operating income rising by $40.6 million, primarily due to improvements in warehousing and leasing businesses[322]. Cash Flow and Liquidity - Operating cash flows for 2025 were $1.3 billion, boosted by $478.2 million from a new accounts receivable securitization program[280]. - The company ended 2025 with $1.1 billion in unrestricted cash and cash equivalents and $7.1 billion in stockholders' equity[281]. - Free Cash Flow for 2025 was reported at $763,228, reflecting strong operational cash generation[380]. - Total unrestricted liquidity as of December 31, 2025, was $1,097,231, with total liquidity including restricted cash at $1,185,551[382]. - The company had a working capital deficit of $143.7 million as of December 31, 2025, an improvement from a deficit of $258.0 million in 2024[393]. - Net cash provided by operating activities increased by $467,584 to $1,266,647 in 2025 compared to 2024[396]. - Net cash used in investing activities decreased by $238,728, primarily due to reduced cash invested in acquisitions[398]. - Net cash used in financing activities increased by $668,346, driven by higher repayments on finance leases and long-term debt[399]. Expenses and Cost Management - Consolidated salaries, wages, and benefits increased by 4.7% to $2.96 billion, largely due to a $129.5 million increase in LTL wages from service center expansion and increased shipment count[324][326]. - Fuel expenses decreased by 3.7% to $838.8 million, attributed to lower average weekly diesel prices and a 3.2% decrease in total miles driven by truckload company drivers[327][329]. - Insurance and claims expense decreased by 7.3% to $385.1 million, primarily due to exiting the third-party insurance business and improvements in claims experience[332][334]. - Operating taxes and licenses expenses increased by $7.6 million in 2025, primarily due to the expansion of the LTL network, representing a 5.9% increase compared to 2024[337]. - Communications expenses decreased by 5.9% to $29.3 million in 2025, remaining flat as a percentage of total revenue at 0.4%[338][339]. - Depreciation and amortization of property and equipment decreased by 0.9% to $711.1 million in 2025, accounting for 9.5% of total revenue[340][341]. - Amortization of intangibles increased by 2.3% to $77.0 million in 2025, primarily attributed to the DHE acquisition[343][344]. - Rental expenses decreased by 2.8% to $166.8 million in 2025, representing 2.2% of total revenue[345][346]. - Purchased transportation expenses decreased by 3.6% to $1.1 billion in 2025, accounting for 15.1% of total revenue[347][348]. - Miscellaneous operating expenses decreased by 9.6% to $179.0 million in 2025, primarily due to a $30.8 million increase in gains on sales of operating property[352][353]. Strategic Initiatives - The company plans to adopt the AAA Cooper brand across its entire LTL business effective January 1, 2026, to streamline operations and enhance customer experience[307]. - The company combined Abilene trucking operations into the Swift business to enhance efficiency and productivity[302]. - In 2025, Knight-Swift opened 16 new service centers, achieving a year-over-year growth in door count of 10.0%[311]. - Knight-Swift continues to seek both organic and inorganic opportunities for geographic expansion within the LTL market[311]. - The company plans to continue focusing on operational efficiencies and strategic acquisitions to enhance market position and profitability moving forward[373]. Tax and Impairments - The effective tax rate for 2025 was 31.2%, up from 22.1% in 2024, primarily due to a reduction in pre-tax earnings[360]. - The effective tax rate for adjusted EPS calculation was 26.7% in 2025, compared to 25.4% in 2024, reflecting changes in tax strategy[369]. - The company recorded a non-cash impairment of $27.4 million related to goodwill associated with the Abilene brand due to operational changes[407]. - The fair value of certain trade names was determined to be zero, resulting in non-cash impairments of $33.5 million for the MME, DHE, and Abilene brands[408]. Interest Rates and Financial Management - A hypothetical one percentage point increase in interest rates would increase annual interest expense by $13.4 million, given the current variable interest rate of 5.4%[428]. - The company primarily manages interest rate exposure through a mix of variable rate debt and fixed rate equipment lease financing[428]. - The company has not used derivative financial instruments to hedge fuel price exposure but continues to evaluate this possibility[429]. - Management judgment is required in determining the provision for income taxes and assessing the likelihood of recovering deferred tax assets[420].