Knight-Swift Transportation Holdings Inc (KNX, Financial) released its 8-K filing on July 24, 2024, reporting its financial results for the second quarter of 2024. Knight-Swift, the largest truckload carrier in the U.S., offers a diversified transportation portfolio, including full-truckload, less-than-truckload (LTL), truck brokerage, intermodal, and other logistics services.
Performance and Challenges
For the second quarter of 2024, Knight-Swift reported a net income attributable to the company of $20.3 million, with an adjusted net income of $39.4 million. The GAAP earnings per diluted share (EPS) were $0.13, while the adjusted EPS stood at $0.24, aligning with analyst estimates. The results included a $12.5 million charge for the settlement of an auto liability claim from 2020, which negatively impacted the adjusted EPS by $0.06 per share. Excluding this settlement, the adjusted EPS would have been $0.30.
Consolidated total revenue for the quarter was $1.8 billion, an 18.9% increase from the same period last year, primarily driven by the acquisition of U.S. Xpress Enterprises, Inc. However, consolidated operating income decreased by 32.5% to $63.5 million compared to the previous year.
Key Financial Achievements
Knight-Swift's diversified business model showed mixed results across its segments:
- Truckload: The segment reported a 97.2% adjusted operating ratio, with revenue excluding fuel surcharge and intersegment transactions increasing by 33.0% year-over-year due to the inclusion of U.S. Xpress. However, the segment faced a 5.5% decline in revenue per loaded mile.
- LTL: The segment achieved an 85.9% adjusted operating ratio, with a 15.1% year-over-year increase in revenue excluding fuel surcharge. Shipments per day increased by 8.4%, and revenue per hundredweight excluding fuel surcharge rose by 13.4%.
- Logistics: The segment reported a 95.5% adjusted operating ratio with a gross margin of 17.9%. Revenue excluding intersegment transactions grew by 11.8% year-over-year.
- Intermodal: The segment's operating ratio worsened to 101.8%, with a 1.7% decline in load count and a 4.9% decrease in revenue per load year-over-year.
- All Other Segments: This category generated an operating income of $3.9 million, marking its first operating profit in seven quarters.
Income Statement Highlights
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Total Revenue | $1,846,654 | $1,552,979 | 18.9% |
| Operating Income | $63,460 | $94,030 | (32.5%) |
| Net Income Attributable to Knight-Swift | $20,300 | $63,326 | (67.9%) |
| Adjusted Net Income | $39,375 | $78,618 | (49.9%) |
| GAAP EPS | $0.13 | $0.39 | (66.7%) |
| Adjusted EPS | $0.24 | $0.49 | (51.0%) |
Commentary and Analysis
Adam Miller, CEO of Knight-Swift, commented, "Our Truckload, Logistics, and Intermodal segments continue to navigate a challenging full truckload market. For much of the quarter, freight demand remained steady, and the excess capacity added during the upcycle has been slowly eroding. We saw a seasonal uptick in June, as a number of customers looked to secure additional capacity to support elevated volumes, but it is too early to call this a trend or for it to drive earnings results."
The company's performance highlights the resilience of its diversified business model amidst a challenging market environment. The acquisition of U.S. Xpress has significantly contributed to revenue growth, although it has also introduced integration challenges and impacted operating ratios.
Financial Metrics and Cash Flow
As of June 30, 2024, Knight-Swift had $1.1 billion in unrestricted cash and available liquidity, with $7.1 billion in stockholders' equity. The net debt stood at $2.5 billion. The company generated $310.7 million in operating cash flows for the year-to-date period, with free cash flow amounting to $52.1 million.
Capital expenditures, net of disposal proceeds, were $258.6 million for the year-to-date period, with an expected range of $600 million to $650 million for the full year 2024.
For more detailed financial information and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Knight-Swift Transportation Holdings Inc for further details.
