Knight-Swift Transportation Holdings Inc
For the period ended Jun 30, 2024. Filed Jul 31, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 31, 2024
KNX$58.41-1.8%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-05-01.
0001492691-24-000064
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-31.
0001492691-24-000080
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 242 previous paragraphs and 277 current paragraphs.
146 unchanged; 80 reworded; 41 added; 14 removed; 2 previous and 10 current paragraphs rearranged.
Tables are not compared: 33 previous and 33 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (41)
Current report
•Intermodal —103.6% operating ratio during the first half of 2024, as load count declined 1.7% and revenue per load declined 12.2% year-over-year, as a result of soft demand and competitive truck capacity.
Current report
•All Other Segments — Operating loss decreased to $16.6 million during the first half of 2024 from $22.7 million during the comparable period of 2023, largely as a result of exiting the third-party insurance business.
Current report
Truckload
Current report
LTL
Current report
•Adjusted operating ratios in the mid-to-high 80's as a result of normal seasonal progression and as we continue to expand the network,
Current report
Logistics
Current report
•Logistics load count sequentially growing mid single-digit percent in the third quarter and stabilizing in the fourth quarter, with adjusted operating ratios in the mid-90’s,
Current report
Intermodal
Current report
•Intermodal load count sequentially growing high single-digit percent in the third quarter and stabilizing in the fourth quarter with an operating ratio modestly below breakeven by the fourth quarter,
Current report
All Other
Current report
Additional
Current report
•Contributor —$44.4 million decrease in operating income within our Truckload segment primarily due to the $12.5 million charge for the settlement of an auto liability claim from 2020, 5.5% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and the 1.8% increase in cost per mile.
Current report
•Contributor — $4.8 million decrease in operating income within our Logistics segment due to increases in purchased transportation costs, while load count remained relatively flat.
Current report
•Offset — $4.9 million decrease in operating loss within our Intermodal segment, driven by a 10.6% decrease in operating expenses, partially offset by a 6.5% decrease in total revenue.
Current report
•Offset — $10.9 million increase in operating income within the All Other Segments, largely as a result of exiting the third-party insurance business at the end of the first quarter of 2024.
Current report
Operating Results: First Half 2024 Compared to First Half 2023
Current report
The $149.9 million decrease in net income attributable to Knight-Swift to $17.7 million during the first half of 2024 from $167.6 million during the same period last year includes the following:
Current report
•Contributor — $15.2 million decrease in operating income within our Logistics segment due to a 5.5% decline in load count.
Current report
•Contributor — $3.5 million decrease in operating income within our LTL segment partly due to severe winter weather disruptions during the first quarter.
Current report
•Offset — $6.1 million decrease in operating loss within the All Other Segments, largely as a result of exiting the third-party insurance business at the end of the first quarter.
Current report
•Offset — $46.6 million decrease in consolidated income tax expense, primarily due to a reduction of pre-tax income. This resulted in an effective tax rate of 32.4% for the first half of 2024, and 24.7% for the first half of 2023.
Current report
3 Includes 20,706 and 15,995 average company-owned tractors for the second quarter of 2024 and 2023, respectively. Includes 20,913 and 16,128 average company-owned tractors for the year-to date periods June 30, 2024 and 2023, respectively.
Current report
Comparison Between the Quarters Ended June 30, 2024 and 2023 —Truckload segment revenue, excluding fuel surcharge and intersegment transactions, was $1.1 billion, an increase of 33.0% year-over-year, reflecting a 5.7% decline in the legacy truckload business prior to the inclusion of U.S. Xpress. This segment continues to experience a difficult environment, operating with a 97.2% Adjusted Operating Ratio in the second quarter, which was negatively impacted by 120 basis points from a settlement of an auto liability claim from 2020. The Adjusted Operating Ratio was essentially flat with the first quarter as the seasonal demand patterns that improved late in the second quarter were largely offset by the claim settlement. Further, the inclusion of U.S. Xpress negatively impacted the Adjusted Operating Ratio by 130 basis points as this brand maintained breakeven results for the quarter. The year-over-year decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, narrowed to 5.5% in the current quarter as rates held stable with the first quarter. Cost per mile increased 1.8% year-over-year and was also flat with the first quarter, including the impact of the claim settlement in the current quarter. We remain disciplined on pricing and are unwilling to commit our capacity on what we view as unsustainable contractual rates.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —Truckload segment revenue, excluding fuel surcharge and intersegment transactions, was $2.2 billion, an increase of 29.6% year-over-year, reflecting an 8.6% decline in the legacy truckload business prior to the inclusion of U.S. Xpress. Adjusted Operating Ratio was 97.3%, largely driven by a 7.7% decrease in revenue per loaded mile, excluding fuel surcharge and intersegment transactions and a 2.7% increase in cost per mile, net of fuel surcharge recovery.
Current report
Comparison Between the Quarters Ended June 30, 2024 and 2023 —Our LTL segment produced an 85.9% Adjusted Operating Ratio during the second quarter of 2024, as revenue, excluding fuel surcharge, grew 15.1% and Adjusted Operating Income increased 8.2% year-over-year. Average shipments per day increased 8.4% year-over-year for the quarter. Revenue per hundredweight, excluding fuel surcharge, increased 13.4%, while revenue per shipment, excluding fuel surcharge, increased by 8.0%, reflecting a 4.7% decrease in weight per shipment.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —The LTL segment produced an 87.9% Adjusted Operating Ratio during the first half of 2024, as revenue, excluding fuel surcharge, increased 13.9%. Adjusted Operating Income decreased 5.4% due to severe winter weather experienced during the first quarter of 2024. In addition, maintenance and labor costs were higher than normal given initial set-up costs as we work to scale up our new facilities. Average shipments per day increased 7.3%. Revenue per hundredweight, excluding fuel surcharge, increased 13.3%, while revenue per shipment, excluding fuel surcharge, increased 7.8%, reflecting a 4.8% decrease in weight per shipment.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —The Logistics segment Adjusted Operating Ratio was 96.3%, with agross margin of 17.3% in the first half of 2024, down from 19.6% in the first half of 2023. The Logistics segment was challenged by the persistently soft demand environment as well as increases in purchased transportation costs that pressured gross margins. Logistics load count decreased 5.5%, reflecting the inclusion of U.S. Xpress logistics volumes. Revenue per load increased by 6.3% year-over-year, largely driven by the inclusion of U.S. Xpress logistics in the current period, as it has a different business mix.
Current report
2 Includes 555 and 595 company-owned tractors for the second quarter of 2024 and 2023, respectively.
Current report
Includes 554 and 568 company-owned tractors for the year-to-date periods ended June 30, 2024 and 2023, respectively.
Current report
Comparison Between the Quarters Ended June 30, 2024 and 2023 —The Intermodal segment improved its operating ratio to 101.8%, while the year-over-year decline in total revenue slowed to 6.5%, resulting in $97.5 million in revenue for the quarter. The drop in revenue was driven by a 4.9% decline in revenue per load, and a 1.7% decline in load count year-over-year as a result of soft demand and competitive truck capacity. We grew load count sequentially by 10.8% while maintaining stable revenue per load as compared to the first quarter, which helped improve the operating ratio by 380 basis points over the first quarter. We remain focused on growing our load count with disciplined pricing across a diverse group of customers and expect load count to continue to grow sequentially into the back half of the year.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —The Intermodal segment operated with a 103.6% operating ratio, while total revenue decreased 13.7% year-over-year to $185.5 million. The drop in revenue was driven by a 12.2% decline in revenue per load, and a 1.7% decline in load count year-over-year as a result of soft demand and competitive truck capacity.
Current report
Comparison Between the Quarters Ended June 30, 2024 and 2023 —Revenue declined 47.5% year-over-year, largely as a result of exiting our third-party insurance business. Operating income of $3.9 million within our All Other Segments was primarily driven by the warehousing and equipment leasing businesses.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —The $314.8 million increase in consolidated salaries, wages, and benefits for the first half of 2024, as compared to the first half of 2023, includes $301.6 million from the results of U.S. Xpress.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —Operations and maintenance expense increased $72.2 million for the first half of 2024, as compared to the same period last year. The increase for the first half of 2024 includes $71.6 million from the results of U.S. Xpress.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —Consolidated insurance and claims expense decreased by $47.5 million for the first half of 2024, as compared to the same period last year. The decrease for the first half of 2024 includes a $116.8 million decrease within our third-party insurance business as a result of the Company exiting the third-party insurance business at the end of the first quarter. This was partially offset by an increase of $46.9 million from the results of U.S. Xpress and an increase of $12.5 million for the settlement of an auto liability claim from 2020.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —Communications expense increased $3.9 million for the first half of 2024, as compared to the same period last year. The change includes $4.3 million from the results of U.S. Xpress. However, it remained relatively flat as a percentage of revenue, excluding truckload and LTL fuel surcharge, as compared to the same period last year.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —Consolidated purchased transportation expense increased $25.0 million for the first half of 2024, as compared to the same period last year. The increase is primarily due to the inclusion of $144.9 million from the results of U.S. Xpress, partially offset by decreased load volume within our logistics and intermodal businesses.
Current report
Comparison Between Year-to-Date June 30, 2024 and 2023 —The $46.6 million decrease in consolidated income tax expense was primarily due to a reduction of pre-tax income. This resulted in an effective tax rate of 32.4% for the first half of 2024, and 24.7% for the first half of 2023.
Current report
6 "Change in fair value of deferred earnout" reflects the expense for the change in fair value of a deferred earnout related to the acquisition of UTXL, which is recorded in "Miscellaneous operating expenses."
Current report
6 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 6.
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Removed paragraphs (14)
Previous report
•Intermodal —105.6% operating ratio during the quarter ended March 31, 2024, as load count declined 1.6% and revenue per load declined 19.1% year-over-year, partly due to less project revenue in the current period.
Previous report
•All Other Segments — Operating loss increased to $20.4 million in the current quarter including the $19.5 million operating loss of our third-party insurance business as well as $8.2 million of severance, legal accruals, and impairment charges. The third-party insurance business has ceased all operations as of the end of the first quarter.
Previous report
•Logistics volume up low single digit percent year-over-year in the second quarter and down mid-teens percent year-over-year in the third quarter as the prior year comparisons begin to include U.S. Xpress, with operating ratios in the mid-90’s,
Previous report
•Intermodal volumes flat year-over-year in the second quarter before improving high-single digit percent year-over-year in the third quarter, and operating ratios near breakeven,
Previous report
•Contributor — $10.3 million decrease in operating income within our Logistics segment due to 10.1% decline in load count as a result of weather disruptions as well as our decision to divert loads to the Truckload segment to offset the loss of contractual volumes in recent bids.
Previous report
•Contributor — $4.8 million increase in operating loss within the All Other Segments, primarily due to a $19.5 million operating loss of our third-party insurance business as well as $8.2 million of severance, legal accrual, and impairment charges.
Previous report
3 Includes 21,120 and 16,262 average company-owned tractors for the first quarter of 2024 and 2023, respectively.
Previous report
Comparison Between the Quarters Ended March 31, 2024 and 2023 —The Truckload segment continues to experience an extremely difficult environment, operating with a 97.3% Adjusted Operating Ratio in a first quarter that saw a more challenging pricing environment than anticipated and greater than average weather disruption that led to reduced volumes and higher operating costs. Excluding U.S. Xpress, the Adjusted Operating Ratio of the legacy truckload business worsened sequentially as a result of a 2.1% sequential decline in revenue per loaded mile excluding fuel surcharge (a 9.2% decline year-over-year), the headwinds on utilization and operating costs from the weather disruptions in January, and the loss of some contractual freight volumes early in the bid season as we were not willing to make further concessions on what we view as unsustainable contractual rates. These volume losses negatively impacted our network and utilization, and they pushed more of our capacity into the spot market. This increased spot exposure caused the sequential decline in revenue per mile as our primary contractual revenue per mile was fairly stable throughout the quarter. If there continues to be downward pressure on contractual rates, there may be additional exposure to the volatility of the spot market.
Previous report
Comparison Between the Quarters Ended March 31, 2024 and 2023 —Our LTL segment produced a 90.0% Adjusted Operating Ratio during the first quarter of 2024, as revenue, excluding fuel surcharge, grew 12.6% while Adjusted Operating Income decreased 20.6% year-over-year. With our LTL activities concentrated in regions exposed to severe winter weather during the quarter, the disruption was particularly impactful to our network and operating costs for our LTL segment. In addition, maintenance and labor costs were higher than normal as we stretch to cover growing volumes and extend our reach into new facilities. We anticipate these costs should normalize as we scale volumes and staffing while growing revenue in new locations. After being significantly impacted by the weather disruptions in January, volumes recovered well as average shipments per day increased 6.8% month-over-month in February and held steady into March, resulting in a 6.1% year-over-year increase for the quarter. Revenue per hundredweight, excluding fuel surcharge, increased 13.3%, while revenue per shipment, excluding fuel surcharge, increased by 7.5%, reflecting a 5.1% decrease in weight per shipment.
Previous report
2 Includes 552 and 542 company-owned tractors for the first quarter of 2024 and 2023, respectively.
Previous report
Comparison Between the Quarters Ended March 31, 2024 and 2023 —The Intermodal segment operated with a 105.6% operating ratio while total revenue decreased 20.4% year-over-year to $88.0 million. The drop in revenue was driven by a 19.1% decline in revenue per load, partly due to the inclusion of project revenue in the prior year period, and a 1.6% decline in load count as a result of soft demand and competitive truck capacity. The sequential decline in our load count of 4.0% as compared to the fourth quarter of 2023 is better than the historical average decline between fourth quarter and first quarter, and we remain focused on growing our load count with disciplined pricing and improving the efficiency of our assets as Intermodal continues to provide value to our customers and is complementary to the many services we offer.
Previous report
We expect to continue to grow with new customers and expand with existing customers. With our container fleet count now approximately 12,600, we do not expect to order additional containers until we achieve meaningful improvement in our turns per container. Our capex strategy is shifting to chassis moving forward as we work to better optimize our operation and reduce equipment costs.
Previous report
We expect that consolidated purchased transportation will increase as a percentage of revenue if we grow our logistics and intermodal businesses faster than our full truckload and LTL businesses. The increase could be partially offset if independent contractors exit the market due to regulatory changes.
Previous report
•$532.7 million: Finance lease obligations
Reworded paragraphs (80)
Previous wording
•future insurance claims, coverage, coverage limits, premiums, and retention limits, including exposure through our Iron Insurance line of business,
Current wording
•future insurance claims, coverage, coverage limits, premiums, and retention limits,
Previous wording
•future rates, operating profitability and margin, asset utilization, and return on capital,
Current wording
•future rates, operating profitability and margin, load count, asset utilization, and return on capital,
Previous wording
Consolidated operating income decreased 85.8% to $20.6 million during the quarter ended March 31, 2024, as compared to the same period last year. Net income attributable to Knight-Swift decreased 102.5% to a $2.6 million net loss.
Current wording
Consolidated operating income decreased 64.8% to $84.0 million during the first half of 2024, as compared to the same period last year. Net income attributable to Knight-Swift decreased 89.5% to $17.7 million.
Previous wording
•Truckload — 98.2% operating ratio during the quarter ended March 31, 2024. The Adjusted Operating Ratio 1 was 97.3%, with a 26.3% year-over-year increase in revenue, excluding fuel surcharge and intersegment transactions, as a result of the inclusion of the truckload business of U.S. Xpress. Adjusted Operating Ratio worsened by 1,070 basis points year-over-year primarily due to the 10.2% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and the 2.7% increase in cost per mile largely as a result of weather disruptions in the current quarter.
Current wording
•Truckload — 98.2% operating ratio during the first half of 2024. The Adjusted Operating Ratio 1 was 97.3%, with a 29.6% year-over-year increase in revenue, excluding fuel surcharge and intersegment transactions, as a result of the inclusion of the truckload business of U.S. Xpress. Adjusted Operating Ratio worsened by 820 basis points year-over-year primarily due to the 7.7% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and the 2.7% increase in cost per mile largely due to inflationary prices.
Previous wording
•LTL — 92.8% operating ratio during the quarter ended March 31, 2024. The Adjusted Operating Ratio 1 increased 430 basis point year-over-year to 90.0%, as a result of weather disruptions on volumes and operating costs, and incremental maintenance and labor costs as we expand. We opened seven new locations during the quarter as we continue to grow our network.
Current wording
•LTL — 90.9% operating ratio during the first half of 2024. The Adjusted Operating Ratio 1 increased 250 basis points year-over-year to 87.9%, as a result of weather disruptions on volume, incremental operating, maintenance, and labor costs as we expand. We opened 18 new locations during the first half of 2024 as we continue to grow our network.
Previous wording
•Logistics —98.0% operating ratio during the quarter ended March 31, 2024. The Adjusted Operating Ratio 1 was 97.1% with a gross margin of 16.8% while revenue, excluding intersegment transactions, declined 7.3%, including the U.S. Xpress logistics business. Load count decreased 10.1% due to the weather disruptions as well as our decision to divert loads to the Truckload segment to offset the loss of contractual volumes in recent bids.
Current wording
•Logistics —97.2% operating ratio during the first half of 2024. The Adjusted Operating Ratio 1 was 96.3% with a gross margin of 17.3% while revenue, excluding intersegment transactions, remained relatively flat, including the U.S. Xpress logistics business. Load count decreased 5.5% due to the soft demand environment.
Previous wording
•Liquidity and Capital —During the quarter ended March 31, 2024, we generated $37.3 million in operating cash flows. Free Cash Flow 1 for the quarter ended March 31, 2024 was a deficit of $104.0 million, largely driven by our decision to transfer $161.1 million of third-party insurance claims liabilities to another insurance company, which was funded by transferring the corresponding restricted cash held in trust for payment of third-party insurance claims. The use of restricted cash in this transaction does not impact the availability of operating cash for the needs of our ongoing business. We paid down $20.5 million in finance lease liabilities and $54.3 million in operating lease liabilities. We obtained financing of $62.0 million from net borrowings on our 2021 Revolver and 2023 RSA. As of March 31, 2024, we had a balance of $204.8 million in unrestricted cash and cash equivalents, $1.3 billion face value outstanding on the 2021 Term Loans and 2023 Term Loan, and $7.1 billion of stockholders' equity. We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants. See discussion under "Liquidity and Capital Resources" for additional information.
Current wording
•Liquidity and Capital —During the first half of 2024, we generated $310.7 million in operating cash flows and Free Cash Flow 1 of $52.1 million, which was negatively impacted by our decision to transfer $161.1 million of third-party insurance claim liabilities to another insurance company as discussed during the previous quarter, funded by transferring the corresponding restricted cash held in trust for payment of the third-party insurance claims. The use of restricted cash in this transaction does not impact the availability of operating cash for the needs of our ongoing businesses. We paid down $39.7 million in finance lease liabilities, $91.4 million in operating lease liabilities, and $21.6 million from net repayments on our 2021 Revolver and 2023 RSA. As of June 30, 2024, we had a balance of $186.5 million in unrestricted cash and cash equivalents, $1.3 billion face value outstanding on the 2021 Term Loans and 2023 Term Loan, and $7.1 billion of stockholders' equity. We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants. See discussion under "Liquidity and Capital Resources" for additional information.
Previous wording
2 Our tractor fleet within the Truckload segment had a weighted average age of 2.6 years and 2.7 years as of March 31, 2024 and 2023, respectively.
Current wording
2 Our tractor fleet within the Truckload segment had a weighted average age of 2.7 years and 2.6 years as of June 30, 2024 and 2023, respectively.
Previous wording
3 Our average trailers includes 8,769 and 8,988 trailers related to leasing activities recorded within our non-reportable segments for the quarter ended March 31, 2024 and 2023, respectively. Our trailer fleet within the Truckload segment had a weighted average age of 8.4 years and 10.2 years as of March 31, 2024 and 2023, respectively.
Current wording
3 Our average trailers includes 8,876 and 8,377 trailers related to leasing activities recorded within our non-reportable segments for the quarters ended June 30, 2024 and 2023, respectively. Our trailer fleet within the Truckload segment had a weighted average age of 9.1 years and 10.0 years as of June 30, 2024 and 2023, respectively. Our average trailers includes 8,822 and 8,683 trailers related to leasing activities recorded within our non-reportable segments for the year-to-date periods June 30, 2024 and 2023, respectively.
Previous wording
4 Our LTL tractor fleet had a weighted average age of 4.3 years and 4.2 years as of March 31, 2024 and 2023, respectively. Our LTL tractor fleet includes 611 and 619 tractors from ACT's and MME's dedicated and other businesses for the quarters ended March 31, 2024 and 2023, respectively.
Current wording
4 Our LTL tractor fleet had a weighted average age of 4.2 years as of both June 30, 2024 and June 30, 2023. Our LTL tractor fleet includes 612 and 604 tractors from ACT's and MME's dedicated and other businesses for the quarters ended June 30, 2024 and 2023, respectively. Our LTL tractor fleet includes 612 and 611 tractors from ACT's and MME's dedicated and other businesses for the year-to-date period June 30, 2024 and 2023, respectively.
Previous wording
5 Our LTL trailer fleet had a weighted average age of 8.6 years and 8.3 years as of March 31, 2024 and 2023, respectively. Our LTL trailer fleet includes 821 and 778 trailers from ACT's and MME's dedicated and other businesses for the quarter ended March 31, 2024 and 2023, respectively.
Current wording
5 Our LTL trailer fleet had a weighted average age of 8.6 years and 8.4 years as of June 30, 2024 and 2023, respectively. Our LTL trailer fleet includes 829 and 778 trailers from ACT's and MME's dedicated and other businesses for the quarters ended June 30, 2024 and 2023, respectively. Our LTL trailer fleet includes 825 and 778 trailers from ACT's and MME's dedicated and other businesses for the year-to-date periods June 30, 2024 and 2023, respectively.
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The national unemployment rate was 3.8%1 as of March 31, 2024, as compared to 3.5% as of March 31, 2023. The US gross domestic product, which is the broadest measure of goods and services produced across the economy, increased by 1.6%2 on a quarter-over-quarter basis, per preliminary third-party forecasts. The increase, compared to the fourth quarter increase of 3.4%, primarily reflected increases in consumer spending and housing investment that were partly offset by a decrease in inventory investment. Early estimates of the first quarter 2024 US employment cost index indicate a quarter-over-quarter increase of 4.2%1 and a sequential increase of 1.2%1.
Current wording
The national unemployment rate was 4.1%1 as of June 30, 2024, as compared to 3.6% as of June 30, 2023. The US gross domestic product, which is the broadest measure of goods and services produced across the economy, increased by 2.8%2 on a quarter-over-quarter basis, per preliminary third-party forecasts. The increase, compared to the first quarter increase of 1.4%, primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investments. These were partially offset by increased imports. The most recent US employment cost index indicates a quarter-over-quarter increase of 4.2%1 and a sequential increase of 1.2%1.
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Our Company outlook for the second and third quarters of 2024 includes the following:
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Our Company outlook for the third and fourth quarters of 2024 includes the following:
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•Truckload Segment revenue up slightly sequentially in the second quarter and again into the third quarter with slight sequential improvements in operating margins resulting in mid-90’s operating ratios, including U.S. Xpress breakeven operating results through the second quarter and high-90’s Adjusted Operating Ratio in the third quarter,
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•Truckload Segment revenue up slightly sequentially in the third quarter and again into the fourth quarter with sequential improvements in operating margins each quarter resulting in adjusted operating ratios steadily improving into the low to mid-90’s,
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•Truckload tractor count down modestly sequentially into the second quarter before stabilizing for the third quarter,
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•Truckload tractor count down modestly sequentially into the third quarter before stabilizing for the fourth quarter,
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•Truckload miles per tractor increasing high-single digit percent year-over-year in the second quarter and low-single digit percent year-over-year in the third quarter as the prior year comparisons begin to include U.S. Xpress,
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•Truckload miles per tractor increasing low-single digit percent year-over-year in the third quarter and fourth quarters as the prior year comparisons begin to include U.S. Xpress,
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•LTL revenue growth of 12-15% year-over-year as shipment count in the second and third quarters improves mid-to-high single digit percent year-over-year and revenue per hundredweight, excluding fuel surcharge, improves low-to-mid-teens percent year-over-year with an operating ratio in line with 2023 results,
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•LTL low double-digit percent growth in revenue, excluding fuel surcharge, year-over-year as shipment count in the third and fourth quarters improves mid single-digit percent year-over-year and revenue per hundredweight, excluding fuel surcharge, improves high single-digit percent year-over-year,
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•All Other segments operating income of approximately $10-15 million for the second and third quarters before including the $11.7 million intangible asset amortization,
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•All Other segments operating income, before including the $11.7 million quarterly intangible asset amortization, of approximately $10-15 million for the third quarter and modestly negative for the fourth quarter as some of these services experience their typical seasonal slowdown,
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•Net interest expense up modestly sequentially in the second quarter and stable into third quarter,
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•Net interest expense up modestly sequentially in the third quarter and fourth quarter,
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•Net cash capital expenditures for the full year 2024 expected range of $625 million - $675 million,
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•Net cash capital expenditures for the full year 2024 expected range of $600 million - $650 million,
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•Expected tax rate of approximately 25% to 26% for the year.
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•Expected tax rate of approximately 29% to 30% for the year.
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Note: The reported results do not include U.S. Xpress's operating results prior to its acquisition by the Company on July 1, 2023, in accordance with the accounting treatment applicable to the transaction. Accordingly, comparisons between the Company's year-to-date March 31, 2024 results and prior periods may not be meaningful.
Current wording
Note: The reported results do not include U.S. Xpress's operating results prior to its acquisition by the Company on July 1, 2023, in accordance with the accounting treatment applicable to the transaction. Accordingly, comparisons between the Company's quarter and year-to-date June 30, 2024 results and prior periods may not be meaningful.
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Operating Results: First Quarter 2024 Compared to First Quarter 2023
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Operating Results: Second Quarter 2024 Compared to Second Quarter 2023
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The $106.9 million decrease in net income attributable to Knight-Swift to a $2.6 million net loss during the first quarter of 2024 from $104.3 million during the same period last year includes the following:
Current wording
The $43.0 million decrease in net income attributable to Knight-Swift to $20.3 million during the second quarter of 2024 from $63.3 million during the same period last year includes the following:
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•Contributor — $18.1 million increase in consolidated interest expense primarily driven by higher debt balances related to the U.S. Xpress Acquisition and higher interest rates.
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•Contributor — $16.1 million increase in consolidated interest expense primarily driven by higher debt balances related to the U.S. Xpress Acquisition and higher interest rates.
Previous wording
•Contributor — $6.3 million decrease in operating income within our LTL segment primarily due to the impact of weather disruptions on volumes and operating costs, and incremental maintenance and labor costs as we expand our network. This was partially offset by a 6.1% increase in shipments per day and a 13.3 % increase in revenue per hundredweight excluding fuel surcharge.
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•Offset — $2.8 million increase in operating income within our LTL segment primarily due to an 8.4% increase in shipments per day and a 13.4% increase in revenue per hundredweight excluding fuel surcharge.
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•Offset — $36.4 million decrease in consolidated income tax expense, primarily due to a reduction of pre-tax income. Our effective tax rate for the first quarter of 2024 was 55.1%, compared to 24.0% for the first quarter of 2023.
Current wording
•Offset — $10.2 million decrease in consolidated income tax expense, primarily due to a reduction of pre-tax income. Our effective tax rate for the second quarter of 2024 was 37.2%, compared to 25.9% for the second quarter of 2023.
Previous wording
•Contributor —$92.8 million decrease in operating income within our Truckload segment primarily due to the 10.2% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and the 2.7% increase in cost per mile largely as a result of weather disruptions in the current quarter.
Current wording
•Contributor —$137.2 million decrease in operating income within our Truckload segment primarily due to the 7.7% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and the 2.7% increase in cost per mile.
Previous wording
•Contributor — $10.0 million decrease in operating income within our Intermodal segment, driven by a 19.1% decrease in revenue per load and a 1.6% decrease in load count.
Current wording
•Contributor — $5.1 million increase in operating loss within our Intermodal segment, driven by a 12.2% decrease in revenue per load.
Previous wording
•Our truckload services include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base with approximately 16,600 irregular route and 6,700 dedicated tractors.
Current wording
•Our truckload services include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base with approximately 16,400 irregular route and 6,500 dedicated tractors.
Previous wording
•Our LTL business, which was initially established in 2021 through the ACT acquisition and later the MME acquisition, provides our customers with regional LTL transportation service through our growing network of over 120 facilities and a door count of approximately 4,700. Our LTL segment operates approximately 3,400 tractors and approximately 8,700 trailers and also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.
Current wording
•Our LTL business, which was initially established in 2021 through the ACT acquisition and later the MME acquisition, provides our customers with regional LTL transportation service through our growing network of over 130 facilities and a door count of approximately 5,100. Our LTL segment operates approximately 3,400 tractors and approximately 8,900 trailers and also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.
Previous wording
•Our Logistics and Intermodal segments provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services. We offer power-only services through our Logistics segment leveraging our fleet of nearly 94,000 trailers.
Current wording
•Our Logistics and Intermodal segments provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services. We offer power-only services through our Logistics segment leveraging our fleet of nearly 93,000 trailers.
Previous wording
•Our All Other Segments include support services provided to our customers and third-party carriers including insurance, equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services. Our All Other Segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).
Current wording
•Our All Other Segments include support services provided to our customers and third-party carriers including equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services, as well as insurance prior to the first quarter of 2024. Our All Other Segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).
Previous wording
We generate revenue in the Truckload segment primarily through irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border service operations across our brands. We operated approximately 16,600 irregular route tractors and approximately 6,700 dedicated route tractors in use during the quarter ended March 31, 2024. Generally, we are paid a predetermined rate per mile or per load for our truckload services. Additional revenues are generated by charging for tractor and trailer detention, loading and unloading activities, dedicated services, and other specialized services, as well as through the collection of fuel surcharge revenue to mitigate the impact of increases in the cost of fuel. The main factors that affect the revenue generated by our Truckload segment are rate per mile from our customers, the percentage of miles for which we are compensated, and the number of loaded miles we generate with our equipment.
Current wording
We generate revenue in the Truckload segment primarily through irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border service operations across our brands. We operated approximately 16,400 irregular route tractors and approximately 6,500 dedicated route tractors in use during the quarter ended June 30, 2024. Generally, we are paid a predetermined rate per mile or per load for our truckload services. Additional revenues are generated by charging for tractor and trailer detention, loading and unloading activities, dedicated services, and other specialized services, as well as through the collection of fuel surcharge revenue to mitigate the impact of increases in the cost of fuel. The main factors that affect the revenue generated by our Truckload segment are rate per mile from our customers, the percentage of miles for which we are compensated, and the number of loaded miles we generate with our equipment.
Previous wording
4 Our average trailers includes 8,769 and 8,988 trailers related to leasing activities recorded within our All Other Segments for the quarter ended March 31, 2024 and 2023, respectively.
Current wording
4 Our average trailers includes 8,876 and 8,377 trailers related to leasing activities recorded within our All Other Segments for the quarters ended June 30, 2024 and 2023, respectively. Our average trailers includes 8,822 and 8,683 trailers related to leasing activities recorded within our All Other Segments for the year-to-date periods June 30, 2024 and 2023, respectively.
Previous wording
Truckload segment miles per tractor increased 8.1% year-over-year (5.9% before including U.S. Xpress), largely driven by our earlier decision to reduce the number of unseated tractors in the legacy businesses in order to reduce cost. We have been intentionally trimming our capital equipment over the past few quarters in order to improve our cost structure through the downcycle, but without cutting so far as to sacrifice our ability to flex when the market improves. Revenue, excluding fuel surcharge and intersegment transactions, was $1.1 billion, an increase of 26.3% year-over-year, reflecting an 11.4% decline in the legacy truckload business prior to the inclusion of U.S. Xpress. Excluding U.S. Xpress, revenue, excluding fuel surcharge, per tractor decreased 3.6% year-over-year as the decline in rates outweighed the improvement in miles per tractor.
Current wording
Truckload segment miles per tractor increased 8.5% year-over-year, largely driven by our earlier decision to reduce the number of unseated tractors in the legacy businesses to reduce cost. We have been intentionally trimming our capital equipment over the past few quarters to improve our cost structure through the trough of the freight cycle but without cutting so far as to sacrifice our ability to flex when the market improves. Excluding U.S. Xpress, revenue, excluding fuel surcharge, per tractor increased 3.5% year-over-year, which was the first year-over-year increase in six quarters as we improve miles per tractor while the decline in pricing decelerates. We are diligently focused on improving our cost structure and equipment utilization to mitigate pressure on margins through the bottom of this prolonged freight cycle with the intention of maximizing the benefits of operating leverage as the cycle turns.
Previous wording
3 Our LTL tractor fleet includes 611 and 619 tractors from ACT's and MME's dedicated and other businesses for the first quarter of 2024 and 2023, respectively.
Current wording
3 Our LTL tractor fleet includes 612 and 604 tractors from ACT's and MME's dedicated and other businesses for the second quarter of 2024 and 2023, respectively. Our LTL tractor fleet includes 612 and 611 tractors from ACT's and MME's dedicated and other businesses for the year-to-date periods June 30, 2024 and 2023, respectively.
Previous wording
4 Our LTL trailer fleet includes 821 and 778 trailers from ACT's and MME's dedicated and other businesses for the first quarter of 2024 and 2023, respectively.
Current wording
4 Our LTL trailer fleet includes 829 and 778 trailers from ACT's and MME's dedicated and other businesses for the second quarter of 2024 and 2023, respectively. Our LTL trailer fleet includes 825 and 778 trailers from ACT's and MME's dedicated and other businesses for the year-to-date periods June 30, 2024 and 2023, respectively.
Previous wording
During the quarter, we opened seven terminals that had been recently acquired from various parties. We expect to open another 25 terminals by the end of 2024. Overall, the 32 locations planned to open in 2024 will represent a 16% increase to our door count from the end of 2023, meaningfully impacting the reach of our service offering and increasing the density of our network. We expect these investments will bring opportunities to service additional freight and customers. We remain encouraged by the strong performance within our LTL segment, and we continue to look for both organic and inorganic opportunities to geographically expand our footprint within the LTL market.
Current wording
During the quarter, we opened 11 additional terminals in new markets and now expect to open another 20 terminals by the end of 2024. Overall, the 38 locations planned to open in 2024 will represent an addition of over 1,000 doors this year, for a 22.1% increase to our door count from the beginning of the year, which we believe will meaningfully impact the reach of our service offering and increase the density of our network. We expect these investments will bring opportunities to service additional freight and customers. While these new locations initially bring set up costs and operational inefficiencies, we expect that as the locations continue to scale, and particularly as they participate in the next bid cycle, they will help drive growth and margin expansion in the business. We remain encouraged by the strong performance within our LTL segment, and we continue to look for both organic and inorganic opportunities to geographically expand our footprint within the LTL market.
Previous wording
Comparison Between the Quarters Ended March 31, 2024 and 2023 —The Logistics segment Adjusted Operating Ratio was 97.1%, with agross margin of 16.8% in the first quarter of 2024, down from 19.8% in the first quarter of 2023. The first quarter was challenging for volumes, as the persistently weak demand environment was further pressured by weather disruptions and our decision to divert loads to our existing truckload businesses to partially offset their losses of contractual volumes through the bid activity as noted above. As a result, Logistics load count declined by 10.1% year-over-year. We remain disciplined on price, which allowed our Logistics businesses to maintain profitability but is a headwind to volumes. Revenue per load increased by 2.1% year-over-year but declined by 5.2% from the prior quarter. We continue to leverage our power-only capabilities to complement our asset business, build a broader and more diversified freight portfolio, enhance the returns on our capital assets, and innovate with technology intended to remove friction and allow seamless connectivity, leading to services that we expect will capture new opportunities for revenue growth.
Current wording
Comparison Between the Quarters Ended June 30, 2024 and 2023 —The Logistics segment Adjusted Operating Ratio was 95.5%, with agross margin of 17.9% in the second quarter of 2024, down from 19.4% in the second quarter of 2023. The second quarter was challenged by the persistently soft demand environment as well as increases in purchased transportation costs later in the quarter that pressured gross margins. Logistics load count for the quarter was flat year-over-year, reflecting the inclusion of U.S. Xpress logistics volumes in the current period. We remain disciplined on price, which allowed our Logistics business to maintain profitability but is a headwind to volumes. After first turning modestly positive last quarter, revenue per load increased by 10.8% year-over-year in the second quarter, representing a 4.6% increase from the prior quarter. The year-over-year increase in revenue per load is largely driven by the inclusion of U.S. Xpress logistics in the current quarter, as it has a different business mix. We continue to leverage our power-only capabilities to complement our asset business, build a broader and more diversified freight portfolio, and to enhance the returns on our capital assets.
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Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
•Contributor — $34.3 million increase in consolidated interest expense primarily driven by higher debt balances related to the U.S. Xpress Acquisition and higher interest rates.
Current report — wording carried from elsewhere
Comparison Between Year-to-Date June 30, 2024 and 2023 —The $101.1 million increase in consolidated fuel expense for the first half of 2024 includes $116.3 million from the results of U.S. Xpress. The increase was partially offset by the decrease in the average weekly DOE fuel prices for the first half of 2024, as compared to the first half of 2023. Average weekly DOE fuel prices were $3.91 per gallon for the first half of 2024 and $4.16 per gallon for the first half of 2023.
Current report — wording carried from elsewhere
Comparison Between Quarters Ended June 30, 2024 and 2023 — Operating taxes and licenses expenses increased by $2.0 million for the second quarter of 2024, as compared to the same period last year. The change includes $4.0 million from the results of U.S. Xpress, partially offset by a decrease in tractor count excluding U.S. Xpress. However, it remained relatively flat as a percentage of revenue, excluding truckload and LTL fuel surcharge, as compared to the same period last year.
Current report — wording carried from elsewhere
Comparison Between Year-to-Date June 30, 2024 and 2023 —Consolidated depreciation and amortization of property and equipment increased by $48.4 million for the first half of 2024, as compared to the same period last year. The increase includes $52.3 million from the results of U.S. Xpress, partially offset by a decrease in tractor depreciation due to a decrease in tractor count (excluding U.S. Xpress).
Current report — wording carried from elsewhere
Comparison Between Quarters Ended June 30, 2024 and 2023 — Consolidated rental expense increased $27.9 million for the second quarter of 2024, as compared to the same period last year. The increase is primarily related to the inclusion of $27.6 million from the results of U.S. Xpress.
Current report — wording carried from elsewhere
Comparison Between Year-to-Date June 30, 2024 and 2023 —The $38.6 million increase in net consolidated miscellaneous operating expenses is primarily due to the inclusion of $19.8 million from the results of U.S. Xpress as well as a $21.7 million decrease in gain on sales of equipment.
Current report — wording carried from elsewhere
Comparison Between Year-to-Date June 30, 2024 and 2023 —The $5.5 million decrease in other (income) expenses, net is primarily driven by a decrease in the net gain recorded within our portfolio of investments during the first half of 2024.
Current report — wording carried from elsewhere
2 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 2.
Current report — wording carried from elsewhere
3 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 3.
Current report — wording carried from elsewhere
4 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
2 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.
Previous report — wording carried elsewhere
3 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 2.