Knight-Swift Lifts Profit as Truckload Pricing Accelerates
Second-quarter revenue rose 12.6% to $2.096 billion as freight rates strengthened.
Knight-Swift Transportation Holdings (KNX), the trucking and logistics company, increased adjusted net income 79.7% to $102.8 million as stronger pricing lifted its core Truckload business.
The quarter marked a pricing inflection for Truckload. Year-over-year revenue per loaded mile moved from low-single-digit growth entering the period to high-single-digit growth in June, when the over-the-road business recorded a double-digit increase.
Revenue excluding Truckload and LTL fuel surcharges grew 5.5% to $1.764 billion. Operating income rose 44.4% to $104.9 million, while the adjusted operating ratio improved 240 basis points to 91.4%. Diluted earnings increased to $0.26 a share from $0.21, and adjusted earnings rose to $0.63 a share from $0.35.
Truckload revenue excluding fuel surcharges and intersegment transactions increased 2.8% as a 5.5% gain in revenue per loaded mile outweighed a 2.6% decline in loaded miles, which was attributed largely to tighter driver supply and fewer seated trucks. Adjusted operating income for the segment climbed 69.4% to $98.9 million, helped by pricing gains and a reduction in empty miles. U.S. Xpress's over-the-road division recorded its first profitable quarter since Knight-Swift acquired the company.
LTL adjusted operating income rose 13.3% to $26.4 million despite a 1.4% decline in revenue excluding fuel surcharges. Shipments per day fell 3.7%, while heavier, longer-haul freight lifted tonnage per day 4.0% and revenue per shipment excluding fuel 3.4%.
The other freight businesses produced mixed results. Logistics revenue grew 8.9% as a 29.6% increase in revenue per load offset a 16.4% decline in load count, but higher spot-capacity costs compressed brokerage margins and reduced adjusted operating income 25.7%. Intermodal revenue climbed 34.9% and the business returned to operating profitability, posting income of $0.7 million compared with a $3.4 million loss a year earlier.
Several expenses weighed on reported results, including a $22.8 million mark-to-market charge tied to U.S. Xpress purchase-price obligations and an $18.2 million severance charge. Even with higher capital spending, first-half operating cash flow increased $124.4 million to $450.4 million, leaving free cash flow of $190.4 million.
For the third quarter, Knight-Swift expects adjusted earnings of $0.71 to $0.77 a share. The company projects mid-single-digit Truckload revenue growth excluding fuel and a 650- to 750-basis-point improvement in that segment's adjusted operating ratio, while LTL revenue excluding fuel is expected to grow at a low-single-digit rate. Logistics results are expected to remain roughly stable sequentially, and Intermodal revenue is projected to rise by a low-single-digit percentage with a slightly better operating ratio.