Knight-Swift Transportation Q3 2024 Earnings Report

Knight-Swift Transportation (NYSE: KNX), one of North America's largest truckload carriers, presented its third-quarter earnings for 2024, revealing mixed results amid challenging market conditions. The company reported a decline in revenue excluding fuel surcharges by 5.3% year-over-year, primarily due to the recent acquisition of U.S. Xpress.

Despite these challenges, the company's consolidated adjusted operating ratio saw a slight sequential improvement, marking its first improvement since 2021. The logistics segment struggled with a 9.5% revenue decline, while intermodal revenue grew for the first time in six quarters. Looking ahead, Knight-Swift provided guidance for the fourth quarter of 2024 and the first quarter of 2025, with adjusted EPS expected to be between $0.32 and $0.36 and $0.29 and $0.33, respectively.

Key Takeaways

• Knight-Swift's Q3 revenue decreased by 5.3% year-over-year, excluding fuel surcharges.
• GAAP EPS stood at $0.19, with adjusted EPS at $0.34.
• The company's adjusted operating ratio improved slightly to 93.9%.
• The truckload market is showing signs of stabilization.
• Knight-Swift's LTL segment revenue grew by 16.7% due to the acquisition of DHE.
• Logistics segment revenue fell by 9.5%, while intermodal revenue increased by 1.4%.
• Q4 2024 adjusted EPS is projected between $0.32 and $0.36; Q1 2025 is projected between $0.29 and $0.33.
• The company is focused on disciplined pricing, cost control, and expanding its LTL capabilities.

Company Outlook

• Knight-Swift anticipates a gradual market recovery in 2025, with potential for rate increases.
• Investments in terminal networks, particularly in California, Nevada, and Arizona, are expected to enhance margins by 2025.
• The company aims for incremental operational improvements annually.

Bearish Highlights

• Revenue was negatively impacted by the acquisition of U.S. Xpress and a decline in logistics segment revenue.
• Load count decreased by 21.1% year-over-year.
• Revenue from all other segments declined by 42.8%, mainly due to winding down the third-party insurance business.

Bullish Highlights

• Revenue per loaded mile and load count in the intermodal segment increased.
• LTL segment reported a significant revenue increase.
• The company is optimistic about leveraging its expanded network for growth.

Misses

• The company faced challenges integrating U.S. Xpress, with ongoing issues in revenue per mile.
• Hurricanes temporarily impacted the LTL and intermodal segments.

Q&A Highlights

• The company's structural changes present challenges for historical comparisons.
• Seasonal volume adjustments are expected from Q4 to Q1, but the company's performance may outperform financial appearances in early 2025.

Knight-Swift Transportation's Q3 earnings call underscored the company's efforts to navigate a complex market landscape. While facing revenue declines and integration challenges, the carrier is strategically investing in its network and focusing on cost management to position itself for a potential market recovery and improved profitability in the coming years.

InvestingPro Insights

• Knight-Swift has maintained a market capitalization of $8.54 billion, indicating its significant presence in the transportation sector.
• The company has raised its dividend for four consecutive years, demonstrating a commitment to shareholder returns even in a difficult operating environment, with a dividend yield of 1.21% and notable dividend growth of 14.29% over the last twelve months.
• Analysts predict profitability this year, aligning with Knight-Swift's guidance for positive adjusted EPS in upcoming quarters.
• Knight-Swift is trading at a high earnings multiple, with a P/E ratio of 126.44.

Full Transcript – Knight-Swift Transportation (KNX) Q3 2024

Operator: Good morning. My name is Chloe and I will be your conference operator today…

Brad Stewart: Thank you. Good afternoon everyone and thank you for joining our third quarter 2024 earnings call…

Adam Miller: Thanks Brad and good afternoon everyone…

Andrew Hess: Thanks, Adam…

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