Knight-Swift’s Q4 Earnings: A Mixed Bag Amidst Market Uncertainty
Truckload Segment: A Tale of Two Stories
Knight-Swift Transportation’s fourth-quarter earnings report revealed a complex picture of the truckload market. While the company’s adjusted earnings per share of 36 cents exceeded expectations, CEO Adam Miller cautioned that it’s too early to declare a meaningful positive inflection in the market. The truckload revenue fell 4.4% year over year to $1.1 billion, attributed to a 6% decline in average tractors in service. However, loaded miles per tractor increased 2.4%, and revenue per loaded mile (excluding fuel) was off 0.7%.
Rationalizing Fleet Utilization
The company has been working to improve fleet utilization by rationalizing tractor and trailer counts. Miller noted that rates have been trending positively in bid season, with the company seeking mid-single-digit rate increases. The TL unit recorded a 92.2% adjusted operating ratio, a 170-basis-point improvement year over year.
U.S. Xpress Integration Challenges
The integration of U.S. Xpress, acquired in July 2023, continues to pose challenges. The operation has shifted to a terminal network approach with shorter lengths of haul but higher revenue per mile. While an annual run rate of $180 million in cost synergies has been achieved, more opportunities exist as the company swaps out leased equipment for owned assets.
Less-Than-Truckload Segment: Expansion and Growth
The less-than-truckload unit reported a 20.2% year-over-year increase in revenue to $279 million, driven by a 13% increase in daily shipments and a 6.6% increase in revenue per shipment (excluding fuel). The unit added 51 terminals in 2024, increasing door count by over 30%. However, the expansion and slightly less supportive demand weighed on margins, resulting in a 94.5% adjusted operating ratio.
Logistics and Intermodal Segments: Mixed Results
Logistics revenue increased 2.1% year over year, while intermodal revenue rose 4.9%. However, both segments reported operating ratios above 90%, indicating challenges in these areas.
Outlook: Gradual Recovery Ahead
CEO Adam Miller expressed optimism about 2025 being a year of gradual recovery in market conditions, bridging to a more constructive 2026. The company expects revenue growth in its LTL and logistics segments, alongside modest margin improvements. Shares of KNX rose 5.8% in after-hours trading on Wednesday.
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