Release Date: April 23, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Knight-Swift Transportation Holdings Inc (KNX, Financial) reported a 68.2% year-over-year improvement in adjusted operating income, showcasing strong financial performance.
- The company's LTL segment experienced a 26.7% increase in revenue, driven by a 24.2% rise in shipments per day, indicating robust growth in this area.
- The Truckload segment achieved a 1.5% increase in revenue per loaded mile, marking the first year-over-year increase in this metric in 10 quarters.
- Knight-Swift Transportation Holdings Inc (KNX) successfully reached a quarterly operating profit for the US Express Truckload business for the first time since its acquisition in July 2023.
- The company is investing in new technology and enhancing safety measures, which are expected to improve operational efficiency and reduce costs.
Negative Points
- Severe weather conditions in February led to a slowdown in volumes, impacting the company's performance early in the quarter.
- The uncertainty surrounding toxic tariffs and fluid trade policies has created a cautious tone among shippers, affecting market momentum and volume growth.
- Knight-Swift Transportation Holdings Inc (KNX) has adjusted its earnings guidance for the second quarter, reflecting a more conservative approach due to market uncertainties.
- The company's Intermodal segment faced a competitive bid season, leading to a decrease in revenue per load and impacting profitability.
- The LTL segment experienced cost headwinds due to inefficiencies in the DHE region and startup costs at newly opened facilities, resulting in a decline in adjusted operating income.
Q & A Highlights
Q: With the gains from equipment sales, do you think you've right-sized the fleet for a potential downside scenario?
A: Adam Miller, CEO: We are focusing on tightening our cost structure. We have opportunities to pull out trailers to match the number of seated trucks and reduce excess capital by selling underutilized tractors. This approach allows us to maintain flexibility without limiting our ability to respond to market opportunities.
Q: How are you addressing the additional costs in the LTL segment, and are there any M&A opportunities?
A: Adam Miller, CEO: We are building volume and density in our LTL segment, which helps with cost absorption. We are maintaining price discipline and seeing volume growth. We plan to add more locations this year and are open to both organic and inorganic growth opportunities, though significant M&A is more likely in 2026.
Q: Can you discuss the cost improvements in the Truckload segment and the impact of bid season on utilization?
A: Adam Miller, CEO: We are reducing costs by not carrying tractors that aren't producing revenue and selling them in a strong used equipment market. This improves miles per tractor. Bid season started well, but uncertainty around tariffs has slowed momentum. We are still achieving low to mid-single-digit rate increases.
Q: How do you anticipate a decline in West Coast container imports affecting your business?
A: Adam Miller, CEO: We expect May to be weaker due to a decline in West Coast imports. We are working on plans to limit capacity in affected markets and may need to be more nimble in the spot market. This will impact our Knight and Swift Truckload brands and our Intermodal business.
Q: Are you considering shrinking the power-only offering to help catalyze a tighter market?
A: Adam Miller, CEO: Power-only complements our Truckload business by allowing us to participate in freight opportunities where we don't have trucks available. It supports our dedicated operations and provides flexibility, bringing value to our customers and better returns on our assets.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
