Knight-Swift Profits Fall Sharply on Merger-Related Costs
The first quarterly report from Knight-Swift Transportation Holdings reported $3.9 million in earnings or 4 cents per share, including Swift’s contribution from after Sept. 8, 2017, although the results included a series of large multi-million dollar charges related to the merger.
The expenses include $12.3 million in legal and professional fees, $6.6 million in other one-time operating expenses associated with the merger, $16.7 million in impairment of software assets identified after the merger and $2.5 million in amortization expenses.
Excluding those charges, the adjusted profits were $25.5 million or a quarter.
Revenue for the quarter was $521.6 million.
Knight’s trucking segment revenue dropped 4.2% to $195.8 million and operating income fell 75% to $8.6 million. The trucking operating statistics in the first quarterly release excluded the 22 days in which Swift was combined with Knight.
Revenue per tractor, excluding fuel surcharges, crept down 0.2% to $43,397. The percentage of empty miles deteriorated 800 basis points to 13.1% and average length of haul declined 20 miles to 480.
For Knight Logistics, revenue grew 8.8% to $56.6 million and operating income improved 46% to $3.7 million. Brokerage revenue increased 11.5% year-over-year, load volume rose 4.3%, revenue per load grew 6.8% and margin improved 183 basis points to 16.3%.
For Swift Transportation, the truckload unit generated $102.2 million in revenue and $8 million in operating income. Swift Refrigerated revenue was $43.2 million and operating income was $427,000. Swift Dedicated revenue was $35.2 million and operating income was $2.9 million. Swift Intermodal generated $21 million in revenue and $1.4 million in operating income.
Year-over-year comparisons are not available because the 2017 results only included the 22 days after the merger.
Chairman Kevin Knight and CEO Dave Jackson indicated on a call with analysts that they were disappointed that the merger with Swift took until September to be completed, wishing the deal would’ve closed a month earlier. Nevertheless, Knight and Jackson expressed optimism that Swift will add value to the new combined company as Knight works with Swift to lower its operating ratio into the low 80s, a percentage that Knight targets as its financial goal.
Knight added that within the seven to eight-week period when the company was revamping operations at Swift, it has made remarkable improvements and expects more positive changes in the coming months.
