Knight-Swift CEO Cautiously Optimistic as Q2 Results Stabilize
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Knight-Swift Transportation Holdings reported July 24 that revenue reached just shy of $2 billion in the second quarter of 2024.
The Phoenix-based truckload motor carrier posted net income attributable to itself of $20.3 million, or 13 cents a diluted share, for the three months ending June 30. That compared with $63.3 million, 39 cents, during the same time the previous year. Total revenue increased 18.9% to $1.85 billion from $1.55 billion.
Knight-Swift ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
“Demand has yet to truly break out and further attrition of excess capacity is still needed,” Knight-Swift CEO Adam Miller said on a call with investors. “We have a long way to go to return to our target levels of performance, but it is starting to feel like the bottom is behind us with this cycle.
“In short, I think, the story of our truckload business for the second quarter is one of stabilization and a seasonal build in demand.”
Miller has seen the steady freight and seasonal patterns this year start to develop into an uptick in June. He noted it was fairly broad-based as a number of customers looked to secure additional capacity to support elevated volumes. This helped to support a stabilization in revenue per mile a quarter earlier than the company leadership had anticipated.
“It’s too early to call this a trend and for it to be a material driving force around our earnings, but in prior cycles, this would indicate the early signs of a market setting up to change,” Miller said. “There has been some moderation in demand in the two weeks since the Fourth of July holiday, which is in line with the typical seasonal pattern. If the trends over the past few months continue, we should see demand building as we exit the third quarter.”
The results fell below Wall Street expectations. Analysts had been looking for 27 cents per share and quarterly revenue of $1.88 billion, according to Zacks Consensus Estimate.
Truckload segment revenue increased 30% year-over-year to $1.1 billion from $829.4 million, but this still reflected a 5.7% decline in the legacy truckload business prior to the acquisition of U.S. Xpress. The report noted that the segment continued to experience a difficult environment that was being negatively impacted by a settlement of an auto liability claim from 2020. Operating income fell 65.4% to $23.5 million from $67.9 million the prior year.
“The year-over-year decline in revenue per loaded mile, excluding fuel surcharge, narrowed to 5.5% in the current quarter, as rate held stable with the first quarter,” Miller said. “Further, our spot exposure remained relatively consistent with where we entered the second quarter.”
Less-Than-Truckload segment revenue increased 15.1% to $263.1 million from $228.6 million. Average shipments per day increased 8.4% year-over-year during the quarter, while revenue per hundredweight increased 13.4%. The company also opened 11 additional terminals during the quarter to support the segment and expects to open another 20 terminals before the year’s end. Operating income increased 9.3% to $33 million from $30.2 million.
“Market conditions in the LTL industry remain much more supportive than in truckload, allowing for steady rate increases through the first half of the year,” Miller said. “Our LTL business grew revenue, excluding fuel surcharge, 15.1% year over year as shipments per day increased 8.4% and revenue per hundredweight, excluding fuels surcharged, increased 13.4% year over year.”
Logistics segment revenue increased 11.8% to $131.7 million from $117.8 million the prior year. The report noted that the segment was challenged by a persistently soft demand environment and increased purchased transportation costs. The logistics load count being flat year over year during the quarter reflected the inclusion of volumes from U.S. Xpress. Operating income fell 50.3% to $4.76 million from $9.57 million.
“The logistics market continues to be difficult as volumes, which were already soft, are now further challenged by a number of shippers allocating more of their business to asset-based providers,” Miller said. “Gross margins have been under pressure for a few quarters as purchase transportation costs offered little room for relief. Beyond these general market dynamics, our logistics business can face additional challenges in a down market.”
Intermodal segment revenue declined 6.5% to $97.5 million from $104.3 million. The drop was driven by a decline in revenue per load and a decline in load count year over year as a result of soft demand and competitive truck capacity. The segment also reported an operating loss of $1.72 million, compared with $6.63 million during the prior-year quarter.
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