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Knight-Swift Transportation Holdings reported a decline in net income for the first quarter of 2020 due partially to the effects of tax and foreign currency fluctuations, and also reported a decline in revenue for the period.
The Phoenix-based motor carrier also said it is incurring expenses and taking steps to help it navigate through the coronavirus crisis.
Knight-Swift on April 22 reported Q1 net income of $65.4 million, or 38 cents per diluted share, compared with $87.9 million, or 51 cents a share, during the previous year, a 25.6% decline. The per-share topped the 36 cents-per-share expectations of analysts polled by Zack’s Consensus Estimate.
Knight-Swift’s total Q1 revenue slipped 6.6% to $1.1 billion from $1.2 billion.
Zack’s analysts had expected quarterly revenue of $1.09 billion.
Knight-Swift cited costs associated with an increased tax rate, losses on certain investments and a $2.5 million adjustment associated with foreign currency fluctuations within its Mexico operations for the weakened Q1 profits.
The company also cited increased costs tied to the effects of the coronavirus, including a roughly $2.3 million investment to keep drivers and terminal employees safe and ensure that communities receive essential products. The company expects to incur similar costs during the second quarter.
“We continue to operate our business through the COVID-19 pandemic,” Knight-Swift said in a news release. “Our diverse customer base has permitted us to balance our truckload capacity between customers with significant declines in volumes and those experiencing surges in demand for essential consumer products.”
The company’s trucking segment experienced a 5.1% decrease in Q1 revenue to $821 million from $865.6 million last year, while operating income in the segment decreased 6.8% to $107.3 million from $115.1 million. Knight-Swift said cost-control efforts contributed to a 3.2% decrease in operating expenses per total miles driven for the segment. The average revenue per tractor decreased by 2.7%, primarily as a result of a 3.1% decrease in revenue per loaded mile.
The logistics segment saw Q1 revenue decrease by 12% to $76.7 million from $87.2 million last year. Operating income for the segment decreased 48.9% to $3.7 million from $7.3 million a year prior.
The intermodal segment saw Q1 revenue decrease 18.2% to $94.6 million from $115.7 million the prior year. The segment posted an operating loss of $2.7 million after reporting operating income of $2.4 million the previous year.
The company cited continued market pressures for the decline in revenue, including the impact of the pandemic. Load counts in the segment decreased by 13.2% and revenue per load decreased 5.8%.
Knight-Swift also announced that it is suspending its earlier guidance for 2020 amid the economic downturn caused by the coronavirus, a move Baird Equity Research senior research analyst Benjamin Hartford said made sense.
“2020 EPS guidance was suspended, understandably so in the context of COVID-19’s uncertainty,” Hartford said in the report. “The group could take a pause following its strength over the past 4-6 weeks as estimates reset lower and trends continue to deteriorate during 2Q20.”
Hartford added that he believes the company is well-positioned to weather the crisis.
Citigroup analyst Christian Wetherbee in a report added, “These strong results, decent April and solid customer mix should keep Knight (and [truckload] in general) better positioned.” He noted that the company’s customer mix has shifted to 72% essential goods in early April.
Knight-Swift Transportation operates a fleet of roughly 23,000 tractors and 77,000 trailers and employs 28,000 people. The company provides truckload and logistics services throughout the United States, Mexico and Canada.
Knight-Swift ranks No. 5 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.
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