Knight-Swift Reports Lower Q4 Results

Knight Transportation and Swift cabs
(John Sommers II for Transport Topics)

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Knight-Swift Transportation Holdings Inc. experienced a year-over-year decline in revenue and earnings during the fourth quarter of 2022, the company reported Jan. 26.

The Phoenix-based truckload motor carrier posted net income of $148.7 million, or 92 cents a diluted share, for the three months ending Dec. 31. That compared with $254.6 million, or $1.52, during the same time the previous year. Total revenue decreased by 4% to $1.74 billion from $1.82 billion.

The results missed Wall Street expectations, which called for $1.13 per share and quarterly revenue of $1.78 billion, according to Zacks Consensus Estimate.

“I would say that from fourth to first, this is one where the step down is significantly lower than what we’re used to,” Knight-Swift CEO David Jackson said during a call with investors Jan. 26. “The freight market continues to show signs of life here as we go through January. And so, typically you would see quite a bit of seasonality in a fourth quarter, which then changes with the holiday in the rear view mirror moving into a first.”

Dave Jackson


Jackson still expects the first quarter to be seasonably softer than the fourth, but he believes there is a good chance it will be a benign change sequentially. He pointed to the holiday shipping season starting earlier than normal as one of the likely drivers behind the softness in fourth quarter.

“So much of their holiday inventory had already arrived,” Jackson said. “So, it seems that by the time October started, the fourth-quarter freight had already arrived and was largely in position. That explanation made sense to us, and so naturally our next question is, how long are you going to continue to have this inventory overhang?

“The general consensus, almost unanimous from customers that have given us feedback about their inventories, has been that by the time they get through the spring, things are caught up.”

For the full year, Knight-Swift reported net income of $771.3 million, or $4.73, on revenue of $7.42 billion. That compared with earnings of $743.4 million, or $4.45, on $6 billion revenue in 2021.

“Freight demand in the fourth quarter was well below typical seasonal patterns,” said Adam Miller, chief financial officer at Knight-Swift. “We believe this was largely driven by the holiday goods pulled forward earlier in 2022, an existing inventory overhang dating back to last year where some products arrived too late and general caution around what retailers could expect from consumer demand.

“Weak demand pressured volumes and pricing while ongoing inflation was a further headwind on operating income in most segments.”

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  • Truckload revenue in fourth quarter decreased 7.2% to $920.8 million from $992.7 million year-over-year. Operating income decreased 36.5% to $159.4 million from $251 million. Softer seasonal demand resulted in revenue per loaded mile and total miles decreasing from the prior-year period. The segment consists of irregular-route truckload, dedicated truckload, refrigerated, expedited, flatbed and cross-border operations.
  • Less-than-truckload revenue increased 14.7% to $204 million from $177.9 million the prior-year period. Operating income rose 86.9% to $25.6 million from $13.7 million. Shipment counts increased 4.9% year-over-year due in part to RAC MME Holdings. The company was acquired in December 2021. Revenue per hundredweight increased 13.3% while revenue per shipment increased by 7.4%. The operational systems were converted during the quarter to allow freight movement through one connected network across the MME and AAA Cooper Transportation brands.
  • Logistics revenue decreased 42.2% to $173.2 million from $299.4 million. Operating income fell 48.4% to $23.1 million from $44.9 million. Load volumes were lower than the company anticipated, primarily due to reduced import freight opportunities. While revenue per load decreased 28.9% year-over-year, the company achieved a 0.5% increase on a sequential basis.
  • Intermodal revenue fell 8.6% to $112.9 million from $123.6 million. Operating income decreased 74.2% to $5.99 million from $23.2 million. Load count was negatively impacted by softer freight demand and rail labor challenges. Revenue per load decreased 2.5% year-over-year. Labor availability improvements within the rail network in the first quarter has led to improving transit times, more consistent notification times and more predictability for customers. Rail network fluidity, though, continues to be a challenge.

Cowen and Co. noted adjusted earnings per share missed its estimates. It added persistent inflationary pressures in labor, insurance and maintenance caused the adjusted operating ratio to come in worse than expected at 87.5.

Fourth-quarter earnings missed expectations on an absent peak and softer pricing, Cowen analyst Jason Seidl wrote in the report. “TL rates are expected to be down mid-to-high single digits through the first three quarters of the year exerting NT margin pressure across business units. Bottom range of outlook suggests higher floor than what some expected, and we are encouraged by diversification efforts.”

Knight-Swift ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

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