Knight-Swift Transportation reported results for its first full quarter as a single firm Jan. 30 since Knight and Swift closed on their $6 billion merger in September to become one of the largest full truckload carriers.
It reported fourth-quarter net income of $447.6 million, or $2.50 earnings per diluted share, which includes $364.2 million in federal income tax benefits from the legislation enacted in December that lowered the corporate tax rate to 21%.
Without the benefit, the firm reported $83.4 million in net income, topping the $72.8 million that analysts surveyed by Bloomberg expected. Earnings per diluted share were 52 cents, beating the analyst estimate of 38 cents.
The reported total revenues for the quarter were $1.4 billion. Year-over-year comparisons were not available because the 2016 results do not combine the two firms.
Knight Transportation broke down quarterly results for its two major divisions — Knight Trucking and Knight Logistics. Knight Trucking in the quarter had operating income of $37.7 million, up 23% from a year ago, on revenues of $215.4 million, a 6.3% increase. The average revenue per tractor rose 12.2%, while miles per truck fell 1.6%.
Knight Logistics saw operating income of $3.9 million, down nearly 6%, while revenues rose about 7% to $65.9 million. Brokerage revenue increased 8.8%.
Combined revenues for the two divisions were $281.3 million in the quarter, a 6.4% rise from fourth quarter 2016.
John Sommers II for Transport Topics
For Swift Transportation, the firm reported income and revenues for four segments but did not provide yearly and quarterly comparisons due to accounting changes arising from the merger. The truckload division had operating income of nearly $67 million on $434.7 million in revenues; dedicated had income of $19.5 million on $144.6 million in revenues; refrigerated reported income of $13.1 million on revenues of $186.6 million; and intermodal had income of $4.6 million on $91.8 million in revenues.
On a call with analysts, Chairman Kevin Knight and CEO Dave Jackson said the combined company is reducing expenses and seeing operating revenues for all its segments improving along with the growth in the freight market. The major challenge for the firm is finding qualified drivers. The executives also predict a rise of contract rates in the high-single to double-digits.
The company expects to save as much as $100 million in 2018 from synergies arising from the merger but that they plan to maintain Knight and Swift as two distinct brands.
Knight-Swift said results for the quarter also include $10.3 million of amortization expense related to intangible assets recorded in the merger, along with a $1.9 million after-tax charge for legal reserves related to the settlement of class action lawsuits against Swift.
For 2017, Knight-Swift reported results with the caveat that they do not include operations from Swift Transportation prior to the September merger with Knight.
Revenues for the firm were $2.4 billion, compared with $1.2 billion a year ago. Operating income was $200.6 million, up 35% from $148.4 million in 2016.