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October 20, 2021 12:30 PM, EDT

Strong Segment Growth Drives Knight-Swift Q3 Results

Knight and Swift trucks Knight-Swift Transportation

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Knight-Swift Transportation Holdings reported third-quarter revenue and earnings improvements that were driven by strong segment growth.

The Phoenix, Ariz.-based truckload motor carrier posted net income of $206.2 million, or $1.23 a diluted share, for the three months ending Sept. 30. That compared with $122.1 million, 71 cents, during the same time the previous year.

The total revenue increased by 35.7% to $1.64 billion from $1.21 billion.

Dave Jackson

Jackson

“We continue to invest in the diversification of our business through our truckload, logistics, intermodal, LTL and other developing businesses, including our warehousing activities and expanded services to third-party carriers,” Knight-Swift CEO Dave Jackson said in a statement. “This diversification has allowed us to grow revenue and earnings across multiple segments and we expect will lead to earnings growth in 2022.”

The results surpassed expectations by investment analysts on Wall Street, which had been looking for $1.07 per share and quarterly revenue of $1.55 billion, according to Zacks Consensus Estimate.

“We continue to generate meaningful free cash flow that we plan to invest in both organic and inorganic growth into the future that will support our expansion into LTL as well as third-party carrier services,” Jackson said. “We are appreciative of our drivers and supporting team members across all of our brands, who are the foundation of our company and continuously work together to safely move goods throughout the supply chain.”

The truckload segment reported that revenue for the quarter increased 3.4% to $933.2 million from $902.6 million during the same time last year. The operating income for the segment increased 22.4% to $206.5 million from $168.8 million.

The truckload segment includes irregular routes, dedicated, refrigerated, expedited, flatbed and cross-border operations. The segment results were driven by a 24.9% increase in revenue per loaded mile that was partially offset by a 13.6% decrease in miles per tractor. Shipping demand also remained strong.

 

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The logistics segment saw revenue jump 130% to $221.4 million from $96.2 million during the prior-year period. Operating income for the segment surged by 994.8% to $27.1 million from $2.48 million last year. The report noted that demand for logistics service offerings continued to grow throughout the quarter. Logistics revenue increased as the company grew its load count by 60.7% while increasing revenue per load by 43.1%.

The intermodal segment reported that revenue for the recent quarter grew 14.1% to $112.8 million from $98.8 million. Operating income for the segment well surpassed the year-ago number by increasing 3,717.6% to $9.54 million from $250,000.

The report noted that the adjusted operating ratio for the intermodal segment improved from 99.7 to 91.5, which resulted in a $9.3 million increase in operating income. Continued rail congestion and rail allocations resulted in a reduction in load count but contributed to a 25.9% increase in revenue per load. Knight-Swift plans to add approximately 1,000 containers over the next two quarters to position the segment for continued growth.

The newly formed less-than-truckload segment reported revenue for the quarter reached $167.9 million. Operating income for the segment was $17.5 million. Knight-Swift formed its LTL operations with the acquisition of AAA Cooper Transportation in July 2021. The segment currently has approximately 70 facilities with a door count of over 3,400.

Baird Equity Research said the results and outlook are strong and that it remains a buyer. The financial services company concluded that with the fundamentals and execution remaining strong, the earnings visibility for next year is good and the valuation is attractive. 

“Core results in Q3 cleanly beat expectations with improving profitability across segments,” Garrett Holland, senior research analyst at Baird, wrote. “The adjusted 2021 EPS guidance range was revised higher to $4.50-$4.55 with ‘unprecedented demand’ expected in Q4 and similar strength for truckload services likely ‘throughout 2022.’ ” 

Knight-Swift ranks No. 6 on the Transport Topics Top 100 list of the largest for-hire carriers in North America.

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