Knight-Swift sees ‘rapid progression’ in TL fundamentals during Q2

Knight-Swift Transportation beat second-quarter expectations Wednesday after the market closed, noting considerable acceleration in truckload fundamentals as the period progressed.

Knight-Swift (NYSE: KNX) reported second-quarter adjusted earnings per share of 63 cents, 28 cents higher year over year and 12 cents better than the consensus estimate (management’s EPS guidance range was 45 to 49 cents). Revenue of $2. 1 billion was 13% higher y/y (up 6% y/y excluding fuel surcharges) and ahead of the $2. 04 billion consensus estimate.

Knight-Swift issued third-quarter adjusted EPS guidance of 71 to 77 cents, which was better than the 71-cent consensus estimate at the time of the print.

“The second quarter saw a continued and rapid progression in truckload market conditions, with supply-driven tightening pushing spot rates, tender rejection rates, and contractual negotiations higher over the course of the quarter,” said Knight-Swift CEO Adam Miller in a news release.

Table: Knight-Swift’s key performance indicators Truckload revenue increased 3% y/y to $1. 1 billion as a 6% increase in revenue per tractor was only partially offset by a 3% decline in average trucks in service. The unit posted a 91% adjusted operating ratio (a 9% adjusted operating margin), which was 360 basis points better y/y.

Less-than-truckload revenue was down 1% y/y to $333 million as a 4% tonnage increase was offset by a 4% decline in yield. Shipments per day were down 4% in the quarter, but weight per shipment was up 8%. Higher shipment weights were a drag on the yield metric, but a 5% increase in length of haul partially offset this. The unit recorded a 92.

1% adjusted OR, 100 bps better y/y. Revenue was up 9% y/y in the logistics segment, with brokerage revenue per load 30% higher. Elevated purchased transportation costs (gross margin eroded 350 bps y/y) resulted in a 96. 4% adjusted OR, 160 bps worse y/y. Intermodal returned to profitability at a 99. 4% adjusted OR.

Revenue was up 35% y/y as volumes were up 20% and revenue per load was up 13%. The adjusted second-quarter EPS result excluded several deal-related, restructuring, severance and non-cash impairment costs. The period also benefitted from lower interest expense and higher gains on equipment sales (a 5-cent y/y tailwind). The company will host a call at 5:30 p.

m. EDT on Wednesday to discuss second-quarter results. Why it matters? Knight-Swift is the nation’s largest asset-based TL carrier. Its quarterly results provide insight into current market conditions.

More FreightWaves articles by Todd Maiden: Forward Air secures deal to keep at least 50% of $250M account Cass: TL linehaul rates advance in June, volume inflection delayed ArcBest announces layoffs, closing 10 LTL terminals The post Knight-Swift sees ‘rapid progression’ in TL fundamentals during Q2 appeared first on FreightWaves.