Knight-Swift Transportation Holdings Inc (KNX) Q3 2024 Earnings Call Highlights: Navigating ... - Yahoo Finance

Revenue (excluding fuel surcharge): Decreased 5.3% year-over-year.
Adjusted Operating Income: Declined by 7.1% year-over-year.
GAAP Earnings Per Diluted Share: $0.19 for the third quarter of 2024.
Consolidated Adjusted Operating Ratio: Improved modestly over the second quarter.
Net Interest Expense: Increased by $6.6 million year-over-year.
Impairment Charges and Investment Write-off: Totaling $13.1 million, excluded from non-GAAP results.
Truckload Revenue (excluding fuel surcharge): Decreased 6.1% year-over-year.
LTL Revenue (excluding fuel surcharge): Increased 16.7% year-over-year.
Shipments Per Day (LTL): Increased 11.1% year-over-year.
Adjusted Operating Ratio (LTL): 89.6, with a decline in adjusted operating income by 19.5% year-over-year.
Logistics Revenue: Decreased 9.5% year-over-year.
Intermodal Revenue: Increased 1.4% year-over-year.
Intermodal Load Count: Increased 7.2% year-over-year.
Adjusted EPS Guidance (Q4 2024): Expected to be in the range of $0.32 to $0.36.
Adjusted EPS Guidance (Q1 2025): Expected to be in the range of $0.29 to $0.33.

Release Date: October 23, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Knight-Swift Transportation Holdings Inc (NYSE:KNX) reported a sequential improvement in their consolidated adjusted operating ratio for the first time in a third quarter since 2021.
The LTL segment experienced a supportive market, achieving steady rate improvements and expanding their network, which contributed to a 16.7% year-over-year revenue growth.
The company opened 16 additional service centers in the quarter, with plans to open four more by the end of 2024, enhancing their service capabilities.
Knight-Swift Transportation Holdings Inc (NYSE:KNX) successfully integrated the DHGB LTL division, adding significant growth to their service centers and door count.
The logistics segment maintained profitability with an improved adjusted operating ratio and increased revenue per load by 3.7% over the second quarter.

Revenue excluding fuel surcharge decreased by 5.3% year-over-year, and adjusted operating income declined by 7.1% due to challenging market conditions.
The company faced a $6.6 million increase in net interest expense and impairment charges totaling $13.1 million, impacting their GAAP results.
Freight rates in the truckload market remained at unsustainable levels, despite some stabilization.
Start-up costs and early-stage operations at new facilities were a drag on margins in the LTL segment.
The impact of recent hurricanes and potential port strikes disrupted volumes, particularly affecting the US Express and AAA Cooper brands.

Q: Can you provide a sense of your current spot versus contract business within the truckload segment and how it compares to a year ago? A: Brad Stewart, Senior VP of Investor Relations, Treasurer: We are currently in the low double digits for spot business, similar to a year ago. In stronger markets, we can flex this up to 20-25%. We see opportunities for spot business as some shippers have acute needs that require additional capacity beyond their routing guide.

Q: How do you see the truckload cycle playing out next year, given recent disruptions and market conditions? A: Brad Stewart, Senior VP of Investor Relations, Treasurer: We believe the worst is behind us and expect low to mid-single-digit rate improvements as bids pick up. We anticipate a gradual upward trend rather than a sharp inflection, which could benefit larger asset players like us.

Q: Are the current rate increases sufficient to cover cost inflation and improve margins through 2025? A: Adam Miller, CEO: We aim to convert rate improvements into margin gains by controlling costs and improving utilization. We expect to keep inflation minimal and improve cost per mile, allowing rate increases to enhance margins.

Q: How does the shift of customers to asset-based carriers from brokers impact the cycle and rate volatility? A: Brad Stewart, Senior VP of Investor Relations, Treasurer: This shift is typical in cycles, with customers moving to asset-based carriers for security and reliability. Cargo security has become a significant concern, leading to more business for larger carriers like us, potentially reducing rate volatility.

Q: Can you discuss the progress and challenges with the US Express integration and its impact on margins? A: Adam Miller, CEO: The integration has been challenging due to prolonged market difficulties. We’ve made progress on cost synergies but face challenges in improving rates in the over-the-road business. Better market conditions will help us realize the full potential of US Express.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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