UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~September 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35007

Knight-Swift Transportation Holdings Inc.

(Exact name of registrant as specified in its charter)


Delaware						20-5589597
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2002 West Wahalla Lane

Phoenix, Arizona 85027

(Address of principal executive offices and zip code)

(602) 269-2000

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock $0.01 Par Value

KNX

New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were ~~163,568,435~~approximately 160,696,000 shares of the registrant's common stock outstanding as of ~~April 27, 2022.~~October 26, 2022.

Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION			PAGE
Item 1. Financial Statements			54

Condensed Consolidated Balance Sheets (Unaudited) — ~~March 31,~~September 30, 2022 and December 31, 2021			4

Condensed Consolidated Statements of Comprehensive Income (Unaudited) — Quarter and Year-to-Date September 30, 2022 and 2021			5

Condensed Consolidated Statements of ~~Comprehensive Income~~Cash Flows (Unaudited) — ~~Quarters Ended March 31,~~Quarter and Year-to-Date September 30, 2022 and 2021			6

Condensed Consolidated Statements of ~~Cash Flows~~Stockholders' Equity (Unaudited) — ~~Quarters Ended March 31,~~Quarter and Year-to-Date September 30, 2022 and 2021			7

~~Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — Quarters Ended March 31, 2022 and 2021~~			98

Note 1 — Introduction and Basis of Presentation			10



Note 2 — Recently Issued Accounting Pronouncements			11

Note 3 — Acquisitions			11







Note 4 — Income Taxes			13



Note 5 — Accounts Receivable Securitization			1314

Note 6 — Debt and Financing			1415

Note 7 — Defined Benefit Pension Plan			1617

Note 8 — Purchase Commitments			1617

Note 9 — Contingencies and Legal Proceedings			1617

Note 10 — Share Repurchase Plans			1819

Note 11 — Weighted Average Shares Outstanding			1819

Note 12 — Fair Value Measurement			1920

Note 13 — Related Party Transactions			2223

Note 14 — Financial Information by Segment and Geography			2224

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2425

Item 3. Quantitative and Qualitative Disclosures About Market Risk			5258

Item 4. Controls and Procedures			5359
PART II OTHER INFORMATION
Item 1. Legal Proceedings			5460

Item 1A. Risk Factors			5460

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5460

Item 3. Defaults Upon Senior Securities			5460

Item 4. Mine Safety Disclosures			5460

Item 5. Other Information			5460

Item 6. Exhibits			5561

Signatures			5662

Table of Contents

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


~~QUARTERLY REPORT ON FORM 10-Q~~




GLOSSARY OF TERMS
The following glossary defines certain acronyms and terms used in this Quarterly Report on Form 10-Q. These acronyms and terms are specific to our company, commonly used in our industry, or are otherwise frequently used throughout our document.

Term						Definition
Knight-Swift/the Company/Management/We/Us/Our						Unless otherwise indicated or the context otherwise requires, these terms represent Knight-Swift Transportation Holdings Inc. and its subsidiaries.

2017 Merger						The September 8, 2017 merger of Knight Transportation, Inc. and its subsidiaries and Swift Transportation Company and its subsidiaries, pursuant to which we became Knight-Swift Transportation Holdings Inc.
2017 Debt Agreement						The Company's unsecured credit agreement, entered into on September 29, 2017, as amended on October 2, 2020



2021 Debt Agreement						The Company's unsecured credit agreement, entered into on September 3, 2021, consisting of the 2021 Revolver and 2021 Term Loans, which are defined below
2021 Prudential Notes						Third amended and restated note purchase and private shelf agreement, entered into on September 3, 2021 by ACT with unrelated financial entities
2021 Revolver						Revolving line of credit under the 2021 Debt Agreement
2021 Term Loans						The Company's term loans under the 2021 Debt Agreement, collectively consisting of the 2021 Term Loan A-1, 2021 Term Loan A-2 and 2021 Term Loan A-3
2021 Term Loan A-1						The Company's term loan under the 2021 Debt Agreement, maturing on December 3, 2022
2021 Term Loan A-2						The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2024
2021 Term Loan A-3						The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2026
2021 RSA						Fifth Amendment to the Amended and Restated Receivables Sales Agreement, entered into on April 23, 2021 by Swift Receivables Company II, LLC with unrelated financial entities.


July 2021 Term Loan						The Company's term loan entered into on July 6, 2021
ACT						AAA Cooper Transportation, and its affiliated entity
ACT Acquisition						The Company's acquisition of 100% of the securities of ACT on July 5, 2021
Annual Report						Annual Report on Form 10-K
ASC						Accounting Standards Codification
ASU						Accounting Standards Update
Board						Knight-Swift's Board of Directors
BSBY						Bloomberg Short-Term Bank Yield Index

DOE						United States Department of Energy
EPS						Earnings Per Share
Embark						Embark ~~Trucks~~Technology Inc. and its related entities
ESPP						Knight-Swift Transportation Holdings Inc. Amended and Restated 2012 Employee Stock Purchase Plan



GAAP						United States Generally Accepted Accounting Principles

LIBOR						London InterBank Offered Rate


NYSE						New York Stock Exchange
LTL						Less-than-truckload
MME						RAC MME Holdings, LLC. and its subsidiaries, MME, Inc., Midwest Motor Express, Inc., and Midnite Express Inc.
Quarterly Report						Quarterly Report on Form 10-Q

RSU						Restricted Stock Unit

~~Table of Contents~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~




~~GLOSSARY OF TERMS~~
The following glossary defines certain acronyms and terms used in this Quarterly Report on Form 10-Q. These acronyms and terms are specific to our company, commonly used in our industry, or are otherwise frequently used throughout our document.

~~Term~~		~~Definition~~
SEC		United States Securities and Exchange Commission
SOFR	Secured overnight financing rate as administered by the Federal Reserve Bank of New York


~~TRP~~		~~Transportation Resource Partners~~
US		The United States of America
UTXL		UTXL Enterprises, Inc.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

PART I FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS


Condensed Consolidated Balance Sheets (Unaudited)


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(In thousands, except per share data)					(In thousands, except per share data)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	242,860	$	261,001	Cash and cash equivalents	$	194,082	$	261,001
Cash and cash equivalents – restricted	Cash and cash equivalents – restricted	128,774		87,241		Cash and cash equivalents – restricted	144,960		87,241
Restricted investments, held-to-maturity, amortized cost	Restricted investments, held-to-maturity, amortized cost	8,302		5,866		Restricted investments, held-to-maturity, amortized cost	7,827		5,866
Trade receivables, net of allowance for doubtful accounts of $19,883 and $21,663, respectively		939,704		911,336
Trade receivables, net of allowance for doubtful accounts of $22,210 and $21,663, respectively						Trade receivables, net of allowance for doubtful accounts of $22,210 and $21,663, respectively	944,060		911,336
Contract balance – revenue in transit	Contract balance – revenue in transit	21,185		22,936		Contract balance – revenue in transit	19,605		22,936
Prepaid expenses	Prepaid expenses	86,742		90,507		Prepaid expenses	93,292		90,507
Assets held for sale	Assets held for sale	11,421		8,166		Assets held for sale	16,318		8,166
Income tax receivable	Income tax receivable	217		909		Income tax receivable	15,100		909
Other current assets	Other current assets	27,064		26,318		Other current assets	39,103		26,318
Total current assets	Total current assets	1,466,269		1,414,280		Total current assets	1,474,347		1,414,280
Gross property and equipment	Gross property and equipment	5,235,593		5,118,897		Gross property and equipment	5,543,221		5,118,897
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(1,655,908)		(1,563,533)		Less: accumulated depreciation and amortization	(1,867,896)		(1,563,533)
Property and equipment, net	Property and equipment, net	3,579,685		3,555,364		Property and equipment, net	3,675,325		3,555,364
Operating lease right-of-use-assets	Operating lease right-of-use-assets	141,363		147,540		Operating lease right-of-use-assets	160,920		147,540
Goodwill	Goodwill	3,518,589		3,515,135		Goodwill	3,518,589		3,515,135
Intangible assets, net	Intangible assets, net	1,814,883		1,831,049		Intangible assets, net	1,782,452		1,831,049
Other long-term assets	Other long-term assets	175,017		192,132		Other long-term assets	135,734		192,132
Total assets	Total assets	$	10,695,806	$	10,655,500	Total assets	$	10,747,367	$	10,655,500
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY						LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	248,762	$	224,844	Accounts payable	$	229,555	$	224,844
Accrued payroll and purchased transportation	Accrued payroll and purchased transportation	237,909		217,084		Accrued payroll and purchased transportation	200,871		217,084
Accrued liabilities	Accrued liabilities	188,008		128,536		Accrued liabilities	98,513		128,536
Claims accruals – current portion	Claims accruals – current portion	223,382		206,607		Claims accruals – current portion	271,111		206,607

Finance lease liabilities and long-term debt – current portion	Finance lease liabilities and long-term debt – current portion	234,146		262,423		Finance lease liabilities and long-term debt – current portion	76,684		262,423
Operating lease liabilities – current portion	Operating lease liabilities – current portion	33,822		35,322		Operating lease liabilities – current portion	35,618		35,322

Total current liabilities	Total current liabilities	1,166,029		1,074,816		Total current liabilities	912,352		1,074,816
Revolving line of credit	Revolving line of credit	165,000		260,000		Revolving line of credit	146,000		260,000
Long-term debt – less current portion	Long-term debt – less current portion	1,029,159		1,037,552		Long-term debt – less current portion	1,028,014		1,037,552
Finance lease liabilities – less current portion	Finance lease liabilities – less current portion	277,839		256,166		Finance lease liabilities – less current portion	348,594		256,166
Operating lease liabilities – less current portion	Operating lease liabilities – less current portion	103,161		107,614		Operating lease liabilities – less current portion	121,028		107,614
Accounts receivable securitization – less current portion		278,539		278,483
Accounts receivable securitization						Accounts receivable securitization	278,649		278,483
Claims accruals – less current portion	Claims accruals – less current portion	202,737		210,714		Claims accruals – less current portion	208,055		210,714
Deferred tax liabilities	Deferred tax liabilities	881,287		874,877		Deferred tax liabilities	878,167		874,877
Other long-term liabilities	Other long-term liabilities	11,112		11,828		Other long-term liabilities	9,895		11,828
Total liabilities	Total liabilities	4,114,863		4,112,050		Total liabilities	3,930,754		4,112,050
Commitments and contingencies (Notes 3, 7, 8, and 9)	Commitments and contingencies (Notes 3, 7, 8, and 9)	0		0		Commitments and contingencies (Notes 3, 7, 8, and 9)
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, par value $0.01 per share; 10,000 shares authorized; none issued	Preferred stock, par value $0.01 per share; 10,000 shares authorized; none issued	—		—		Preferred stock, par value $0.01 per share; 10,000 shares authorized; none issued	—		—
Common stock, par value $0.01 per share; 500,000 shares authorized; 163,635 and 165,980 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.		1,636		1,660
Common stock, par value $0.01 per share; 500,000 shares authorized; 160,670 and 165,980 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.						Common stock, par value $0.01 per share; 500,000 shares authorized; 160,670 and 165,980 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively.	1,607		1,660

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(935)		(563)		Accumulated other comprehensive loss	(2,554)		(563)
Additional paid-in capital	Additional paid-in capital	4,360,889		4,350,913		Additional paid-in capital	4,382,895		4,350,913
Retained earnings	Retained earnings	2,209,104		2,181,142		Retained earnings	2,424,469		2,181,142
Total Knight-Swift stockholders' equity	Total Knight-Swift stockholders' equity	6,570,694		6,533,152		Total Knight-Swift stockholders' equity	6,806,417		6,533,152
Noncontrolling interest	Noncontrolling interest	10,249		10,298		Noncontrolling interest	10,196		10,298
Total stockholders’ equity	Total stockholders’ equity	6,580,943		6,543,450		Total stockholders’ equity	6,816,613		6,543,450
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	10,695,806	$	10,655,500	Total liabilities and stockholders’ equity	$	10,747,367	$	10,655,500

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
	(In thousands, except per share data)
Revenue:
Revenue, excluding truckload and LTL fuel surcharge	$	1,649,982	$	1,510,572	$	4,992,391	$	3,856,549
Truckload and LTL fuel surcharge	246,857		131,873		692,568		324,611
Total revenue	1,896,839		1,642,445		5,684,959		4,181,160
Operating expenses:
Salaries, wages, and benefits	559,849		500,673		1,645,861		1,248,656
Fuel	231,128		146,422		678,763		390,713
Operations and maintenance	115,918		86,951		318,525		226,334
Insurance and claims	116,493		73,757		316,769		188,176
Operating taxes and licenses	26,628		27,475		85,869		71,240
Communications	5,095		6,612		16,709		16,284
Depreciation and amortization of property and equipment	150,363		138,570		442,889		382,091
Amortization of intangibles	16,254		15,719		48,635		39,452
Rental expense	15,216		12,002		42,109		42,265
Purchased transportation	364,394		352,061		1,135,750		914,448
Impairments	—		—		810		—
Miscellaneous operating expenses	30,060		12,116		62,965		38,040

Total operating expenses	1,631,398		1,372,358		4,795,654		3,557,699
Operating income	265,441		270,087		889,305		623,461
Other (expenses) income:
Interest income	1,221		245		2,357		809
Interest expense	(14,679)		(7,179)		(30,704)		(13,972)
Other income (expenses), net	8,488		4,072		(31,493)		37,017
Total other (expenses) income, net	(4,970)		(2,862)		(59,840)		23,854
Income before income taxes	260,471		267,225		829,465		647,315
Income tax expense	65,679		61,059		206,943		158,171
Net income	194,792		206,166		622,522		489,144
Net loss (income) attributable to noncontrolling interest	3		12		102		(372)
Net income attributable to Knight-Swift	194,795		206,178		622,624		488,772
Other comprehensive income (loss)	243		(878)		(1,991)		(878)
Comprehensive income	$	195,038	$	205,300	$	620,633	$	487,894

Earnings per share:
Basic	$	1.21	$	1.24	$	3.82	$	2.95
Diluted	$	1.21	$	1.23	$	3.80	$	2.93

Dividends declared per share:	$	0.12	$	0.10	$	0.36	$	0.28

Weighted average shares outstanding:
Basic	160,665		165,966		162,785		165,823
Diluted	161,572		167,106		163,720		166,936

See accompanying notes to the condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~


~~Condensed Consolidated Statements of Comprehensive Income (Unaudited)~~

Quarter Ended March 31,
2022 2021
(In thousands, except per share data)
Revenue:
Revenue, excluding truckload and LTL fuel surcharge $ 1,647,878 $ 1,133,105
Truckload and LTL fuel surcharge 179,111 89,909
Total revenue 1,826,989 1,223,014
Operating expenses:
Salaries, wages, and benefits 536,056 370,370
Fuel 190,489 118,236
Operations and maintenance 95,883 68,070
Insurance and claims 98,192 55,643
Operating taxes and licenses 29,037 22,048
Communications 5,870 5,037
Depreciation and amortization of property and equipment 145,044 119,915
Amortization of intangibles 16,166 11,749
Rental expense 13,401 16,864
Purchased transportation 386,446 258,230
Impairments 810 —
Miscellaneous operating expenses 11,509 14,593
Total operating expenses 1,528,903 1,060,755
Operating income 298,086 162,259
Other (expenses) income:
Interest income 461 294
Interest expense (6,680) (3,486)
Other (expense) income, net (14,405) 16,105
Total other (expenses) income, net (20,624) 12,913
Income before income taxes 277,462 175,172
Income tax expense 69,174 45,329
Net income 208,288 129,843
Net loss (income) attributable to noncontrolling interest 49 (53)
Net income attributable to Knight-Swift 208,337 129,790
Other comprehensive loss (372) —
Comprehensive income $ 207,965 $ 129,790
Earnings per share:
Basic $ 1.26 $ 0.77
Diluted $ 1.25 $ 0.77
Dividends declared per share: $ 0.12 $ 0.08
Weighted average shares outstanding:
Basic 165,377 167,478
Diluted 166,499 168,374

~~See accompanying notes to the condensed consolidated financial statements (unaudited).~~

~~Table of ContentsGlossary of Terms~~

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Cash Flows (Unaudited)


		Quarter Ended March 31,					Year-to-Date September 30,
		2022		2021			2022		2021
		(In thousands)					(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	208,288	$	129,843	Net income	$	622,522	$	489,144
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment, and intangibles	Depreciation and amortization of property, equipment, and intangibles	161,210		131,664		Depreciation and amortization of property, equipment, and intangibles	491,524		421,543
Gain on sale of property and equipment	Gain on sale of property and equipment	(34,801)		(10,537)		Gain on sale of property and equipment	(73,373)		(47,700)

Impairments	Impairments	810		—		Impairments	810		—
Deferred income taxes	Deferred income taxes	4,246		(18,920)		Deferred income taxes	1,126		40,987
Non-cash lease expense	Non-cash lease expense	9,490		15,589		Non-cash lease expense	30,973		35,939

Loss (gain) on equity securities						Loss (gain) on equity securities	51,033		(12,839)
Non-cash adjustment to fair value of convertible note						Non-cash adjustment to fair value of convertible note	—		(12,631)
Other adjustments to reconcile net income to net cash provided by operating activities	Other adjustments to reconcile net income to net cash provided by operating activities	32,229		(6,522)		Other adjustments to reconcile net income to net cash provided by operating activities	32,545		30,211
Increase (decrease) in cash resulting from changes in:	Increase (decrease) in cash resulting from changes in:					Increase (decrease) in cash resulting from changes in:
Trade receivables	Trade receivables	(28,007)		(11,586)		Trade receivables	(44,043)		(152,482)
Income tax receivable	Income tax receivable	692		2,872		Income tax receivable	(14,191)		(43,462)
Accounts payable	Accounts payable	22,074		12,534		Accounts payable	14,259		34,255
Accrued liabilities and claims accrual	Accrued liabilities and claims accrual	89,289		70,975		Accrued liabilities and claims accrual	19,207		57,157
Operating lease liabilities	Operating lease liabilities	(9,267)		(15,174)		Operating lease liabilities	(30,755)		(37,357)
Other assets and liabilities	Other assets and liabilities	607		5,375		Other assets and liabilities	(2,442)		14,759
Net cash provided by operating activities	Net cash provided by operating activities	456,860		306,113		Net cash provided by operating activities	1,099,195		817,524
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from maturities of held-to-maturity investments	Proceeds from maturities of held-to-maturity investments	1,881		500		Proceeds from maturities of held-to-maturity investments	7,506		8,380
Purchases of held-to-maturity investments	Purchases of held-to-maturity investments	(4,372)		(512)		Purchases of held-to-maturity investments	(9,594)		(6,683)
Proceeds from sale of property and equipment, including assets held for sale	Proceeds from sale of property and equipment, including assets held for sale	60,532		67,175		Proceeds from sale of property and equipment, including assets held for sale	139,545		192,454
Purchases of property and equipment	Purchases of property and equipment	(164,974)		(111,020)		Purchases of property and equipment	(496,237)		(388,518)
Expenditures on assets held for sale	Expenditures on assets held for sale	(43)		(401)		Expenditures on assets held for sale	(499)		(1,367)
Net cash, restricted cash, and equivalents invested in acquisitions	Net cash, restricted cash, and equivalents invested in acquisitions	(1,291)		(39,281)		Net cash, restricted cash, and equivalents invested in acquisitions	(1,291)		(1,342,042)

Investment in convertible note						Investment in convertible note	—		(25,000)
Other cash flows from investing activities	Other cash flows from investing activities	(1,920)		9,398		Other cash flows from investing activities	1,944		14,019
Net cash used in investing activities	Net cash used in investing activities	(110,187)		(74,141)		Net cash used in investing activities	(358,626)		(1,548,757)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayment of finance leases and long-term debt	Repayment of finance leases and long-term debt	(48,843)		(6,600)		Repayment of finance leases and long-term debt	(250,884)		(374,539)

Proceeds from long-term debt						Proceeds from long-term debt	—		1,200,000

Repayments on revolving lines of credit, net	Repayments on revolving lines of credit, net	(95,000)		(95,000)		Repayments on revolving lines of credit, net	(114,000)		90,000

Borrowings under accounts receivable securitization						Borrowings under accounts receivable securitization	—		80,000
Repayment of accounts receivable securitization	Repayment of accounts receivable securitization	—		(15,000)		Repayment of accounts receivable securitization	—		(15,000)

Proceeds from common stock issued	Proceeds from common stock issued	1,220		2,709		Proceeds from common stock issued	6,111		7,624
Repurchases of the Company's common stock	Repurchases of the Company's common stock	(144,881)		(53,661)		Repurchases of the Company's common stock	(299,941)		(53,661)
Dividends paid	Dividends paid	(20,137)		(13,624)		Dividends paid	(59,011)		(46,935)

Other cash flows from financing activities	Other cash flows from financing activities	(15,608)		(4,190)		Other cash flows from financing activities	(31,104)		(14,180)
Net cash used in financing activities		(323,249)		(185,366)
Net increase in cash, restricted cash, and equivalents		23,424		46,606
Net cash (used in) provided by financing activities						Net cash (used in) provided by financing activities	(748,829)		873,309
Net (decrease) increase in cash, restricted cash, and equivalents						Net (decrease) increase in cash, restricted cash, and equivalents	(8,260)		142,076
Cash, restricted cash, and equivalents at beginning of period	Cash, restricted cash, and equivalents at beginning of period	350,023		197,277		Cash, restricted cash, and equivalents at beginning of period	350,023		197,277
Cash, restricted cash, and equivalents at end of period	Cash, restricted cash, and equivalents at end of period	$	373,447	$	243,883	Cash, restricted cash, and equivalents at end of period	$	341,763	$	339,353

See accompanying notes to condensed consolidated financial statements (unaudited).

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Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued


		Quarter Ended March 31,					Year-to-Date September 30,
		2022		2021			2022		2021
		(In thousands)					(In thousands)
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	5,928	$	2,505	Interest	$	29,342	$	11,683
Income taxes	Income taxes	1,778		2,199		Income taxes	234,260		160,281
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Equipment acquired included in accounts payable	Equipment acquired included in accounts payable	$	11,643	$	13,860	Equipment acquired included in accounts payable	$	4,264	$	9,278

Financing provided to independent contractors for equipment sold		1,536		462

Transfers from property and equipment to assets held for sale	Transfers from property and equipment to assets held for sale	16,986		29,955		Transfers from property and equipment to assets held for sale	45,618		80,881
Noncontrolling interest associated with acquisition	Noncontrolling interest associated with acquisition	—		10,281		Noncontrolling interest associated with acquisition	—		10,281
Purchase price adjustment on acquisition	Purchase price adjustment on acquisition	2,163		—		Purchase price adjustment on acquisition	2,164		—

Right-of-use assets obtained (forfeited) in exchange for operating lease liabilities		3,314		(2,608)
Contingent consideration associated with acquisitions and investments						Contingent consideration associated with acquisitions and investments	1,717		5,000
Value of common stock issued for acquisition						Value of common stock issued for acquisition	—		10,000
Right-of-use assets obtained in exchange for operating lease liabilities						Right-of-use assets obtained in exchange for operating lease liabilities	44,465		20,261
Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions	Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions	—		560		Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions	—		4,613

Property and equipment obtained in exchange for finance lease liabilities						Property and equipment obtained in exchange for finance lease liabilities	141,374		114,803
Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities	Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities	—		28,149		Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities	6,462		42,298

Reconciliation of Cash, Restricted Cash, and Equivalents: March 31,
2022 December 31,
2021 March 31,
2021 December 31,
2020
(In thousands)
Condensed Consolidated Balance Sheets
Cash and cash equivalents $ 242,860 $ 261,001 $ 194,650 $ 156,699
Cash and cash equivalents – restricted 1
128,774 87,241 47,867 39,328
Other long-term assets 1
1,813 1,781 1,366 1,250
Condensed Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents $ 373,447 $ 350,023 $ 243,883 $ 197,277


Reconciliation of Cash, Restricted Cash, and Equivalents:	September 30, 2022		December 31, 2021		September 30, 2021		December 31, 2020
	(In thousands)
Consolidated Balance Sheets
Cash and cash equivalents	$	194,082	$	261,001	$	269,694	$	156,699
Cash and cash equivalents – restricted 1	144,960		87,241		68,019		39,328
Other long-term assets 1	2,721		1,781		1,640		1,250
Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents	$	341,763	$	350,023	$	339,353	$	197,277

________

1 Reflects cash and cash equivalents that are primarily restricted for claims payments.

See accompanying notes to condensed consolidated financial statements (unaudited).

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited)

Common Stock Additional
Paid-in Capital Retained Earnings Accumulated
Other
Comprehensive Loss Total Knight-Swift Stockholders' Equity Noncontrolling
Interest Total
Stockholders’ Equity
Shares Par Value
(In thousands, except per share data)
Balances – December 31, 2021 165,980 $ 1,660 $ 4,350,913 $ 2,181,142 $ (563) $ 6,533,152 $ 10,298 $ 6,543,450
Common stock issued to employees 364 3 408 411 411
Common stock issued under ESPP 14 — 809 809 809
Company shares repurchased (2,723) (27) (144,854) (144,881) (144,881)
Shares withheld – RSU settlement (15,608) (15,608) (15,608)
Employee stock-based compensation expense 8,759 8,759 8,759
Cash dividends paid and dividends accrued ($0.12 per share) (19,913) (19,913) (19,913)
Net income attributable to Knight-Swift 208,337 208,337 208,337
Other comprehensive loss (372) (372) (372)
Net income attributable to noncontrolling interest (49) (49)
Balances – March 31, 2022 163,635 $ 1,636 $ 4,360,889 $ 2,209,104 $ (935) $ 6,570,694 $ 10,249 $ 6,580,943


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)


































Balances – December 31, 2021	165,980	$	1,660	$	4,350,913	$	2,181,142	$	(563)	$	6,533,152	$	10,298	$	6,543,450

Common stock issued to employees	614	6		2,369						2,375				2,375
Common stock issued to the Board	18	—		873						873				873

Common stock issued under ESPP	59	1		2,862						2,863				2,863
Company shares repurchased	(6,001)	(60)				(299,881)				(299,941)				(299,941)
Shares withheld – RSU settlement						(20,504)				(20,504)				(20,504)
Employee stock-based compensation expense				25,878						25,878				25,878
Cash dividends paid and dividends accrued ($0.36 per share)						(58,912)				(58,912)				(58,912)
Net income attributable to Knight-Swift						622,624				622,624				622,624
Other comprehensive loss								(1,991)		(1,991)				(1,991)


Net income attributable to noncontrolling interest												(102)		(102)

Balances – September 30, 2022	160,670	$	1,607	$	4,382,895	$	2,424,469	$	(2,554)	$	6,806,417	$	10,196	$	6,816,613


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)


































Balances – December 31, 2020	166,553	$	1,665	$	4,301,424	$	1,566,759	$	—	$	5,869,848	$	2,192	$	5,872,040

Common stock issued to employees	475	6		5,020						5,026				5,026
Common stock issued to the Board	12	—		575						575				575
Common stock issued with ACT acquisition	219	2		9,998						10,000				10,000
Common stock issued under ESPP	47	—		2,023						2,023				2,023
Company shares repurchased	(1,303)	(13)				(53,648)				(53,661)				(53,661)
Shares withheld – RSU settlement						(8,079)				(8,079)				(8,079)
Employee stock-based compensation expense				25,854						25,854				25,854
Cash dividends paid and dividends accrued ($0.28 per share)						(46,820)				(46,820)				(46,820)
Net income attributable to Knight-Swift						488,772				488,772				488,772
Other comprehensive income								(878)		(878)				(878)
Investment in noncontrolling interest												10,281		10,281
Distribution to noncontrolling interest												(65)		(65)
Net income attributable to noncontrolling interest												372		372

Balances – September 30, 2021	166,003	$	1,660	$	4,344,894	$	1,946,984	$	(878)	$	6,292,660	$	12,780	$	6,305,440

Common Stock Additional
Paid-in Capital Retained Earnings Accumulated
Other
Comprehensive Loss Total Knight-Swift Stockholders' Equity Noncontrolling Interest Total
Stockholders’ Equity
Shares Par Value
(In thousands, except per share data)
Balances – December 31, 2020 166,553 $ 1,665 $ 4,301,424 $ 1,566,759 $ — $ 5,869,848 $ 2,192 $ 5,872,040
Common stock issued to employees 220 3 2,006 2,009 2,009
Common stock issued under ESPP 18 — 700 700 700
Company shares repurchased (1,303) (13) (53,648) (53,661) (53,661)
Shares withheld – RSU settlement (4,159) (4,159) (4,159)
Employee stock-based compensation expense 5,662 5,662 5,662
Cash dividends paid and dividends accrued ($0.08 per share) (13,345) (13,345) (13,345)
Net income attributable to Knight-Swift 129,790 129,790 129,790
Investment in noncontrolling interest 10,281 10,281
Distribution to noncontrolling interest (32) (32)
Net income attributable to noncontrolling interest 53 53
Balances – March 31, 2021 165,488 $ 1,655 $ 4,309,792 $ 1,625,397 $ — $ 5,936,844 $ 12,494 $ 5,949,338
See accompanying notes to condensed consolidated financial statements (unaudited).

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Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — Continued


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)
















Balances – June 30, 2022	160,639	$	1,606	$	4,372,916	$	2,249,333	$	(2,797)	$	6,621,058	$	10,199	$	6,631,257

Common stock issued to employees	7	—		—						—				—


Common stock issued under ESPP	24	1		1,053						1,054				1,054

Shares withheld – RSU settlement						(188)				(188)				(188)
Employee stock-based compensation expense				8,926						8,926				8,926
Cash dividends paid and dividends accrued ($0.12 per share)						(19,471)				(19,471)				(19,471)
Net income attributable to Knight-Swift						194,795				194,795				194,795
Other comprehensive loss								243		243				243


Net income attributable to noncontrolling interest												(3)		(3)

Balances – September 30, 2022	160,670	$	1,607	$	4,382,895	$	2,424,469	$	(2,554)	$	6,806,417	$	10,196	$	6,816,613


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)
















Balances – June 30, 2021	165,711	$	1,657	$	4,325,915	$	1,757,689	$	—	$	6,085,261	$	12,792	$	6,098,053

Common stock issued to employees	57	1		1,629						1,630				1,630

Common stock issued with ACT acquisition	219	2		9,998						10,000				10,000
Common stock issued under ESPP	16	—		692						692				692

Shares withheld – RSU settlement						(132)				(132)				(132)
Employee stock-based compensation expense				6,660						6,660				6,660
Cash dividends paid and dividends accrued ($0.10 per share)						(16,751)				(16,751)				(16,751)
Net income attributable to Knight-Swift						206,178				206,178				206,178
Other comprehensive loss								(878)		(878)				(878)


Net income attributable to noncontrolling interest												(12)		(12)

Balances – September 30, 2021	166,003	$	1,660	$	4,344,894	$	1,946,984	$	(878)	$	6,292,660	$	12,780	$	6,305,440

See accompanying notes to condensed consolidated financial statements (unaudited).

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Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 — Introduction and Basis of Presentation

Certain acronyms and terms used throughout this Quarterly Report are specific to the Company, commonly used in the trucking industry, or are otherwise frequently used throughout this document. Definitions for these acronyms and terms are provided in the "Glossary of Terms," available in the front of this document.

Description of Business

Knight-Swift is a transportation solutions provider, headquartered in Phoenix, Arizona. During the ~~first quarter of~~year-to-date period ended September 30, 2022, the Company operated an average of~~17,965~~ 18,072 tractors (comprised of ~~16,159~~16,205 company tractors and ~~1,806~~1,867 independent contractor tractors) and ~~71,310~~73,476 trailers within the Truckload segment and leasing activities within the non-reportable segments. The LTL segment operated an average of ~~3,091~~3,147 tractors and ~~8,302~~8,392 trailers. Additionally, the Intermodal segment operated an average of ~~584~~612 tractors and ~~11,027~~11,552 intermodal containers. As of ~~March 31,~~September 30, 2022,, the Company's 4four reportable segments were Truckload, LTL, Logistics, ~~LTL,~~ and Intermodal.

Basis of Presentation

The condensed consolidated financial statements and footnotes included in this Quarterly Report include the accounts of Knight-Swift Transportation Holdings Inc. and its subsidiaries and should be read in conjunction with the consolidated financial statements and footnotes included in Knight-Swift's 2021 Annual Report. In management's opinion, these condensed consolidated financial statements were prepared in accordance with GAAP and include all adjustments necessary (consisting of normal recurring adjustments) for the fair statement of the periods presented.

With respect to transactional/durational data, references to years pertain to calendar years. Similarly, references to quarters pertain to calendar quarters.

Changes in Presentation

Beginning in the second quarter of 2022, the Company separately disclosed "Loss (gain) on equity securities" in the condensed consolidated statement of cash flows. Accordingly, the amounts presented in the Company's year-to-date September 30, 2021 condensed consolidated statement of cash flows were reclassified from "Other adjustments to reconcile net income to net cash provided by operating activities" to "Loss (gain) on equity securities" to align with the current year presentation.

2021 Acquisitions

The Company ~~recently~~ acquired the following ~~entities:~~entities in 2021:

•100.0% of MME on December 6, 2021. The results are included within the LTL segment.

•100.0% of ACT on July 5, 2021. The results are included within the LTL segment.

•100.0% of UTXL on June 1, 2021. The results are included within the Logistics segment.

•79.44% of Eleos on February 1, 2021. The results are included within the non-reportable segments. The noncontrolling interest is presented as a separate component of the condensed consolidated financial statements.

Note regarding comparability: In accordance with the accounting treatment applicable to the transactions, the Company's consolidated results, as reported, do not include the operating results of its ownership interest in the acquired entities prior to the respective acquisition dates. Accordingly, comparisons between the Company's current and prior period results may not be meaningful.

Additional information regarding the Company's recent acquisitions is included in Note 3.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Seasonality

In the truckload transportation industry, results of operations generally follow a seasonal pattern. Freight volumes in the first quarter are typically lower due to less consumer demand, customers reducing shipments following the holiday season, and inclement weather, while operating expenses generally increase. Tractor productivity of the Company's Truckload fleet, third-party carriers, and independent contractors decreases during the winter months due to decreased fuel efficiency, increased cold weather-related equipment maintenance and repairs, and increased insurance claims and costs attributed to higher accident frequency from harsh weather. These factors typically lead to lower operating profitability, as compared to other parts of the year. Additionally, beginning in the latter half of the

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~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

third quarter and continuing into the fourth quarter, the Company typically experiences surges pertaining to holiday shopping trends toward delivery of gifts purchased over the Internet, as well as the length of the holiday season (consumer shopping days between Thanksgiving and Christmas). However, as the Company continues to diversify its business through expansion into the LTL industry, warehousing, and other activities, seasonal volatility is becoming more tempered. Additionally, macroeconomic trends and cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry.

Note 2 — Recently Issued Accounting Pronouncements

Date Issued

Reference

Description

Expected Adoption Date and Method

Financial Statement Impact

March 2022

ASU No. 2022-02: Financial Instruments – Credit Losses (ASC 326), Troubled Debt Restructurings and Vintage Disclosures

The amendments in this ASU require that a creditor incorporates troubled debt restructurings into the allowance for credit losses and disclose current-period gross ~~writeoffs~~write-offs by year of origination for financing receivables and net investments in leases.

January 2023, Prospective

Currently under evaluation, but not expected to be material

June 2022

ASU No. 2022-03: Fair Value Measurements (ASC 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

The amendments in this ASU clarify that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security, and not considered in measuring fair value.

January 2024, Prospective

No material impact

Note 3 — Acquisitions

~~First quarter~~Developments during the nine months ended September 30, 2022 ~~developments~~ related to the Company's ~~recent~~2021 acquisitions are discussed below.

MME

On December 6, 2021, the Company, through a wholly owned subsidiary, acquired 100.0% of Bismarck, North Dakota-based MME. MME provides LTL, full truckload, and specialized and other logistics transportation services to a diverse customer base in its service territory in the upper Midwestern and great Northwestern regions of the US.

During the measurement period, the net working capital adjustment increased by $1.3 million based on the actual versus estimated net working capital adjustment as of the transaction date. This adjustment resulted in increasing the total purchase price consideration to $165.7 million. The Company also reduced the deferred tax liabilities on MME's opening balance sheet by $2.2 million based on valuation of the Company's intangible assets. These measurement period adjustments resulted in a $3.5 million increase in goodwill related to the MME ~~acquisition.~~acquisition during the first quarter of 2022.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

ACT

On July 5, 2021, the Company acquired 100% of Dothan, Alabama-based ACT. ACT is a leading LTL carrier that also offers dedicated contract carriage and ancillary services. The purchase price was allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the July 5, 2021 acquisition date.

During the quarter ended ~~March 31,~~September 30, 2022, the Company's condensed consolidated operating results included ACT's total revenue of ~~$217.7~~$236.5 million and net income of ~~$16.1~~$20.4 million. ACT's net income during the quarter ended ~~March 31,~~September 30, 2022 included $3.5 million related to the amortization of intangible assets acquired in the ACT Acquisition.

~~Table~~During the year-to-date period ended September 30, 2022, the Company's condensed consolidated operating results included ACT's total revenue of ~~ContentsGlossary~~$699.4 million and net income of ~~Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

$63.1 million. ACT's net income during the year-to-date period ended September 30, 2022 included $10.5 million related to the amortization of intangible assets acquired in the ACT Acquisition.

Pro Forma Information (Unaudited)— The following unaudited pro forma information combines the historical operations of the Company and ACT giving effect to the ACT Acquisition, and related transactions as if consummated on January 1, 2020.

~~Quarter Ended March 31,~~

~~2021~~

~~(in thousands, except per share data)~~

~~Total revenue~~

~~1,412,232~~

~~Net income attributable to Knight-Swift~~

~~139,189~~

~~Earnings per share – diluted~~

~~0.83~~


	Quarter-to-Date September 30,		Year-to-Date September 30,
	2021		2021
	(in thousands, except per share data)
Total revenue	$	1,642,445	$	4,570,470
Net income attributable to Knight-Swift	202,883		507,168
Earnings per share – diluted	1.21		3.04

The unaudited pro forma condensed combined financial information has been presented for comparative purposes only and includes certain adjustments such as recognition of assets acquired at estimated fair values and related depreciation and amortization, elimination of transaction costs incurred by Knight-Swift and ACT during the periods presented that were directly related to the ACT Acquisition, and related income tax effects of these items.

The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Knight-Swift and ACT would have achieved had the companies been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the identified transactions. The unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the ACT Acquisition and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

UTXL

On June 1, 2021, pursuant to a stock purchase agreement, the Company, through a wholly owned subsidiary, acquired 100.0% of the equity interests of UTXL, a premier third-party logistics company which specializes in over-the-road full truckload and multi-stop loads.

As of ~~March 31,~~September 30, 2022, contingent consideration of $2.5 million associated with the transaction was ~~$2.5 million~~ included in "Accrued ~~liabilities" and $2.5 million included in "Other long-term~~ liabilities" in the Company's condensed consolidated balance ~~sheets, depending~~sheets. The purchase price was allocated based on estimated fair values of the ~~expected payment dates.~~assets acquired and liabilities assumed at the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the June 1, 2021 acquisition date.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Eleos

On February 1, 2021, pursuant to a membership interest purchase agreement ("MIPA"), the Company, through a wholly owned subsidiary, acquired 79.44% of the issued and outstanding membership interests of Eleos Technologies, LLC ("Eleos"), a Greenville, South Carolina-based software provider, specializing in mobile driving platforms, which complement the Company's suite of services. The purchase price was allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the February 1, 2021 acquisition date.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

Purchase Price Allocations

Unless otherwise stated, the purchase price allocations for the above acquisitions are preliminary and have been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date, and among other things may be pending the completion of the valuation of acquired tangible assets, an independent valuation of certain acquired intangible assets, assessment of lease agreements, assessment of certain liabilities, the calculation of deferred taxes based upon the underlying tax basis of assets acquired and liabilities assumed, and assessment of other tax related items as applicable. As the Company obtains more information, the preliminary purchase price allocations disclosed ~~below~~above are subject to change. Any future adjustments to the preliminary purchase price allocations, including changes within identifiable intangible assets or estimation uncertainty impacted by market conditions, may impact future net earnings. The purchase price allocation adjustments can be made through the end of the measurement periods, which is not to exceed one year from the respective acquisition dates.

Asset Purchase Agreement

On October 3, 2022, the Company entered into an asset purchase agreement with a total purchase consideration of $30.0 million for the purchase of revenue equipment and certain intangibles.

Note 4 — Income Taxes

Effective Tax Rate — The quarter-to-date ~~March 31,~~September 30, 2022 and ~~March 31,~~September 30, 2021 effective tax rates were 25.2% and 22.8%, respectively. The year-to-date September 30, 2022 and September 30, 2021 effective tax rates were 24.9% and ~~25.9%~~24.4%, respectively.

Valuation Allowance — The Company has not established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

Unrecognized Tax Benefits — Management believes it is reasonably possible that a decrease of up to ~~$0.3~~$0.7 million in unrecognized tax benefits relating to federal deductions may be necessary within the next twelve months.

Interest and Penalties — Accrued interest and penalties related to unrecognized tax benefits were approximately $~~0.1~~0.2 million and $0.1 million as of ~~March 31,~~September 30, 2022 and December 31, ~~2021.~~2021, respectively.

Tax Examinations — Certain of the Company's subsidiaries are currently under examination by Federal and various state jurisdictions for tax years ranging from 2014 to ~~2020~~2018. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to 2017 remain subject to examination.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 5 — Accounts Receivable Securitization

As of ~~March 31,~~September 30, 2022, the Company's eligible receivables related to the 2021 RSA generally have high credit quality, as determined by the obligor's corporate credit rating.

The 2021 RSA is subject to fees, various affirmative and negative covenants, representations and warranties, and default and termination provisions customary for facilities of this type. The Company was in compliance with these covenants as of ~~March 31,~~September 30, 2022. Collections on the underlying receivables by the Company are held for the benefit of SRCII and the various purchasers and are unavailable to satisfy claims of the Company and its subsidiaries.

The following table summarizes the key terms of the 2021 RSA (dollars in thousands):




Effective date			April 23, 2021
Final maturity date			April 23, 2024
Borrowing capacity			$400,000
Accordion option 1			$100,000
Unused commitment fee rate 2			20 to 40 basis points
Program fees on outstanding balances 3			~~one-month~~one month LIBOR + 82.5 basis points

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~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

1The accordion option increases the maximum borrowing capacity, subject to participation of the purchasers.

2The 2021 RSA commitment fees rate are based on the percentage of the maximum borrowing capacity utilized.

3As identified within the 2021 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for LIBOR.

Availability under the 2021 RSA is calculated as follows:


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(In thousands)					(In thousands)
Borrowing base, based on eligible receivables	Borrowing base, based on eligible receivables	$	400,000	$	400,000	Borrowing base, based on eligible receivables	$	400,000	$	400,000
Less: outstanding borrowings 1	Less: outstanding borrowings 1	(279,000)		(279,000)		Less: outstanding borrowings 1	(279,000)		(279,000)
Less: outstanding letters of credit, net		(65,300)		(65,300)
Less: outstanding letters of credit						Less: outstanding letters of credit	(65,300)		(65,300)
Availability under accounts receivable securitization facilities	Availability under accounts receivable securitization facilities	$	55,700	$	55,700	Availability under accounts receivable securitization facilities	$	55,700	$	55,700

1~~As of March 31, 2022 and December 31, 2021, outstanding~~Outstanding borrowings are included in "Accounts receivable ~~securitization – less current portion"~~securitization" in the condensed consolidated balance sheets and are offset by ~~$0.5 million~~of deferred loan ~~costs.~~costs of $0.4 million as of September 30, 2022 and $0.5 million as of December 31, 2021. Interest accrued on the aggregate principal balance at a rate of ~~1.1%~~3.4% and 0.9% as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

Refer to Note 12 for information regarding the fair value of the 2021 RSA.

2022 RSA

On October 3, 2022, the Company entered into the Sixth Amendment to the Amended and Restated Receivables Sales Agreement ("2022 RSA"). The 2022 RSA, among other things, extends the maturity date to October 1, 2025, increases the maximum borrowing capacity to $475.0 million, and replaces LIBOR with SOFR.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 6 — Debt and Financing

Other than the Company's accounts receivable securitization as discussed in Note 5, the Company's long-term debt consisted of the following:


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(In thousands)					(In thousands)
2021 Term Loan A-1, due December 3, 2022, net 1 2	2021 Term Loan A-1, due December 3, 2022, net 1 2	$	169,765	$	199,676	2021 Term Loan A-1, due December 3, 2022, net 1 2	$	—	$	199,676
2021 Term Loan A-2, due September 3, 2024, net 1 2	2021 Term Loan A-2, due September 3, 2024, net 1 2	199,645		199,607		2021 Term Loan A-2, due September 3, 2024, net 1 2	199,659		199,607
2021 Term Loan A-3, due September 3, 2026, net 1 2	2021 Term Loan A-3, due September 3, 2026, net 1 2	798,440		798,352		2021 Term Loan A-3, due September 3, 2026, net 1 2	798,617		798,352

2021 Prudential Notes, net 1		39,261		47,265
Prudential Notes, net 1						Prudential Notes, net 1	38,964		47,265
Other	Other	4,567		5,069		Other	3,554		5,069
Total long-term debt, including current portion	Total long-term debt, including current portion	1,211,678		1,249,969		Total long-term debt, including current portion	1,040,794		1,249,969
Less: current portion of long-term debt	Less: current portion of long-term debt	(182,519)		(212,417)		Less: current portion of long-term debt	(12,780)		(212,417)
Long-term debt, less current portion	Long-term debt, less current portion	$	1,029,159	$	1,037,552	Long-term debt, less current portion	$	1,028,014	$	1,037,552


		March 31, 2022		December 31, 2021			September 30, 2022		December 31, 2021
		(In thousands)					(In thousands)
Total long-term debt, including current portion	Total long-term debt, including current portion	$	1,211,678	$	1,249,969	Total long-term debt, including current portion	$	1,040,794	$	1,249,969
2021 Revolver, due September 3, 2026 1 3	2021 Revolver, due September 3, 2026 1 3	165,000		260,000		2021 Revolver, due September 3, 2026 1 3	146,000		260,000

Long-term debt, including revolving line of credit	Long-term debt, including revolving line of credit	$	1,376,678	$	1,509,969	Long-term debt, including revolving line of credit	$	1,186,794	$	1,509,969

1Refer to Note 12 for information regarding the fair value of debt.

2~~The~~As of September 30, 2022, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 werenet of $0.3 million and $1.4 million in deferred loan costs, respectively. As of December 31, 2021, the carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 ~~are~~net of $0.2 million, $0.4 million, and $1.6 million in deferred loan costs as of March 31, 2022, respectively. The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 arewere net of $0.3 million, $0.4 million, and $1.6 million in deferred loan costs, ~~as of December 31, 2021,~~ respectively.

3The Company also had outstanding letters of credit of ~~$64.4~~$29.2 million and $64.0 million under the 2021 Revolver, primarily related to workers' compensation and self-insurance liabilities at ~~March 31,~~September 30, 2022 and December 31, 2021, respectively. As of September 30, 2022, the Company also had outstanding letters of credit of $94.8 million under a separate bilateral agreement which do not impact the availability of the 2021 Revolver.

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Credit Agreements

2021 Debt Agreement — On September 3, 2021, the Company entered into the $2.3 billion 2021 Debt Agreement (an unsecured credit facility), with a group of banks, replacing the 2017 Debt Agreement and the July 2021 Term Loan. The following table presents the key terms of the 2021 Debt Agreement:

2021 Term Loan A-1

2021 Term Loan A-2

2021 Term Loan A-3

2021 Revolver 2

2021 Term Loan A-1

2021 Term Loan A-2

2021 Term Loan A-3

2021 Revolver 2

2021 Debt Agreement Terms

(Dollars in thousands)

2021 Debt Agreement Terms

(Dollars in thousands)

Maximum borrowing capacity

$200,000

$800,000

$1,100,000

Maximum borrowing capacity

$200,000

$800,000

$1,100,000

Final maturity date

December 3, 2022

September 3, 2024

September 3, 2026

Final maturity date

December 3, 2022

September 3, 2024

September 3, 2026

Interest rate minimum margin

BSBY

Interest rate margin reference rate

BSBY

Interest rate minimum margin 1

0.75%

0.88%

Interest rate minimum margin 1

0.75%

0.88%

Interest rate maximum margin 1

1.38%

1.50%

Interest rate maximum margin 1

1.38%

1.50%

Minimum principal payment — amount

$—

$10,000

$—

Minimum principal payment — amount

$—

$10,000

$—

Minimum principal payment — frequency

Once

Quarterly

Once

Minimum principal payment — frequency

Once

Quarterly

Once

Minimum principal payment — commencement date

December 3, 2022

September 3, 2024

September 30, 2024

September 3, 2026

Minimum principal payment — commencement date

December 3, 2022

September 3, 2024

September 30, 2024

September 3, 2026

1The interest rate margin for the 2021 Term Loans and 2021 Revolver is based on the Company's consolidated leverage ratio. As of ~~March 31,~~September 30, 2022, interest accrued at ~~1.08%~~3.37% on the 2021 Term Loans and ~~1.13%~~3.40% on the 2021 Revolver.

2The commitment fee for the unused portion of the 2021 Revolver is based on the Company's consolidated leverage ratio, and ranges from 0.1% to 0.2%. As of ~~March 31,~~September 30, 2022, commitment fees on the unused portion of the 2021 Revolver accrued at 0.1% and outstanding letter of credit fees accrued at 1.0%.

Pursuant to the 2021 Debt Agreement, the 2021 Revolver and the 2021 Term Loans contain certain financial covenants with respect to a maximum net leverage ratio and a minimum consolidated interest coverage ratio. The 2021 Debt Agreement provides flexibility regarding the use of proceeds from asset sales, payment of dividends, stock repurchases, and equipment financing. In addition to the financial covenants, the 2021 Debt Agreement includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the 2021 Debt Agreement may be accelerated, and the lenders' commitments may be terminated. The 2021 Debt Agreement contains certain usual and customary restrictions and covenants relating to, among other things, dividends (which are restricted only if a default or event of default occurs and is continuing or would result therefrom), liens, affiliate transactions, and other indebtedness. As of ~~March 31,~~September 30, 2022, the Company was in compliance with the covenants under the 2021 Debt Agreement.

Borrowings under the 2021 Debt Agreement are made by Knight-Swift Transportation Holdings Inc., and are guaranteed by certain of the Company's domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

~~ACT Credit Agreement~~

ACT's Prudential Notes — The 2021 Prudential Notes allow ACT to borrow up to $125.0 million, less amounts ~~then~~ currently outstanding with Prudential Capital Group, provided that certain financial ratios are maintained. The 2021 Prudential Notes have interest rates ranging from 4.05% to 4.40% and various maturity dates ranging from October 2023 through January 2028. The 2021 Prudential Notes are unsecured and contain usual and customary restrictions on, among other things, the ability to make certain payments to stockholders, similar to the provisions of the Company's 2021 Debt Agreement. As of ~~March 31,~~September 30, 2022,, ACT had $87.9 million available for issuance under the agreement.

Fair Value Measurement —See Note 12 for fair value disclosures regarding the Company's debt instruments.

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Note 7 — Defined Benefit Pension Plan

Net periodic pension income and benefits paid during the ~~first quarter of~~quarter-to-date and year-to-date periods ended September 30, 2022 were immaterial.

Assumptions

A weighted-average discount rate of ~~3.38%~~5.11% was used to determine benefit obligations as of ~~March 31,~~September 30, 2022.

The following weighted-average assumptions were used to determine net periodic pension cost:


	~~Quarter Ended March 31,~~
	~~2022~~
~~Discount rate~~	~~2.55~~	%
~~Expected long-term rate of return on pension plan assets~~	~~6.00~~	%


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
Discount rate	4.33	%	2.49	%	3.13	%	2.49	%
Expected long-term rate of return on pension plan assets	6.00	%	6.00	%	6.00	%	6.00	%

Refer to Note 12 for additional information regarding fair value measurements of the Company's investments.

Note 8 — ~~Commitments~~

Purchase Commitments

As of ~~March 31,~~September 30, 2022, the Company had outstanding commitments to purchase revenue equipment of ~~$682.2~~$199.2 million in the remainder of 2022 ($~~479.3~~158.2 million of which were tractor commitments), ~~$58.6~~$297.4 million in 2023 ($~~50.4~~236.1 million of which were tractor commitments), and none thereafter. These purchases may be financed through any combination of finance leases, operating leases, debt, proceeds from sales of existing equipment, and cash flows from operations.

As of ~~March 31,~~September 30, 2022, the Company had outstanding commitments to purchase facilities and non-revenue equipment of ~~$52.0~~$40.0 million in the remainder of 2022, ~~$6.4~~$21.4 million from 2023 through 2024, ~~$1.2~~$1.8 million from 2025 through 2026, and none thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

Note 9 — Contingencies and Legal Proceedings

Legal Proceedings

Information is provided below regarding the nature, status, and contingent loss amounts, if any, associated with the Company's pending legal matters. There are inherent uncertainties in these legal matters, some of which are beyond management's control, making the ultimate outcomes difficult to predict. Moreover, management's views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop.

The Company has made accruals with respect to its legal matters where appropriate, which are included in "Accrued liabilities" in the condensed consolidated balance sheets. The Company has recorded an aggregate accrual of approximately ~~$18.6~~$13.2 million, relating to the Company's outstanding legal proceedings as of ~~March 31,~~September 30, 2022.

Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's overall financial position, operating results, or cash flows after taking into account any existing accruals. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.

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EMPLOYEE COMPENSATION AND PAY PRACTICES MATTERS

California Wage, Meal, and Rest Class Actions

The plaintiffs generally allege one or more of the following: that the Company 1) failed to pay the California minimum wage; 2) failed to provide proper meal and rest periods; 3) failed to timely pay wages upon separation from employment; 4) failed to pay for all hours worked; 5) failed to pay overtime; 6) failed to properly reimburse work-related expenses; and 7) failed to provide accurate wage statements.

Plaintiff(s)

Defendant(s)

Date instituted

Court or agency currently pending in

John Burnell 1

Swift Transportation Co., Inc

March 22, 2010

United States District Court for the Central District of California

James R. Rudsell 1

Swift Transportation Co. of Arizona, LLC and Swift Transportation Company

April 5, 2012

United States District Court for the Central District of California

Recent Developments and Current Status

In April 2019, the parties reached settlement of this matter. In January 2020, the court granted final approval of the settlement. Two objectors appealed the court’s decision granting final approval of the settlement. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of ~~March 31,~~September 30, 2022.

INDEPENDENT CONTRACTOR MATTERS

Ninth Circuit Independent Contractor Misclassification Class Action

The putative class alleges that Swift misclassified independent contractors as independent contractors, instead of employees, in violation of the Fair Labor Standards Act and various state laws. The lawsuit also raises certain related issues with respect to the lease agreements that certain independent contractors have entered into with Interstate Equipment Leasing, LLC. The putative class seeks unpaid wages, liquidated damages, interest, other costs, and attorneys' fees.

Plaintiff(s)

Defendant(s)

Date instituted

Court or agency currently pending in

Joseph Sheer, Virginia Van Dusen, Jose Motolinia, Vickii Schwalm, Peter Wood 1

Swift Transportation Co., Inc., Interstate Equipment Leasing, Inc., Jerry Moyes, and Chad Killebrew

December 22, 2009

United States District Court of Arizona and Ninth Circuit Court of Appeals

Recent Developments and Current Status

In January 2020, the court granted final approval of the settlement in this matter. In March 2020, the Company paid the settlement amount approved by the court. As of ~~March 31,~~September 30, 2022, the Company has ~~accrued~~an accrual for anticipated costs associated with finalizing this matter.

1 Individually and on behalf of all others similarly situated.

Self Insurance

Effective March 1, 2022, ACT retains a $10.0 million self-insured retention per occurrence, as compared to the previous policy period, which included $2.0 million per occurrence with a $5.0 million annual corridor deductible subject to a $10.0 million three-year policy term aggregate ~~cap during the previous policy period.~~cap. This was the only material change related to our self insurance policies during the ~~first quarter of~~year-to-date period ended September 30, 2022.

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Note 10 — Share Repurchase Plans

~~2020 Knight-Swift Share Repurchase Plan~~

On November 30, 2020, the Company announced that the Board approved the repurchase of up to $250.0 million worth of the Company's outstanding common stock (the "2020 Knight-Swift Share Repurchase Plan").

~~The following table presents the Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:~~

Share Repurchase Plan Quarter Ended March 31, 2022 Quarter Ended March 31, 2021
Board Approval Date Authorized Amount Shares Amount Shares Amount
(shares and dollars in thousands)
November 24, 2020 1
$250,000 2,723 $ 144,881 1,303 $ 53,661

1~~$47.9 million and $192.8 million remained available under the 2020 Knight-Swift Share Repurchase Plan as of March 31, 2022 and December 31, 2021, respectively.~~

~~Subsequent to March 31, 2022, the Company repurchased 0.1 million shares for $5.1 million under the 2020 Knight-Swift Share Repurchase Plan.~~

~~2022 Knight-Swift Share Repurchase Plan~~

On April 25, 2022, the Company announced that the Board approved the repurchase of up to $350.0 million of the Company's outstanding common stock (the "2022 Knight-Swift Share Repurchase Plan"). With the adoption of the 2022 Knight-Swift Share Repurchase Plan, the Company terminated the 2020 Knight-Swift Share Repurchase Plan, which had approximately $42.8 million of authorized purchases remaining upon termination.

~~Subsequent to March 31, 2022,~~The following table presents the ~~Company repurchased 0.4~~Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:


Share Repurchase Plan		Quarter-to-Date September 30, 2022			Year-to-Date September 30, 2022
Board Approval Date	Authorized Amount	Shares	Amount		Shares	Amount
		(shares and dollars in thousands)
November 24, 2020 1	$250,000	—	$	—	2,821	$	149,982
April 19, 2022 1	$350,000	—	$	—	3,180	$	149,959
		—	$	—	6,001	$	299,941
		Quarter-to-Date September 30, 2021			Year-to-Date September 30, 2021

November 24, 2020 1	$250,000	—	$	—	1,303	$	53,661

1 $200.0 million ~~shares for $17.3 million~~remained available under the 2022 Knight-Swift Repurchase Plan as of September 30, 2022. $192.8 million remained available under the 2020 Knight-Swift Share Repurchase Plan ~~leaving $332.7 million available~~ as of ~~May 4, 2022.~~December 31, 2021.

Note 11 — Weighted Average Shares Outstanding

Earnings per share, basic and diluted, as presented in the condensed consolidated statements of comprehensive income, are calculated by dividing net income attributable to Knight-Swift by the respective weighted average common shares outstanding during the period.

The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:


		Quarter Ended March 31,		Quarter-to-Date September 30,				Year-to-Date September 30,
			2022		2021		2022	2021	2022	2021
			(In thousands)				(In thousands)
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding		165,377		167,478	Basic weighted average common shares outstanding	160,665	165,966	162,785	165,823
Dilutive effect of equity awards	Dilutive effect of equity awards		1,122		896	Dilutive effect of equity awards	907	1,140	935	1,113
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding		166,499		168,374	Diluted weighted average common shares outstanding	161,572	167,106	163,720	166,936
Anti-dilutive shares excluded from diluted earnings per share 1	Anti-dilutive shares excluded from diluted earnings per share 1		239		6	Anti-dilutive shares excluded from diluted earnings per share 1	132	23	321	165

1 Shares were excluded from the dilutive-effect calculation because the outstanding awards' exercise prices were greater than the average market price of the Company's common stock for the periods presented.

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Note 12 — Fair Value Measurement

The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:


			March 31, 2022		December 31, 2021				September 30, 2022				December 31, 2021
		Condensed Consolidated Balance Sheets Caption	Carrying Value	Estimated Fair Value	Carrying Value	Estimated Fair Value		Condensed Consolidated Balance Sheets Caption	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
			(In thousands)						(In thousands)
Financial Assets:	Financial Assets:						Financial Assets:

Equity method investments	Equity method investments	Other long-term assets	78,750	78,750	75,769	75,769	Equity method investments	Other long-term assets	$	103,950	$	103,950	$	75,769	$	75,769

Investments in equity securities	Investments in equity securities	Other long-term assets	53,352	53,352	74,201	74,201	Investments in equity securities	Other long-term assets	3,195		3,195		74,201		74,201
Convertible note	Convertible note	Other current assets	10,437	10,437	10,141	10,141	Convertible note	Other current assets	11,039		11,039		10,141		10,141

Financial Liabilities:	Financial Liabilities:						Financial Liabilities:

2021 Term Loan A-1, due December 2022 1	2021 Term Loan A-1, due December 2022 1	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	169,765	170,000	199,676	200,000	2021 Term Loan A-1, due December 2022 1	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	$	—	$	—	$	199,676	$	200,000
2021 Term Loan A-2, due September 2024 1		Long-term debt – less current portion	199,645	200,000	199,607	200,000
2021 Term Loan A-2, due September, 2024 1							2021 Term Loan A-2, due September, 2024 1	Long-term debt – less current portion	199,659		200,000		199,607		200,000
2021 Term Loan A-3, due September 2026 1	2021 Term Loan A-3, due September 2026 1	Long-term debt – less current portion	798,440	800,000	798,352	800,000	2021 Term Loan A-3, due September 2026 1	Long-term debt – less current portion	798,617		800,000		798,352		800,000
2021 Revolver, due September 2026	2021 Revolver, due September 2026	Revolving line of credit	165,000	165,000	260,000	260,000	2021 Revolver, due September 2026	Revolving line of credit	146,000		146,000		260,000		260,000
2021 Prudential Notes 2	2021 Prudential Notes 2	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	39,261	39,341	47,265	47,354	2021 Prudential Notes 2	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	38,964		39,027		47,265		47,354

2021 RSA, due April 2024 3	2021 RSA, due April 2024 3	Accounts receivable securitization – less current portion	278,539	279,000	278,483	279,000	2021 RSA, due April 2024 3	Accounts receivable securitization	278,649		279,000		278,483		279,000
Contingent consideration, acquisitions		Accrued liabilities, Other long-term liabilities	13,100	13,100	13,100	13,100
Contingent consideration							Contingent consideration	Accrued liabilities, Other long-term liabilities	4,217		4,217		13,100		13,100

1~~The~~As of September 30, 2022, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 werenet of $0.3 million and $1.4 million in deferred loan costs, respectively. As of December 31, 2021, the carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 ~~are~~net of $0.2 million, $0.4 million, and $1.6 million in deferred loan costs as of March 31, 2022, respectively. The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 arewere net of $0.3 million, $0.4 million, and $1.6 million in deferred loan costs, ~~as of December 31, 2021,~~ respectively.

2~~The~~As of September 30, 2022, the carrying amount of the 2021 Prudential Notes iswas net of $0.1 million iinn deferred loan costs asand included $1.9 million in fair value adjustments. As of ~~March 31, 2022~~ ~~and~~ December 31, 2021,~~. T~~he the carrying amount of the 2021 Prudential Notes iswas net of $~~2.2~~0.1 million in deferred loan costs and included $2.4 million in fair value ~~adjustments as of~~ ~~March 31, 2022 and December 31, 2021, respectively.~~adjustments.

3The carrying amount of the 2021 RSA iswas net of$0.4 million and $0.5 million in deferred loan costs as of ~~March 31,~~September 30, 2022 and December 31, 2021, respectively.

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Recurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of assets measured on a recurring basis as of ~~March 31,~~September 30, 2022 and December 31, ~~2021~~:2021:


				Fair Value Measurements at Reporting Date Using:											Fair Value Measurements at Reporting Date Using
		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Unrealized Gain (Loss) Position			Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Unrealized Gain (Loss) Position
		(In thousands)											(In thousands)
As of March 31, 2022
Convertible note 1		$	10,437	$	—	$	—	$	10,437	$	296
As of September 30, 2022												As of September 30, 2022
Convertible notes 1												Convertible notes 1	$	11,039	$	—	$	—	$	11,039	$	1,039
Investments in equity securities 2	Investments in equity securities 2	53,352		53,352		—		—		(7,817)		Investments in equity securities 2	3,195		3,195		—		—		(49,391)

As of December 31, 2021	As of December 31, 2021											As of December 31, 2021
Convertible note 1		10,141		—		—		10,141		141
Convertible notes 1												Convertible notes 1	$	10,141	$	—	$	—	$	10,141	$	141
Investments in equity securities 2	Investments in equity securities 2	74,201		74,201		—		—		14,456		Investments in equity securities 2	74,201		74,201		—		—		14,456

1Convertible notes —The condensed consolidated statements of comprehensive income include the fair value activities from the Company's convertible notes within "Other (expenses) income, net". The estimated fair value is based on probability-weighted discounted cash flow analysis of the corresponding pay-off/redemption.

•Quarter-to-date Gain (Loss) Activities: During the quarter ended September 30, 2022, the Company recognized $0.3 million of unrealized gains ~~on the~~associated with a $10.0 million face value convertible note ~~for~~entered into in November of 2021. During the quarter ended ~~March 31, 2022, which is included within "Other (expense) income, net" within~~September 30, 2021, the ~~condensed consolidated statement of comprehensive income. No~~Company recognized no gain ~~was recognized~~ on ~~the~~its convertible note ~~for~~with Embark. The Embark convertible note balance is excluded from the ~~quarter~~September 30, 2022 and December 31, 2021 convertible notes balances in the table above, as it was converted to an equity security in November of 2021.

•Year-to-date Gain (Loss) Activities: During the year-to-date period ended ~~March 31, 2021. The fair~~September 30, 2022, the Company recognized $0.9 million of unrealized gains associated with the $10.0 million face value convertible note, discussed above. During the year-to-date period ended September 30, 2021, the Company recognized an unrealized gain on its convertible note with Embark of ~~the note was determined using a discounted cash flow analysis based on the probability of exit event options and exit event dates.~~$12.6 million.

2~~Fair~~Investments in equity securities— The condensed consolidated statements of comprehensive income include the fair value ~~activity~~activities from the Company's investments in equity securities ~~is recorded in~~within "Other ~~(expense)~~(expenses) income, net" ~~within the condensed consolidated statement of comprehensive income.~~. The estimated fair value is based on quoted prices in active markets that are readily and regularly obtainable.

•Quarter-to-date Gain (Loss) Activities: During the quarter ended ~~March 31,~~September 30, 2022, the Company recognized ~~$20.8~~a gain of $0.5 million, consisting of $7.0 million in realized gains from the Company's other investments in equity securities. This was partially offset by $6.5 million in unrealized losses, ~~on these~~primarily from mark-to-market adjustments of the Company's equity investment in Embark.During the quarter ended September 30, 2021, the Company recognized a gain of $4.0 million from its other investments in equity securities, ~~consisting~~which consisted of ~~$20.8 million in unrealized losses and no realized loss. During the quarter ended March 31, 2021, the Company recognized $10.4 million in gains, consisting of $6.9~~$3.0 million in unrealized gains and ~~$3.5~~$1.0 million in realized gains.

~~Embark Investment —~~•Year-to-date Gain (Loss) Activities: During the year-to-date period ended September 30, 2022, the Company recognized a loss of $51.0 million, which consisted of $62.4 million in unrealized losses, primarily from mark-to-market adjustments of the Company's investment in Embark. This was partially offset by $11.4 million in realized gains from the Company's other investments in equity securities. During the year-to-date period ended September 30, 2021, the Company recognized an $12.8 million gain from its investments in equity securities, which consisted of $7.6 million in unrealized gains and $5.2 million in realized gains from its other equity investments.

Table of Contents AsGlossary of March 31, 2022, the fair value of the combined investment in Embark was $37.0 million, resulting in a net unrealized loss of $17.5 million recognized during the quarter ended March 31, 2022 in "Operating (expense) income, net" in the condensed consolidated statements of comprehensive income.Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Recurring Fair Value Measurements (Liabilities) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of liabilities measured on a recurring basis as of ~~March 31,~~September 30, 2022 and December 31, 2021:

Fair Value Measurements at Reporting Date Using:
Estimated
Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Total Gain (Loss)
(In thousands)
As of March 31, 2022
Contingent consideration associated with acquisitions 1
$ 13,100 $ — $ — $ 13,100 $ —
As of December 31, 2021
Contingent consideration associated with acquisition 1
13,100 — — 13,100 —


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Gain (Loss)
	(In thousands)
As of September 30, 2022
Contingent consideration 1	$	4,217	$	—	$	—	$	4,217	$	—

As of December 31, 2021
Contingent consideration 1	$	13,100	$	—	$	—	$	13,100	$	—

1Contingent consideration is associated with acquisitions and investments. The Company did not recognize any gains (losses) during the ~~quarters~~quarter or year-to-date periods ended ~~March 31,~~September 30, 2022 and 2021 related to the revaluation of these liabilities. Refer to Note 3 for information regarding ~~the~~material components of these liabilities.

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

Nonrecurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a nonrecurring basis as of ~~March 31,~~September 30, 2022 and December 31, 2021:


				Fair Value Measurements at Reporting Date ~~Using:~~Using
	Estimated Fair Value			Level 1 Inputs				Level 2 Inputs				Level 3 Inputs				Total Loss
	(In thousands)
As of ~~March 31,~~September 30, 2022
Buildings 1	$	—		$	—			$	—			$	—			$	(810)

As of December 31, 2021

Equipment 2	— $		—			$	—			$	—			$	—			$	(299)

1 Reflects the non-cash impairment of building improvements (within the non-reportable segments).

2 Reflects the non-cash impairment of certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment).

~~Gain on Sale of Revenue Equipment —~~ Net gains on disposals, including disposals of property and equipment classified as assets held for sale, reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income, were $34.8 million and $10.5 million for the quarters ended March 31, 2022 and 2021, respectively. The increase in net gains on disposals was primarily due to a stronger market for used revenue equipment during the quarter ended March 31, 2022, as compared to the same period in 2021.

Nonrecurring Fair Value Measurements (Liabilities) — As of ~~March 31,~~September 30, 2022 and December 31, 2021, the Company had no major categories of liabilities estimated at fair value that were measured on a nonrecurring basis.

Gain on Sale of Revenue Equipment — Net gains on disposals, including disposals of property and equipment classified as assets held for sale, are reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income. The Company recorded net gains on disposals of:

•$15.6 million and $22.1 million for the quarter-to-date periods ended September 30, 2022 and 2021, respectively.

•$73.4 million and $47.7 million for the year-to-date periods ended September 30, 2022 and 2021, respectively.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Fair Value of Pension Plan Assets — The following table sets forth by level the fair value hierarchy of ACT's pension plan financial assets accounted for at fair value on a recurring basis. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. ACT's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and their placement within the fair value hierarchy levels.


				Fair Value Measurements at Reporting Date Using:									Fair Value Measurements at Reporting Date Using:
		Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs			Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
		(In thousands)									(In thousands)
As of March 31, 2022
As of September 30, 2022										As of September 30, 2022
US equity funds	US equity funds	$	14,442	$	14,442	$	—	$	—	US equity funds	$	11,234	$	11,234	$	—	$	—
International equity funds	International equity funds	5,902		5,902		—		—		International equity funds	4,675		4,675		—		—
Fixed income funds	Fixed income funds	42,431		42,431		—		—		Fixed income funds	34,047		34,047		—		—
Cash and cash equivalents	Cash and cash equivalents	1,418		1,418		—		—		Cash and cash equivalents	1,031		1,031		—		—
Total pension plan assets	Total pension plan assets	$	64,193	$	64,193	$	—	$	—	Total pension plan assets	$	50,987	$	50,987	$	—	$	—

As of December 31, 2021	As of December 31, 2021									As of December 31, 2021
US equity funds	US equity funds	$	14,877	$	14,877	$	—	$	—	US equity funds	$	14,877	$	14,877	$	—	$	—
International equity funds	International equity funds	6,304		6,304		—		—		International equity funds	6,304		6,304		—		—
Fixed income funds	Fixed income funds	47,873		47,873		—		—		Fixed income funds	47,873		47,873		—		—
Cash and cash equivalents	Cash and cash equivalents	1,413		1,413		—		—		Cash and cash equivalents	1,413		1,413		—		—
Total pension plan assets	Total pension plan assets	$	70,467	$	70,467	$	—	$	—	Total pension plan assets	$	70,467	$	70,467	$	—	$	—

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

Note 13 — Related Party Transactions


		Quarter Ended March 31,				Quarter-to-Date September 30,											Year-to-Date September 30,
			2022	2021					2022						2021				2022				2021
				Provided by Knight-Swift			Received by Knight-Swift			Provided by Knight-Swift		Received by Knight-Swift			Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift
				(In thousands)											(In thousands)

Facility and Equipment Leases:	Facility and Equipment Leases:													Facility and Equipment Leases:

Certain affiliates 1	Certain affiliates 1			—			78			—		57		Certain affiliates 1	$	—	$	78	$	—	$	69	$	—	$	263	$	—	$	214
Total				$	—		$	78		$	—	$	57

Other Services:	Other Services:													Other Services:

Certain affiliates 1	Certain affiliates 1			5			9			6		9		Certain affiliates 1	$	20	$	9	$	8	$	9	$	58	$	27	$	21	$	27
Total				$	5		$	9		$	6	$	9

March 31, 2022 December 31, 2021
Receivable Payable Receivable Payable
(In thousands)
Certain affiliates 1
2 39 14 44
Total $ 2 $ 39 $ 14 $ 44


	September 30, 2022				December 31, 2021
	Receivable		Payable		Receivable		Payable
	(In thousands)



Certain affiliates 1	$	11	$	60	$	14	$	44

1"Certain affiliates" includes entities that are associated with various board members and executives and require approval by the Board prior to completing transactions. Transactions with these entities generally include freight services, facility and equipment leases, equipment sales, and other services.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 14 — Financial Information by Segment and Geography

Segment Information


		Quarter Ended March 31,			Quarter-to-Date September 30,						Year-to-Date September 30,
			2022			2021			2022		2021		2022		2021
Revenue:	Revenue:		(In thousands)					Revenue:	(In thousands)
Truckload	Truckload		$	1,080,531		$	962,947	Truckload	$	1,160,735	$	1,041,332	$	3,430,075	$	2,990,137

LTL								LTL	278,615		191,906		817,587		191,906
Logistics	Logistics		282,039			118,887		Logistics	210,673		226,338		741,374		511,962
LTL			255,125			—
Intermodal	Intermodal		109,222			107,066		Intermodal	130,777		112,801		372,870		335,245

Subtotal	Subtotal		$	1,726,917		$	1,188,900	Subtotal	$	1,780,800	$	1,572,377	$	5,361,906	$	4,029,250
Non-reportable segments	Non-reportable segments		117,639			50,669		Non-reportable segments	139,435		89,393		385,186		206,857
Intersegment eliminations	Intersegment eliminations		(17,567)			(16,555)		Intersegment eliminations	(23,396)		(19,325)		(62,133)		(54,947)
Total revenue	Total revenue		$	1,826,989		$	1,223,014	Total revenue	$	1,896,839	$	1,642,445	$	5,684,959	$	4,181,160

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

Quarter Ended March 31,
2022 2021
Operating income (loss): (In thousands)
Truckload $ 205,117 $ 158,483
Logistics 39,601 7,577
LTL 26,377 —
Intermodal 15,170 3,457
Subtotal $ 286,265 $ 169,517
Non-reportable segments 11,821 (7,258)
Operating income $ 298,086 $ 162,259

Quarter Ended March 31,
2022 2021
Depreciation and amortization of property and equipment: (In thousands)
Truckload $ 110,349 $ 101,885
Logistics 596 208
LTL 15,260 —
Intermodal 3,864 3,818
Subtotal $ 130,069 $ 105,911
Non-reportable segments 14,975 14,004
Depreciation and amortization of property and equipment $ 145,044 $ 119,915


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
Operating income:	(In thousands)
Truckload	$	175,802	$	206,543	$	587,215	$	533,483
LTL	30,859		17,469		101,003		17,469
Logistics	27,459		27,128		110,809		49,061
Intermodal	12,834		9,544		42,176		18,813
Subtotal	$	246,954	$	260,684	$	841,203	$	618,826
Non-reportable segments	18,487		9,403		48,102		4,635
Operating income	$	265,441	$	270,087	$	889,305	$	623,461


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
Depreciation and amortization of property and equipment:	(In thousands)
Truckload	$	114,946	$	107,229	$	338,014	$	314,320
LTL	15,699		11,950		46,280		11,950
Logistics	566		355		1,708		852
Intermodal	4,324		3,942		12,424		11,700
Subtotal	$	135,535	$	123,476	$	398,426	$	338,822
Non-reportable segments	14,828		15,094		44,463		43,269
Depreciation and amortization of property and equipment	$	150,363	$	138,570	$	442,889	$	382,091

Geographical Information

In the aggregate, total revenue from the Company's international operations was less than 5.0% of consolidated total revenue for the ~~quarters~~quarter and year-to-date periods ended ~~March 31,~~September 30, 2022 and 2021. Additionally, long-lived assets on the Company's international subsidiary balance sheets were less than 5.0% of consolidated total assets as of ~~March 31,~~September 30, 2022 and December 31, 2021.

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ITEM 2.			MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Section 27A of the Securities Act of 1933, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation:

•any projections of or guidance regarding earnings, earnings per share, revenues, cash flows, dividends, capital expenditures, or other financial items,

•any statement of plans, strategies, and objectives of management for future operations,

•any statements concerning proposed acquisition plans, new services, or developments,

•any statements regarding future economic conditions or performance, and

•any statements of belief and any statements of assumptions underlying any of the foregoing.

In this Quarterly Report, forward-looking statements include, but are not limited to, statements we make concerning:

•the ability of our infrastructure to support future growth, whether we grow organically or through potential acquisitions,

•the future impact of acquisitions, including achievement of anticipated synergies and the anticipated risks regarding our ~~acquisition~~acquisitions of ACT and MME,

•the future performance of our LTL business, including revenue and margins,

•the flexibility of our model to adapt to market conditions,

•our ability to recruit and retain qualified driving associates,

•future safety performance,

•future performance of our segments or businesses,

•our ability to gain market share,

•the ability, desire, and effects of expanding our logistics, brokerage, LTL, and intermodal operations, whether organically or inorganically,

•future equipment prices and availability, our equipment purchasing or leasing plans (including containers in our Intermodal segment), and our equipment turnover (including expected tractor trade-ins),

•our ability to sublease equipment to independent contractors,

•the impact of pending legal proceedings,

•future insurance claims, coverage, coverage limits, premiums, and retention limits,

•the expected freight environment, including freight demand, capacity, and volumes,

•economic conditions and growth, including future inflation, consumer spending, supply chain conditions, labor supply and relations, and US Gross Domestic Product ("GDP") changes,

•future pricing terms from vendors and suppliers,

•expected liquidity and methods for achieving sufficient liquidity,

•future fuel prices and the expected impact of fuel efficiency initiatives,

•future expenses, interest rates, and cost structure and our ability to control costs,

•future operating profitability and margin,

•future third-party service provider relationships and availability,

•future contracted pay rates with independent contractors and compensation arrangements with driving associates,

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

•our expected need or desire to incur indebtedness and our ability to comply with debt covenants,

•future capital expenditures and expected sources of liquidity, capital allocation, capital structure, capital requirements, and growth strategies and opportunities,

•~~expected capital expenditures,~~

•future mix of owned versus leased revenue equipment,

•future asset utilization,

•future return on capital,

•future share repurchases and dividends,

•future tax rates,

•future trucking industry capacity and balance between industry demand and capacity,

•future rates,

•future depreciation and amortization,

•expected tractor and trailer fleet age, fleet size, and demand for trailer fleet,

•future investment in and deployment of new or updated technology or services,

•political conditions and regulations, including trade regulation, quotas, duties, or tariffs, and any future changes to the foregoing,

•future purchased transportation expense, and

•others.

Such statements may be identified by their use of terms or phrases such as "believe," "may," "could," "will," "would," "should," "expects," "estimates," "designed," "likely," "foresee," "goals," "seek," "target," "forecast," "projects," "anticipates," "plans," "intends," "hopes," "strategy," "potential," "objective," "mission," "continue," "outlook," "feel," and similar terms and phrases. Forward-looking statements are based on currently available operating, financial, and competitive information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to materially differ from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A "Risk Factors" in our 2021 Annual Report, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.

All such forward-looking statements speak only as of the date of this Quarterly Report. You are cautioned not to place undue reliance on such forward-looking statements. We expressly disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein, to reflect any change in our expectations with regard thereto, or any change in the events, conditions, or circumstances on which any such statement is based.


Reference to Glossary of Terms

Certain acronyms and terms used throughout this Quarterly Report are specific to our company, commonly used in our industry, or are otherwise frequently used throughout our document. Definitions for these acronyms and terms are provided in the "Glossary of Terms," available in the front of this document.


Reference to Annual Report

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements (unaudited) and footnotes included in this Quarterly Report, as well as the consolidated financial statements and footnotes included in our 2021 Annual Report.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


Executive Summary

Company Overview

Knight-Swift Transportation Holdings Inc. is one of North America's largest and most diversified freight transportation companies, providing multiple full truckload, LTL, intermodal, and ~~logistics~~other complementary services. Our objective is to operate our business with industry-leading margins and continued organic growth and growth through acquisitions while providing safe, high-quality, cost-effective solutions for our customers. Knight-Swift uses a nationwide network of business units and terminals in the US and Mexico to serve customers throughout North America. In addition to operating the country's largest truckload fleet, Knight-Swift also contracts with third-party equipment providers to provide a broad range of transportation services to our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors. Our four reportable segments are Truckload, LTL, Logistics, ~~LTL,~~ and Intermodal. Additionally, we have various non-reportable segments. ~~Refer~~

Key Financial Highlights — Year-to-Date September 30, 2022

During the year-to-date period ended September 30, 2022, margins improved across all of our reportable segments, supported by consolidated revenue growth of 29.5%, excluding truckload and LTL fuel surcharge. Consolidated operating income improved 42.6% to ~~Note 14~~$889.3 million in ~~Part I, Item 1 of this Quarterly Report for information regarding our segments.~~

~~Our objective is~~the year-to-date period ended September 30, 2022, as compared to ~~operate our business with industry-leading margins and growth while providing safe, high-quality, cost-effective solutions for our customers.~~

~~We continue~~the same period last year. Net income attributable to ~~grow our company organically and through acquisitions. Refer~~Knight-Swift increased 27.4% to ~~Note 3 in Part I, Item 1 of this Quarterly Report for information about our recent acquisitions.~~

~~Revenue~~$622.6 million.

•~~Our truckload services include irregular route~~Truckload— 82.9% operating ratio during year-to-date September 30, 2022. The Adjusted Operating Ratio1 improved by 40 basis points to 79.7% for year-to-date September 30, 2022, supported by a 7.5% increase in revenue, excluding fuel surcharge and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base with 13,249 irregular route and 4,716 dedicated tractors.intersegment transactions, compared to the same period last year.

•~~Our Logistics~~LTL —87.6% operating ratio during year-to-date September 30, 2022. Yield remains strong and Intermodal segments provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services. Wewe continue to ~~offer power-only services through our Logistics segment with our consolidated fleet of over 71,000 trailers.~~capture both revenue and cost synergies, leading to an 83.0% Adjusted Operating Ratio1.

•~~Our LTL business, which~~Logistics — 85.1% operating ratio during year-to-date September 30, 2022. The Adjusted Operating Ratio1 was ~~initially established~~84.8%, with operating income improvement of 125.9%. Load count grew by 44.6%, leading to a 47.7% increase in 2021 through the ACT and later the MME acquisition, provides our customers with regional LTL transportation service through our growing network of approximately 100 service centers within our geographical footprint. Our LTL segment operates approximately 3,100 tractors and 8,300 trailers and also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.revenue, excluding intersegment transactions.

•~~Our non-reportable segments include support services provided~~Intermodal — 88.7% operating ratio during year-to-date September 30, 2022, a 570 basis point improvement compared to this time last year, leading to a 124.2% increase in operating income with revenue growth of 11.3%, excluding intersegment transactions.

•Non-reportable Segments —Strong demand for our ~~third-party carriers including~~ insurance offering, equipment maintenance, equipment leasing, and warehousing ~~trailer parts manufacturing,~~services led to a 937.8% improvement in operating income and ~~warranty services. Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization~~revenue growth of ~~intangibles related to the 2017 Merger and various acquisitions)~~86.2%.

•Liquidity and Capital — During the year-to-date period ended September 30, 2022, we generated $1.1 billion in operating cash flows. Our Free Cash Flow1 was $742.5 million. We paid down $209.4 million in long-term debt, $114.0 million on our revolving line of credit, $41.5 million in finance lease liabilities, and $30.8 million in cash on our operating lease liabilities. We also repurchased $299.9 million worth of our shares and issued $59.0 million in dividends to ~~loaded miles for~~ our ~~Truckload segment~~stockholders. Gain on sale of revenue equipment increased to $73.4 million in the year-to-date period ended September 30, 2022, compared to $47.7 million this time last year.

As of September 30, 2022 we had a balance of $194.1 million in unrestricted cash and ~~typically does not offset non-paid empty miles, idle time, and out-of-route miles driven. Fuel surcharge programs involve a computation based~~cash equivalents, $146.0 million outstanding on the ~~change in national~~2021 Revolver, $1.0 billion face value outstanding on the 2021 Term Loans, and $6.8 billion of stockholders' equity. We do not foresee material liquidity constraints or ~~regional fuel prices. These programs may update as often as weekly, but typically require a specified minimum change in fuel cost~~any issues with our ongoing ability to ~~prompt a change in fuel surcharge revenue. Therefore, many of these programs have a time lag between when fuel costs change~~meet our debt covenants. See discussion under "Liquidity and ~~when the change is reflected in fuel surcharge revenue~~Capital Resources" for ~~our Truckload and LTL segments.~~additional information.

________

~~Expenses —~~1Our most significant expenses typically vary with miles traveled and include fuel, driving associate-related expenses (such as wages and benefits), and services purchased from third-party service providers (including other trucking companies, railroad and drayage providers, and independent contractors. Maintenance and tire expenses, as well as the cost of insurance and claims generally vary with the miles we travel, but also have a controllable component based on safety performance, fleet age, operating efficiency, and other factors. Our primary fixed costs are depreciation and lease expense for revenue equipment and terminals, non-driver employee compensation, amortization of intangible assets, and interest expense.Refer to "Non-GAAP Financial Measures" below.

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~~Operating Statistics —~~We measure our consolidated and segment results through certain operating statistics, which are discussed under "Results of Operations — Segment Review — Operating Statistics," below. Our results are affected by various economic, industry, operational, regulatory, and other factors, which are set forth in Part I, Item 1A "Risk Factors" in our 2021 Annual Report, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.

~~Consolidated~~ Key Financial ~~Highlights~~Data and Operating Metrics


		Quarter Ended March 31,				Quarter-to-Date September 30,								Year-to-Date September 30,
			2022				2021				2022			2021			2022			2021
GAAP financial data:	GAAP financial data:		(Dollars in thousands, except per share data)							GAAP financial data:	(Dollars in thousands, except per share data)
Total revenue	Total revenue		$	1,826,989			$	1,223,014		Total revenue	$	1,896,839		$	1,642,445		$	5,684,959		$	4,181,160
Revenue, excluding truckload and LTL fuel surcharge	Revenue, excluding truckload and LTL fuel surcharge		$	1,647,878			$	1,133,105		Revenue, excluding truckload and LTL fuel surcharge	$	1,649,982		$	1,510,572		$	4,992,391		$	3,856,549
Net income attributable to Knight-Swift	Net income attributable to Knight-Swift		$	208,337			$	129,790		Net income attributable to Knight-Swift	$	194,795		$	206,178		$	622,624		$	488,772
Earnings per diluted share	Earnings per diluted share		$	1.25			$	0.77		Earnings per diluted share	$	1.21		$	1.23		$	3.80		$	2.93
Operating ratio	Operating ratio		83.7		%		86.7		%	Operating ratio	86.0		%	83.6		%	84.4		%	85.1		%

Non-GAAP financial data:	Non-GAAP financial data:									Non-GAAP financial data:
Adjusted Net Income Attributable to Knight-Swift 1	Adjusted Net Income Attributable to Knight-Swift 1		$	224,863			$	139,433		Adjusted Net Income Attributable to Knight-Swift 1	$	204,967		$	217,080		$	660,019		$	519,511
Adjusted EPS 1	Adjusted EPS 1		$	1.35			$	0.83		Adjusted EPS 1	$	1.27		$	1.30		$	4.03		$	3.11
Adjusted Operating Ratio 1	Adjusted Operating Ratio 1		80.6		%		84.5		%	Adjusted Operating Ratio 1	83.1		%	81.3		%	81.2		%	82.8		%

Revenue equipment statistics by segment:	Revenue equipment statistics by segment:									Revenue equipment statistics by segment:
Truckload	Truckload									Truckload
Average tractors 2	Average tractors 2		17,965				18,224			Average tractors 2	18,196			17,867			18,072			18,041
Average trailers 3	Average trailers 3		71,310				59,797			Average trailers 3	75,432			60,361			73,476			60,396
LTL	LTL									LTL
Average tractors 4	Average tractors 4		3,091				N/A			Average tractors 4	3,223			2,546			3,147			2,546
Average trailers 5	Average trailers 5		8,302				N/A			Average trailers 5	8,472			7,202			8,392			7,202
Intermodal	Intermodal									Intermodal
Average tractors	Average tractors		584				597			Average tractors	628			609			612			605
Average containers	Average containers		11,027				10,846			Average containers	12,138			10,842			11,552			10,843

1Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are non-GAAP financial measures and should not be considered alternatives, or superior to, the most directly comparable GAAP financial measures. However, management believes that presentation of these non-GAAP financial measures provides useful information to investors regarding the Company's results of operations. Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are reconciled to the most directly comparable GAAP financial measures under "Non-GAAP Financial Measures," below.

2Our tractor fleet within the Truckload segment had a weighted average age of ~~2.6~~2.8 years and ~~2.3~~2.4 years as of ~~March 31,~~September 30, 2022 and 2021, respectively.

3~~Note that average trailers~~Third quarter 2022 includes ~~7,561~~7,952 trailers related to leasing activities recorded within our non-reportable ~~segments in 2022.~~operating segments. Third quarter 2021 does not include 6,682 trailers related to leasing activities recorded within our non-reportable operating segments. Our trailer fleet within the Truckload segment had a weighted average age of ~~8.4~~9.5 years and ~~8.2~~8.3 years as of ~~March 31,~~September 30, 2022 and 2021, respectively.

The year-to-date period ending September 30, 2022 includes 7,282 trailers related to leasing activities recorded within our non-reportable operating segments. The year-to-date period ending September 30, 2021 does not include 5,886 trailers related to leasing activities recorded within our non-reportable operating segments.

4Our LTL tractor fleet had a weighted average age of ~~4.5~~4.3 years and 4.0 years as of ~~March 31,~~September 30, 2022 and 2021, respectively. Our LTL tractor fleetincludes ~~695~~720 and 547 tractors from ACT's and MME's dedicated and other businesses for the quarters ended ~~first~~September 30, 2022 and 2021, respectively. Our LTL tractor fleet ~~quarter of 2022.~~includes 705 and 547 tractors from ACT's and MME's dedicated and other businesses for the year-to-date periods ended September 30, 2022 and 2021, respectively.

5Our LTL trailer fleet had a weighted average age of 8.0 years and 7.8 years as of ~~March 31,~~September 30, 2022 and i~~ncludes 907~~2021, respectively. Our LTL trailer fleet includes 999 and 621 trailers from ACT's and MME's dedicated and other businesses for the quarters ended ~~first~~September 30, 2022 and 2021, respectively. Our LTL trailer fleet ~~quarter of 2022.~~includes 956 and 621 trailers from ACT's and MME's dedicated and other businesses for the year-to-date periods ended September 30, 2022 and 2021, respectively.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Market Trends and ~~Company Performance~~Outlook

~~Our Company Trends and Outlook~~ — Each reportable segment grew revenue while improving margins, leading to consolidated revenue growth of 45.4%, excluding truckload and LTL fuel surcharge, and an improvement of 83.7% in consolidated operating income to $298.1 million in the first quarter of 2022, as compared to the same quarter last year. Net Income Attributable to Knight-Swift increased by 60.5% to $208.3 million.

•~~Truckload~~—81.0% operating ratio during the first quarter of 2022. We generated a 78.2% Adjusted Operating Ratio during the quarter, a 360 basis point improvement, supported by continued year-over-year revenue growth. This represents our strongest performance in a first quarter since the 2017 Merger.

•~~Logistics —~~86.0% operating ratio during the first quarter of 2022. The Adjusted Operating Ratio was 85.7% with operating income improvement of 422.6%. Load count grew by 76.9%, leading to a 142.1% increase in revenue, excluding intersegment transactions. Within our power-only service offering, revenue more than quadrupled as compared to the first quarter of 2021, and we expect this service offering will continue to grow as a percentage of our overall logistics revenue.

•~~LTL —~~89.7% operating ratio during the first quarter of 2022. An 85.9% Adjusted Operating Ratio was led by a 13.8% improvement in revenue, excluding fuel surcharge, per hundredweight, as well as cost synergies being realized, representing a sequential 440 basis point improvement. This was supported by a 24.8% sequential increase in total revenue, which includes the results of MME.

•~~Intermodal —~~ ~~Operating ratio of 86.1% during the first quarter of 2022, a 1,070 basis point improvement leading to a 338.8% increase in operating income with year-over-year revenue growth of 2.1%.~~

•~~Non-reportable —~~ Revenue growth of 132.2% was supported by the activities within our diverse operating segments of insurance, equipment maintenance, equipment leasing, and warehousing, leading to a $19.1 million improvement in operating income within our non-reportable segments.

•~~Free Cash Flow~~1 — ~~During the first quarter of 2022, we generated $352.4 million of Free Cash Flow~~1.

~~Market Trends and Outlook~~ —The national unemployment rate was ~~3.6%~~3.5%21 as of ~~March 31,~~September 30, 2022, as compared to ~~6.0% this time last year.~~4.8%1 as of September 30, 2021. The US gross domestic product, which is the broadest measure of goods and services produced across the economy, ~~decreased~~increased by ~~1.4%~~2.6%32 on a year-over-year basis, per preliminary third-party forecasts. The ~~deceleration,~~increase, compared to ~~2021, was driven by~~the second quarter decrease of 0.9%, reflected a ~~reduction~~smaller decrease in private inventory investment, an upturn in government spending, and ~~lower spending at all levels of government.~~an acceleration in nonresidential fixed investment that were partly offset by a larger decrease in residential fixed investment and a deceleration in consumer spending. Early estimates of the ~~first~~third quarter 2022 US employment cost index indicate a year-over-year increase of ~~4.5%~~5.0%21 and a sequential increase of ~~1.4%~~1.2%21.

~~From a~~The freight market ~~perspective, we are encouraged by the continued strength in freight demand; however, demand may be difficult to predict~~outlook for the ~~rest~~fourth quarter of ~~2022. The~~ 2022 ~~market outlook~~ includes the following:

•~~Strong contract rates lead to an increase in commitments with less spot exposure~~Overall consumer demand moderates

•~~Trailer pool capacity remains at a premium~~Minimal non-contract opportunities

•~~Declining~~Muted peak season

•Strong demand continues for trailer pools

•Small carriers continue to exit as a result of lower spot rates ~~historically high used equipment market, limited availability to new equipment~~ and ~~high fuel~~significantly higher operating costs ~~increase barriers to entry~~

•LTL demand remains ~~strong~~stable with continued increases in revenue per hundredweight ~~remaining in the double digits~~year-over-year

•~~Sourcing and retaining drivers remains challenging~~Labor availability improves for stronger carriers

•Inflationary ~~pressure on~~pressures continue for equipment, maintenance, labor and other cost items

•~~Used~~Demand for used equipment market ~~remains strong but begins to normalize late in~~weakens as small carriers struggle

Based on the ~~year~~above market factors, our Company outlook for the fourth quarter of 2022 includes the following:

•Rates inflect negatively year-over-year as the moderating spot market yields less non-contract opportunities

•~~Uncertainty~~Stable truck count with typical sequential declines in miles per tractor

•Year-over-year increase in LTL revenue and margin, but typical sequential declines

•Stable Logistics load volumes with reduced revenue per load with an operating ratio in the ~~market based on China lockdowns, significant inflation, war overseas, and consumer confidence~~

~~________~~

1~~Refer to "Non-GAAP Financial Measures" below.~~mid-to-high 80s

2•~~Source: bls.gov~~Intermodal margins to remain in the high single digits with volumes improving year-over-year

3•~~Source: bea.gov~~

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED~~

Continued growth in revenue and operating income within the non-reportable segments

•Inflationary pressure in most cost areas including driver pay, maintenance, equipment, and non-driving labor

•Equipment gains to be approximately $10 – $15 million

~~The above factors should continue~~•Sequential increase in interest expense due to ~~support a favorable~~higher rates

•Net cash capital expenditures expected range of $525 – $575 million for the full year 2022, excluding potential acquisitions

•Approximate tax rate ~~environment, likely resulting in double-digit contract rate increases.~~ of 25% for the full year 2022

In addition to the above, we expect the Truckload segment will remain resilient and continue to operate efficiently and the Logistics segment will continue to provide value to our customers through our power-only and traditional brokerage service offerings. Our ACT and MME teams are ~~seeing strong demand for power-only opportunities~~working together to further build out a super-regional network that we expect will provide additional yield and ~~strength in the used equipment market.~~revenue opportunities. The Intermodal segment continues to build out its network that aligns with our new rail partners. Our non-reportable segments are further expanding to complement our other service offerings.

We anticipate that depreciation and amortization expense will increase and rental expense will correspondingly decrease, as a percentage of revenue, excluding truckload and LTL fuel surcharge, as we intend to purchase, rather than enter into operating leases, for a majority of our revenue equipment, terminal improvements, or terminal expansions in the remainder of 2022. With significant tightening in the insurance markets, we may also experience changes in premiums, retention limits, and excess coverage limits in the remainder of 2022. While fuel expense is generally offset by fuel surcharge revenue, our fuel expense, net of truckload and LTL fuel surcharge revenue, may increase in the future, particularly during periods of sharply rising fuel prices.

~~We expect that our entry into the LTL market through our acquisitions of ACT and MME will~~ Overall, we remain committed to long-term profitability as we continue to ~~have~~leverage opportunities across the Knight-Swift brands, and efficiently deploy our assets, while maintaining a ~~significant impact~~relentless focus on ~~our future consolidated financial results, including an overall increase in operating revenues and expenses.~~cost control.

~~Operating Results: First Quarter 2022 Compared to First Quarter 2021~~________

~~Note:~~ 1in accordance with the accounting treatment applicable to each of our recent acquisitions, Knight-Swift's reported results do not include the operating results of the acquired entities prior to the respective acquisition dates. Accordingly, comparisons between the Company's first quarter 2022 results and prior periods may not be meaningful.

~~The $78.5 million increase in net income attributable to Knight-Swift to $208.3 million during the first quarter of 2022 from $129.8 million during the same period last year includes the following:~~

•~~Contributor —~~ ~~$46.6 million increase in operating income within our Truckload segment, driven by a 7.9% increase in revenue, excluding fuel surcharge and intersegment transactions.~~Source: bls.gov

•2~~Contributor —~~Source: bea.gov ~~$32.0 million increase in operating income within our Logistics segment. Revenue, excluding intersegment transactions, increased by 142.1%, as load volumes grew by~~ ~~76.9%~~ ~~while revenue per load increased by 36.8%.~~

•~~Contributor —~~ ~~$26.4 million of operating income from our LTL segment in the first quarter of 2022.~~

•~~Contributor —~~ ~~$11.7 million improvement in operating income within our Intermodal segment. Revenue per load increased 35.9%, as rail congestion and allocations reduced load counts by 24.9%.~~

•~~Offset —~~ $30.5 million reduction in "Other (expense) income, net," primarily driven by current quarter net losses within our portfolio of investments, including the unrealized loss from the mark-to-market adjustment of our investment in Embark.

•~~Offset —~~ $23.8 million increase in consolidated income tax expense primarily due to an increase in income before income taxes. That results in an effective tax rate of 24.9% for the first quarter of 2022 and 25.9% for the first quarter of 2021.

~~See additional discussion of our operating results within "Results of Operations — Consolidated Operating and Other Expenses" below.~~

~~Liquidity and Capital —~~ During the first quarter of 2022, we generated $456.9 million in operating cash flows and paid down $133.3 million in long-term debt, $10.5 million in finance liabilities, and $9.3 million in cash on our operating lease liabilities. We also repurchased approximately $150 million of our shares, calculated based on the trade dates, and issued $20.1 million in dividends to our stockholders. Gain on sale of revenue equipment increased to $34.8 million in the first quarter of 2022, compared to $10.5 million in the same quarter of 2021.

We ended the quarter with $242.9 million in unrestricted cash and cash equivalents, $165.0 million outstanding on the 2021 Revolver, $1.0 billion face value outstanding on the 2021 Term Loans, and $6.6 billion of stockholders' equity.

~~We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants. See discussion under "Liquidity and Capital Resources" for additional information.~~

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


Results of Operations — ~~Segment Review~~Summary

~~The Company has four reportable segments: Truckload, Logistics, Intermodal, and LTL, as well as certain non-reportable segments. Refer~~Note: In accordance with the accounting treatment applicable to ~~Note 14~~each of our 2021 acquisitions, Knight-Swift's reported results do not include the operating results of the acquired entities prior to the ~~condensed~~respective acquisition dates. Accordingly, comparisons between the Company's quarter and year-to-date September 30, 2022 results and prior periods may not be meaningful.

Operating Results: Third Quarter 2022 Compared to Third Quarter 2021

The $11.4 million decrease in net income attributable to Knight-Swift to $194.8 million during the third quarter of 2022 from $206.2 million during the same period last year includes the following:

•Contributor — $30.7 million decrease in operating income within our Truckload segment. Year-over-year miles per tractor decreased 4.2% during the third quarter of 2022, which is an improvement from the year-over-year decrease of 6.6% during the second quarter of 2022.

•Offset — $13.4 million increase in operating income from our LTL segment, driven by a 15.5% increase in revenue, excluding fuel surcharge per hundredweight.

•Offset — $0.3 million increase in operating income within our Logistics segment due to a 280 basis point improvement in gross margin.

•Offset — $3.3 million improvement in operating income within our Intermodal segment, supported by revenue, excluding intersegment transactions growth of 16.0%.

•Offset — $9.1 million increase in operating income within the non-reportable segments, supported by revenue growth of $50.0 million from the insurance, equipment maintenance, equipment leasing, and warehousing operating segments.

•Contributor —$7.5 million increase in consolidated ~~financial statements, included~~interest expense primarily driven by higher interest rates and overall debt balances.

•Offset —$4.4 million increase in ~~Part I, Item 1~~"Other income (expenses), net," primarily driven by gains from our portfolio of ~~this Quarterly Report~~investments.

•Contributor—$4.6 million increase in consolidated income tax expense primarily due to a year over year reduction of favorable discrete items primarily associated with the ACT acquisition in the third quarter of 2021. The effective tax rate of 25.2% for ~~information regarding our segments.~~

~~Consolidating Tables~~the third quarter of 2022, an increase from 22.8% for ~~Total Revenue and Operating Income (Loss)~~

Quarter Ended March 31,
2022 2021
Revenue: (In thousands)
Truckload $ 1,080,531 $ 962,947
Logistics 282,039 118,887
LTL 255,125 —
Intermodal 109,222 107,066
Subtotal $ 1,726,917 $ 1,188,900
Non-reportable segments 117,639 50,669
Intersegment eliminations (17,567) (16,555)
Total revenue $ 1,826,989 $ 1,223,014

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Operating Results: Year-to-Date September 30, 2022 Compared to Year-to-Date September 30, 2021

The $133.8 million increase in net income attributable to Knight-Swift to $622.6 million during year-to-date of 2022 from $488.8 million during the same period last year includes the following:

•Contributor — $53.7 million increase in operating income within our Truckload segment, driven by a 7.5% increase in revenue, excluding fuel surcharge and intersegment transactions.

•Contributor — $83.5 million increase in operating income from our LTL segment for year-to-date September 30, 2022.

•Contributor —$61.7 million increase in operating income within our Logistics segment. Revenue, excluding intersegment transactions, increased by 47.7%, as load volumes grew by 44.6% while revenue per load increased by 2.2%.

•Contributor — $23.4 million improvement in operating income within our Intermodal segment, supported by revenue growth, as revenue per load increased 34.5%, offset by a 17.3% decrease in load count due to rail congestion and allocations.

•Contributor — $43.5 million increase in operating income within the non-reportable segments, supported by revenue growth of $178.3 million from the insurance, equipment maintenance, equipment leasing, and warehousing operating segments.

•Offset —$16.7 million increase in consolidated interest expense primarily driven by higher interest rates and overall debt balances.

•Offset — $68.5 million reduction in "Other income (expenses), net," primarily driven by an unrealized loss from the mark-to-market adjustment of our investment in Embark, compared to a gain in the year-to-date period ended September 30, 2021.

•Offset— $48.8 million increase in consolidated income tax expense primarily due to an increase in income before income taxes. This resulted in an effective tax rate of 24.9% for year-to-date September 30, 2022 and 24.4% for year-to-date September 30, 2021.

Our results are further discussed in "Results of Operations — Consolidated Operating and Other Expenses".

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


Results of Operations — Segment Review

The Company has four reportable segments: Truckload, LTL, Logistics, and Intermodal, as well as certain non-reportable segments.

Consolidating Tables for Total Revenue and Operating Income


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
Revenue:	(In thousands)
Truckload	$	1,160,735	$	1,041,332	$	3,430,075	$	2,990,137
LTL	278,615		191,906		817,587		191,906
Logistics	210,673		226,338		741,374		511,962
Intermodal	130,777		112,801		372,870		335,245
Subtotal	$	1,780,800	$	1,572,377	$	5,361,906	$	4,029,250
Non-reportable segments	139,435		89,393		385,186		206,857
Intersegment eliminations	(23,396)		(19,325)		(62,133)		(54,947)
Total revenue	$	1,896,839	$	1,642,445	$	5,684,959	$	4,181,160


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
Operating income:	(In thousands)
Truckload	$	175,802	$	206,543	$	587,215	$	533,483
LTL	30,859		17,469		101,003		17,469
Logistics	27,459		27,128		110,809		49,061
Intermodal	12,834		9,544		42,176		18,813
Subtotal	$	246,954	$	260,684	$	841,203	$	618,826
Non-reportable segments	18,487		9,403		48,102		4,635
Operating income	$	265,441	$	270,087	$	889,305	$	623,461

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Revenue

•Our truckload services include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base with approximately 13,500 irregular route and 4,700 dedicated tractors.

•Our LTL business, which was initially established in 2021 through the ACT acquisition and later the MME acquisition, provides our customers with regional LTL transportation service through our growing network of approximately 110 facilities and a door count of approximately 4,400. Our LTL segment operates approximately 3,200 tractors and approximately 8,500 trailers and also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.

•Our Logistics and Intermodal segments provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services. We continue to offer power-only services through our Logistics segment leveraging our fleet of over 75,000 trailers.

•Our non-reportable segments include support services provided to our customers and third-party carriers including insurance, equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services. Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

•In addition to the revenues earned from our customers for the trucking and non-trucking services discussed above, we also earn fuel surcharge revenue from our customers through our fuel surcharge programs, which serve to recover a majority of our fuel costs. This generally applies only to loaded miles for our Truckload segment and typically does not offset non-paid empty miles, idle time, and out-of-route miles driven. Fuel surcharge programs involve a computation based on the change in national or regional fuel prices. These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue. Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue for our Truckload and LTL segments.

Expenses

Our most significant expenses typically vary with miles traveled and include fuel, driving associate-related expenses (such as wages and benefits), and services purchased from third-party service providers (including other trucking companies, railroad and drayage providers, and independent contractors). Maintenance and tire expenses, as well as the cost of insurance and claims generally vary with the miles we travel, but also have a controllable component based on safety performance, fleet age, operating efficiency, and other factors. Our primary fixed costs are depreciation and lease expense for revenue equipment and terminals, non-driver employee compensation, amortization of intangible assets, and interest expenses.

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Operating Statistics

We measure our consolidated and segment results through the operating statistics listed in the table below. Our chief operating decision makers monitor the GAAP results of our reportable segments, as supplemented by certain non-GAAP information. Refer to "Non-GAAP Financial Measures" ~~below~~ for more details. Additionally, we use a number of primary indicators to monitor our revenue and expense performance and efficiency.

Operating Statistic

Relevant Segment(s)

Description

Average Revenue per Tractor

Truckload

Measures productivity and represents revenue (excluding fuel surcharge and intersegment transactions) divided by average tractor count

Total Miles per Tractor

Truckload

Total miles (including loaded and empty miles) a tractor travels on average

Average Length of Haul

Truckload, LTL

Average miles traveled with loaded trailer cargo per order/shipment

Non-paid Empty Miles Percentage

Truckload

Percentage of miles without trailer cargo

Shipments per Day

LTL

Average number of shipments completed each business day

Weight per Shipment

LTL

Total weight (in pounds) divided by total shipments

Revenue per shipment

LTL

Total revenue divided by total shipments

Revenue xFSR per shipment

LTL

Total revenue, excluding fuel surcharge, divided by total shipments

Revenue per hundredweight

LTL

Measures yield and is calculated as total revenue divided by total weight (in pounds) times 100

Revenue xFSR per hundredweight

LTL

Total revenue, excluding fuel surcharge, divided by total weight (in pounds) times 100

Average Tractors

Truckload, LTL, Intermodal

Average tractors in operation during the period including company tractors and tractors provided by independent contractors

Average Trailers

Truckload, LTL

Average trailers in operation during the period

Average Revenue per Load

Logistics, Intermodal

Total revenue (excluding intersegment transactions) divided by load count

Gross Margin Percentage

Logistics

Logistics gross margin (revenue, excluding intersegment transactions, less purchased transportation expense, excluding intersegment transactions) as a percentage of logistics revenue, excluding intersegment transactions

Average Containers

Intermodal

Average containers in operation during the period

GAAP Operating Ratio

Truckload,
LTL, Logistics, ~~LTL,~~ Intermodal

Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses. Calculated as operating expenses as a percentage of total revenue, or the inverse of operating margin.

Non-GAAP Adjusted Operating Ratio

Truckload,
LTL, Logistics, ~~LTL,~~ Intermodal

Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses. Consolidated and segment Adjusted Operating Ratios are reconciled to their corresponding GAAP operating ratios under "Non-GAAP Financial Measures," below.

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Segment Review

Truckload Segment

We generate revenue in the Truckload segment primarily through irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border service operations across our brands. We operated ~~13,249~~approximately 13,500 irregular route tractors and ~~4,716~~approximately 4,700 dedicated route tractors in use during the quarter-to-date period ended ~~March 31,~~September 30, 2022. Generally, we are paid a predetermined rate per mile or per load for our truckload services. Additional revenues are generated by charging for tractor and trailer detention, loading and unloading activities, dedicated services, and other specialized services, as well as through the collection of fuel surcharge revenue to mitigate the impact of increases in the cost of fuel. The main factors that affect the revenue generated by our Truckload segment are rate per mile from our customers, the percentage of miles for which we are compensated, and the number of loaded miles we generate with our equipment.

The most significant expenses in the Truckload segment are primarily variable and include fuel and fuel taxes, driving associate-related expenses (such as wages, benefits, training, and recruitment), and costs associated with independent contractors primarily included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. Maintenance expense (which includes costs for replacement tires for our revenue equipment) and insurance and claims expenses have both fixed and variable components. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency, and other factors. The main fixed costs in the Truckload segment are depreciation and rent ~~expenses~~expense from ~~leasing and acquiring revenue equipment~~tractors, trailers, and terminals, as well as compensating our non-driver employees.


									Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.			YTD 2022 vs.
															2022			2021			2022			2021			QTD 2021		YTD 2021
											(Dollars in thousands, except per tractor data)													Increase (Decrease)
		Quarter Ended March 31,								Increase (Decrease)
			2022			2021
			(Dollars in thousands, except per tractor data)
Total revenue	Total revenue		$	1,080,531		$	962,947					12.2	%	Total revenue	$	1,160,735		$	1,041,332		$	3,430,075		$	2,990,137		11.5	%	14.7	%
Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions		$	941,534		$	872,814					7.9	%	Revenue, excluding fuel surcharge and intersegment transactions	$	967,769		$	933,205		$	2,890,782		$	2,688,579		3.7	%	7.5	%
GAAP: Operating income	GAAP: Operating income		$	205,117		$	158,483					29.4	%	GAAP: Operating income	$	175,802		$	206,543		$	587,215		$	533,483		(14.9	%)	10.1	%
Non-GAAP: Adjusted Operating Income 1	Non-GAAP: Adjusted Operating Income 1		$	205,441		$	158,807					29.4	%	Non-GAAP: Adjusted Operating Income 1	$	176,126		$	206,866		$	588,186		$	534,454		(14.9	%)	10.1	%
Average revenue per tractor 2	Average revenue per tractor 2		$	52,409		$	47,894					9.4	%	Average revenue per tractor 2	$	53,186		$	52,231		$	159,959		$	149,026		1.8	%	7.3	%
GAAP: Operating ratio 2	GAAP: Operating ratio 2		81.0		%	83.5		%				(250	bps)	GAAP: Operating ratio 2	84.9		%	80.2		%	82.9		%	82.2		%	470	bps	70	bps
Non-GAAP: Adjusted Operating Ratio 1 2	Non-GAAP: Adjusted Operating Ratio 1 2		78.2		%	81.8		%				(360	bps)	Non-GAAP: Adjusted Operating Ratio 1 2	81.8		%	77.8		%	79.7		%	80.1		%	400	bps	(40	bps)
Non-paid empty miles percentage 2	Non-paid empty miles percentage 2		14.1		%	12.8		%				130	bps	Non-paid empty miles percentage 2	14.8		%	13.5		%	14.5		%	13.1		%	130	bps	140	bps
Average length of haul (miles) 2	Average length of haul (miles) 2		394			412						(4.4	%)	Average length of haul (miles) 2	398			398			395			407			—	%	(2.9	%)
Total miles per tractor 2	Total miles per tractor 2		18,916			20,928						(9.6	%)	Total miles per tractor 2	19,391			20,233			57,853			62,083			(4.2	%)	(6.8	%)
Average tractors 2 3	Average tractors 2 3		17,965			18,224						(1.4	%)	Average tractors 2 3	18,196			17,867			18,072			18,041			1.8	%	0.2	%
Average trailers 2 4	Average trailers 2 4		71,310			59,797						19.3	%	Average trailers 2 4	75,432			60,361			73,476			60,396			25.0	%	21.7	%

1 Refer to "Non-GAAP Financial Measures" below.

2 Defined under "Operating Statistics," above.

3 Includes ~~16,159~~16,283 and ~~16,305~~16,048 average company-owned tractors for the ~~first~~third quarter of 2022 and 2021, respectively.

4 Includes ~~7,561~~16,205 and 16,166 average company-owned tractors for year-to-date periods ended September 30, 2022 and 2021, respectively.

4 Third quarter 2022 includes 7,952 trailers related to leasing activities recorded within our non-reportable ~~segments for the first~~operating segments. Third quarter ~~of 2022.~~2021 does not include ~~Does not include 5,764~~6,682 trailers related to leasing activities recorded within our non-reportable operating ~~segments for the~~ ~~first~~ ~~quarter of 2021.~~segments.

~~Comparison Between the Quarters Ended March 31,~~The year-to-date period ending September 30, 2022 ~~and 2021~~includes 7,282 trailers related to leasing activities recorded within our non-reportable operating segments. The year-to-date period ending September 30, 2021 does not include— Our Truckload segment operated at a 78.2% Adjusted Operating Ratio, which improved by 360 basis points year-over-year. This, along with a 7.9% growth in revenue, excluding fuel surcharge and intersegment transactions, led 5,886 trailers related to ~~a 29.4% improvement in Adjusted Operating Income.~~leasing activities recorded within our non-reportable operating segments.

Revenue per loaded mile, excluding fuel surcharge and intersegment transactions increased 22.9%, while a 4.4% shorter length of haul contributed to a 9.6% decrease in miles per tractor. These factors ultimately led to a 9.4% increase in average revenue per tractor and improved margins.

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Comparison Between the Quarters Ended September 30, 2022 and 2021— The Truckload segment grew revenue, excluding fuel surcharge and intersegment transactions, by 3.7%, while operating with an 81.8% Adjusted Operating Ratio. Revenue per loaded mile, excluding fuel surcharge and intersegment transactions, increased 8.1% year-over-year. Miles per tractor decreased by 4.2%, which is an improvement from the year-over-year decrease of 6.6% during the second quarter of 2022. These factors ultimately led to a 1.8% year-over-year increase in average revenue per tractor. We continue ~~making modest progress with seating our tractors~~to experience inflationary pressures in driver related costs, maintenance, and ~~operating them productively.~~ insurance that offset the improvements in revenue per tractor. This resulted in a 14.9% reduction in Adjusted Operating Income.

We continue to add scale by increasing our trailer count which has ~~increased by over 2,200 since~~grown to approximately 75,000 trailers as of the ~~fourth~~third quarter of ~~2021.~~

~~Logistics Segment~~

~~The Logistics segment is less asset-intensive than the~~2022. We believe our vast and growing trailer fleet positions us to provide valuable capacity to our customers through our Truckload and ~~LTL segments and is dependent upon capable non-driver employees, modern and effective information technology, and third-party capacity providers.~~ Logistics revenue is generated by its brokerage operations. We generate additional revenue by offering specialized logistics solutions (including, but not limited to, trailing equipment, origin management, surge volume, disaster relief, special projects, and other logistic needs). Logistics revenue is mainly affected by the rates we obtain from customers, the freight volumes we ship through third-party capacity providers, and our ability to secure third-party capacity providers to transport customer freight.

The most significant expense in the Logistics segment is purchased transportation that we pay to third-party capacity providers, which is primarily a variable cost and is included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. Variability in this expense depends on truckload capacity, availability of third-party capacity providers, rates charged to customers, current freight demand, and customer shipping needs. Fixed Logistics operating expenses primarily include non-driver employee compensation and benefits recorded in "Salaries, wages, and benefits" and depreciation and amortization expense recorded in "Depreciation and amortization of property and equipment" in the condensed consolidated statements of comprehensive income.

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands, except per load data)
Total revenue $ 282,039 $ 118,887 137.2 %
Revenue, excluding intersegment transactions $ 280,171 $ 115,722 142.1 %
GAAP: Operating income $ 39,601 $ 7,577 422.6 %
Non-GAAP: Adjusted Operating Income 1
$ 39,935 $ 7,577 427.1 %
Revenue per load 2
$ 2,697 $ 1,971 36.8 %
Gross margin percentage 2
20.2 % 14.4 % 580 bps
GAAP: Operating ratio 2
86.0 % 93.6 % (760 bps)
Non-GAAP: Adjusted Operating Ratio 1 2
85.7 % 93.5 % (780 bps)

~~1 Refer to "Non-GAAP Financial Measures" below.~~

~~2 Defined under "Operating Statistics," above.~~segments.

Comparison Between ~~the Quarters Ended March 31,~~Year-to-Date September 30, 2022 and 2021 — ~~Demand for our logistics service offering remained strong throughout the quarter, as we continue~~Our Truckload segment operated at a 79.7% Adjusted Operating Ratio, which improved by 40 basis points when compared to ~~leverage our consolidated fleet of approximately 71,000 trailers~~year-to-date September 30, 2021. This, along with 7.5% growth in revenue, excluding fuel surcharge and intersegment transactions, led to ~~support our power-only service offering. Logistics revenue,~~a 10.1% improvement in Adjusted Operating Income.

Revenue per loaded mile, excluding fuel surcharge and intersegment transactions increased ~~142.1%~~ ~~as we grew load count~~17.0% while miles per tractor decreased by ~~76.9%, while increasing~~6.8%. These factors ultimately led to a 7.3% increase in average revenue per ~~load by~~ ~~36.8%. The Adjusted Operating Ratio~~tractor and improved to ~~85.7%, resulting in a~~ ~~427.1%~~ ~~increase in Adjusted Operating Income.~~ ~~Brokerage gross margin was 20.2% in the first quarter of 2022, compared to 14.4% in the first quarter of 2021.~~margins.

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED~~

LTL Segment

Dothan, Alabama-based ACT and Bismarck, North Dakota-based MME, both acquired in 2021, comprise our LTL segment. We provide regional direct service and serve our customers' national transportation needs by utilizing key partner carriers for coverage areas outside of our network. We primarily generate revenue by transporting freight for our customers through our core LTL services.

Our revenues are impacted by shipment volume and tonnage levels that flow through our network. Additional revenues are generated through fuel surcharges and accessorial services provided during transit from shipment origin to destination. We focus on the following multiple revenue generation factors when reviewing revenue yield: revenue per hundredweight, revenue per shipment, weight per shipment, and length of haul. Fluctuation within each of these metrics is analyzed when determining the revenue quality of our customers' shipment density.

Our most significant expense is related to direct costs associated with the transportation of our freight moves including; direct salary, wage and benefit costs, fuel expense, and depreciation expense associated with revenue equipment costs. Other expenses associated with revenue generation that can fluctuate and impact operating results are insurance and claims expenses as well as maintenance costs of our revenue equipment. These expenses can be influenced by multiple factors including our safety performance, equipment age, and other factors. A key component of lowering our operating costs is labor efficiency within our network. We continue to focus on technological advances to improve the customer experience and reduce our operating costs.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Note: In accordance with the accounting treatment applicable to the ACT and MME acquisitions, the LTL segment's reported results do not include the comparative operating results of the acquired entities prior to the respective acquisition dates.

~~Quarter Ended March 31, 2022~~

~~(Dollars in thousands, except per tractor data)~~

~~Total revenue~~

~~255,125~~

~~Revenue, excluding fuel surcharge~~

~~214,675~~

~~GAAP: Operating income~~

~~26,377~~

~~Non-GAAP: Adjusted Operating Income~~ 1

~~30,322~~

~~GAAP: Operating ratio~~ 2

~~89.7~~

~~Non-GAAP: Adjusted Operating Ratio~~ ~~1 2~~

~~85.9~~

~~Shipments per day~~ 2

~~18,783~~

~~Weight per shipment~~ 2

~~1,098~~

~~Average length of haul (miles)~~ 2

~~522~~

~~Revenue per shipment~~ 2

~~178.43~~

~~Revenue xFSR per shipment~~ 2

~~150.70~~

~~Revenue per hundredweight~~ 2

~~16.25~~

~~Revenue xFSR per hundredweight~~ 2

~~13.73~~

~~Average tractors~~ ~~2 3~~

~~3,091~~

~~Average trailers~~ ~~2 4~~

~~8,302~~


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands, except per tractor data)												Increase (Decrease)
Total revenue	$	278,615		$	191,906		$	817,587		$	191,906		45.2	%	326.0	%
Revenue, excluding fuel surcharge and intersegment transactions	$	224,443		$	167,900		$	663,296		$	167,900		33.7	%	295.1	%
GAAP: Operating income	$	30,859		$	17,469		$	101,003		$	17,469		76.7	%	478.2	%
Non-GAAP: Adjusted Operating Income 1	$	34,891		$	20,967		$	112,975		$	20,967		66.4	%	438.8	%
GAAP: Operating ratio 2	88.9		%	90.9		%	87.6		%	90.9		%	(200	bps)	(330	bps)
Non-GAAP: Adjusted Operating Ratio 1 2	84.5		%	87.5		%	83.0		%	87.5		%	(300	bps)	(450	bps)

LTL shipments per day 2	18,809			16,430			19,083			16,430			14.5	%	16.1	%
LTL weight per shipment 2	1,052			1,111			1,072			1,111			(5.3	%)	(3.5	%)
LTL average length of haul (miles) 2	512			515			519			515			(0.6	%)	0.8	%
LTL revenue per shipment 2	$	188.18		$	157.55		$	186.05		$	157.55		19.4	%	18.1	%
LTL revenue xFSR per shipment 2	$	151.07		$	138.27		$	151.14		$	138.27		9.3	%	9.3	%
LTL revenue per hundredweight 2	$	17.89		$	14.18		$	17.35		$	14.18		26.2	%	22.4	%
LTL revenue xFSR per hundredweight 2	$	14.37		$	12.44		$	14.09		$	12.44		15.5	%	13.3	%
LTL average tractors 2 3	3,223			2,546			3,147			2,546			26.6	%	23.6	%
LTL average trailers 2 4	8,472			7,202			8,392			7,202			17.6	%	16.5	%

1Refer to "Non-GAAP Financial Measures" below.

2Defined under "Operating Statistics," above.

3~~Includes 695~~Our LTL tractor fleet includes 720 and 547 tractors from ACT's and MME's dedicated and other businesses for ~~2022.~~the quarters ended September 30, 2022 and 2021, respectively. Our LTL tractor fleet includes 705 and 547 tractors from ACT's and MME's dedicated and other businesses for the year-to-date periods ended September 30, 2022 and 2021, respectively.

4~~Includes 907~~Our LTL trailer fleet includes 999 and 621 trailers from ACT's and MME's dedicated and other businesses for the quarters ended September 30, 2022 and 2021, respectively. Our LTL trailers fleet includes 956 and 621 trailers from ACT's and MME's dedicated and other businesses for the year-to-date periods ended September 30, 2022 and 2021, respectively.

Comparison Between the Quarters Ended September 30, 2022 and 2021— Our LTL segment continues to make strides to grow revenue and improve margins and is ahead of the performance targets established at the time of acquisition. Our LTL segment operated at an 84.5% Adjusted Operating Ratio during the third quarter of 2022, a 300 basis-point improvement over the third quarter of 2021. Revenue, excluding fuel surcharge, per hundredweight increased 15.5%, while revenue per shipment, excluding fuel surcharge, increased by 9.3%.

The ACT and MME teams continue to achieve both customer and cost synergies and their systems are expected to be fully connected during the fourth quarter of this year. We believe this will allow for additional freight opportunities across the network with existing and new customers. During the fourth quarter of this year, we expect door capacity will grow by 125 doors across 4 new or expanded locations. We remain encouraged by the strong performance within our LTL segment and we continue to look for both organic and inorganic opportunities to geographically expand our footprint within the LTL market.

Comparison Between Year-to-Date September 30, 2022 and 2021— Our LTL segment operated at an 83.0% Adjusted Operating Ratio during year-to-date September 30, 2022. Revenue, excluding fuel surcharge, per hundredweight was $14.09, while revenue per shipment, excluding fuel surcharge was $151.14.

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~~Our~~Logistics Segment

The Logistics segment is less asset-intensive than the Truckload and LTL segments and is dependent upon capable non-driver employees, modern and effective information technology, and third-party capacity providers. Logistics revenue is generated by its brokerage operations. We generate additional revenue by offering specialized logistics solutions (including, but not limited to, trailing equipment, origin management, surge volume, disaster relief, special projects, and other logistic needs). Logistics revenue is mainly affected by the rates we obtain from customers, the freight volumes we ship through third-party capacity providers, and our ability to secure third-party capacity providers to transport customer freight.

The most significant expense in the Logistics segment ~~operates approximately 3,100 tractors~~is purchased transportation that we pay to third-party capacity providers, which is primarily a variable cost and ~~8,300 trailers across approximately 100 facilities with a door~~is included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. Variability in this expense depends on truckload capacity, availability of third-party capacity providers, rates charged to customers, current freight demand, and customer shipping needs. Fixed Logistics operating expenses primarily include non-driver employee compensation and benefits recorded in "Salaries, wages, and benefits" and depreciation and amortization expense recorded in "Depreciation and amortization of property and equipment" in the condensed consolidated statements of comprehensive income.


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands, except per load data)												Increase (Decrease)



Total revenue	$	210,673		$	226,338		$	741,374		$	511,962		(6.9	%)	44.8	%
Revenue, excluding intersegment transactions	$	209,964		$	221,374		$	737,454		$	499,263		(5.2	%)	47.7	%
GAAP: Operating income	$	27,459		$	27,128		$	110,809		$	49,061		1.2	%	125.9	%
Non-GAAP: Adjusted Operating Income 1 2	$	27,794		$	27,462		$	111,812		$	49,492		1.2	%	125.9	%
Revenue per load 2	$	1,985		$	2,513		$	2,310		$	2,261		(21.0	%)	2.2	%
Gross margin percentage 2	20.9		%	18.1		%	21.8		%	16.5		%	280	bps	530	bps
GAAP: Operating ratio 2	87.0		%	88.0		%	85.1		%	90.4		%	(100	bps)	(530	bps)
Non-GAAP: Adjusted Operating Ratio 1 2	86.8		%	87.6		%	84.8		%	90.1		%	(80	bps)	(530	bps)

1 Refer to "Non-GAAP Financial Measures" below.

2 Defined under "Operating Statistics," above.

Comparison Between the Quarters Ended September 30, 2022 and 2021— Demand for our logistics service offering remained strong during the third quarter, resulting in year-over-year load count growth of 20.1%. We continue to leverage our consolidated fleet of approximately ~~4,300. We generated $214.7 million in revenue, excluding fuel surcharge and an 85.9%~~75,000 trailers to support our power-only service offering. The Adjusted Operating Ratio ~~during~~improved 80 basis points year-over-year to 86.8%, resulting in a 1.2% increase in Adjusted Operating Income. Logistics gross margin improved to 20.9% in the ~~first~~third quarter of ~~2022. Revenue, excluding fuel surcharge, per hundredweight was $13.73, while~~2022, compared to 18.1% in the third quarter of 2021, despite a 21.0% decrease in revenue per ~~shipment,~~load. We remain committed to utilizing the scale of our trailer fleet and continuing to innovate with technology and services that we expect will allow us to capture new opportunities for revenue growth.

Comparison Between Year-to-Date September 30, 2022 and 2021— Logistics revenue, excluding ~~fuel surcharge~~intersegment transactions, increased 47.7% as we grew load count by 44.6% while increasing revenue per load by 2.2%. The Adjusted Operating Ratio improved to 84.8%, resulting in a 125.9% increase in Adjusted Operating Income. Logistics gross margin was ~~$150.70. We anticipate continued strength~~21.8% in ~~revenue and margins within our LTL business~~year-to-date September 30, 2022, compared to 16.5% in the coming quarters, as the ACT and MME teams continue to successfully connect their complementary networks. Additionally, we expanded our network during the quarter by adding six LTL terminals, five in the Texas market and one in Las Vegas, Nevada.year-to-date September 30, 2021.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Intermodal Segment

The Intermodal segment complements our regional operating model, allows us to better serve customers in longer haul lanes, and reduces our investment in fixed assets. Through the Intermodal segment, we generate revenue by moving freight over the rail in our containers and other trailing equipment, combined with revenue for drayage to transport loads between railheads and customer locations. The most significant expense in the Intermodal segment is the cost of purchased transportation that we pay to third-party capacity providers (including rail providers), which is primarily variable and included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. ~~Purchased~~While rail pricing is determined on an annual basis, purchased transportation varies as it relates to rail capacity, freight demand, and customer shipping needs. The main fixed costs in the Intermodal segment are depreciation of our company tractors related to drayage, containers, and chassis, as well as non-driver employee compensation and benefits.


									Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.			YTD 2022 vs.
															2022			2021			2022			2021			QTD 2021		YTD 2021
											(Dollars in thousands, except per load data)													Increase (Decrease)
		Quarter Ended March 31,								Increase (Decrease)
			2022			2021
			(Dollars in thousands, except per load data)
Total revenue	Total revenue		$	109,222		$	107,066					2.0	%	Total revenue	$	130,777		$	112,801		$	372,870		$	335,245		15.9	%	11.2	%
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions		$	109,192		$	106,971					2.1	%	Revenue, excluding intersegment transactions	$	130,777		$	112,754		$	372,823		$	335,019		16.0	%	11.3	%
GAAP: Operating income	GAAP: Operating income		$	15,170		$	3,457					338.8	%	GAAP: Operating income	$	12,834		$	9,544		$	42,176		$	18,813		34.5	%	124.2	%

Average revenue per load 1	Average revenue per load 1		$	3,465		$	2,549					35.9	%	Average revenue per load 1	$	3,699		$	2,902		$	3,608		$	2,682		27.5	%	34.5	%
GAAP: Operating ratio 1	GAAP: Operating ratio 1		86.1		%	96.8		%				(1,070	bps)	GAAP: Operating ratio 1	90.2		%	91.5		%	88.7		%	94.4		%	(130	bps)	(570	bps)

Load count	Load count		31,515			41,968						(24.9	%)	Load count	35,354			38,856			103,343			124,897			(9.0	%)	(17.3	%)
Average tractors 1 2	Average tractors 1 2		584			597						(2.2	%)	Average tractors 1 2	628			609			612			605			3.1	%	1.2	%
Average containers 1	Average containers 1		11,027			10,846						1.7	%	Average containers 1	12,138			10,842			11,552			10,843			12.0	%	6.5	%

1 Defined under "Operating Statistics," above.

2 Includes ~~533~~542 and ~~542~~554 company-owned tractors for the ~~first~~third quarter of 2022 and 2021, respectively.

Includes 544 and 550 company-owned tractors for the year-to-date periods ended September 30, 2022 and 2021, respectively.

Comparison Between the Quarters Ended ~~March 31,~~September 30, 2022 and 2021 — ~~Operating~~The Intermodal segment grew revenue, excluding intersegment transactions, 16.0% while operating income increased ~~by 338.8%~~34.5%, as the operating ratio improved from ~~96.8%~~91.5% to ~~86.1%~~90.2%. ~~Continued chassis allocations~~While load count was negatively impacted by threats of labor strikes across the rail industry during the last two weeks of the quarter, revenue per load remained strong and increased 27.5% year-over-year. Labor challenges within the rail network appear to be softening as we enter the fourth quarter, leading to improved transit times, more consistent notification times, and more predictability for our customers, although network fluidity resulted in a reduction in load count, but contributed to a 35.9% increase in revenue per load. We transitioned to a new rail partner during the quarter, while continuing to improve our operations, cost structure, and network design. To position Intermodal for continued growth, we are growing our container count by 2,000 over the course of 2022. Intermodal continues to ~~provide value to our customers and complements the many services we offer.~~ be a rail market challenge.

As a result of our new network and improved service offering, we expect load volumes to inflect positive year-over-year in the ~~back half of the year~~fourth quarter as we grow with new customers and expand with existing customers. To position Intermodal for continued growth, we increased our container count by approximately 700 during the first three quarters of the year and we anticipate further growth in the fourth quarter. Intermodal continues to provide value to our customers and is complementary to the many services we offer.

Comparison Between Year-to-Date September 30, 2022 and 2021 — The Intermodal segment grew revenue, excluding intersegment transactions, 11.3% while operating income increased 124.2%, as the operating ratio improved from 94.4% to 88.7%. While load count was negatively impacted by threats of labor strikes across the rail industry during the last two weeks of the quarter, revenue per load remained strong and increased 34.5% year-over-year.

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Non-reportable Segments

Our non-reportable segments include support services provided to our customers and third-party carriers including insurance, equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services. Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and $11.6 million ofin quarterly amortization of intangibles related to the 2017 Merger and various acquisitions).


							Quarter-to-Date September 30,						Year-to-Date September 30,				QTD 2022 vs.		YTD 2022 vs.
													2022		2021		2022		2021		QTD 2021		YTD 2021
									(Dollars in thousands)										Increase (Decrease)
		Quarter Ended March 31,						Increase (Decrease)
			2022		2021
			(Dollars in thousands)
Total revenue	Total revenue		$	117,639	$	50,669				132.2	%	Total revenue	$	139,435	$	89,393	$	385,186	$	206,857	56.0	%	86.2	%
Operating income (loss)	Operating income (loss)		$	11,821	$	(7,258)				262.9	%	Operating income (loss)	$	18,487	$	9,403	$	48,102	$	4,635	96.6	%	937.8	%

~~Activities within~~Strong demand for our ~~diverse operating segments of~~ insurance, equipment maintenance, equipment leasing, and warehousing services led to ~~132.2%~~year-over-year operating income improvements of 96.6% for the third quarter and 937.8% in year-to-date September 30, 2022. This was supported by year-over-year revenue growth ~~which resulted in operating~~of 56.0% for the third quarter and 86.2% for year-to-date September 30, 2022. We expect continued growth and income ~~improving by $19.1 million.~~improvement from these segments moving forward.

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Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


Results of Operations — Consolidated Operating and Other Expenses

Consolidated Operating Expenses

The following tables present certain operating expenses from our condensed consolidated statements of comprehensive income, including each operating expense as a percentage of total revenue and as a percentage of revenue, excluding truckload and LTL fuel surcharge. Truckload and LTL fuel surcharge revenue can be volatile and is primarily dependent upon the cost of fuel, rather than operating expenses unrelated to fuel. Therefore, we believe that revenue, excluding truckload and LTL fuel surcharge is a better measure for analyzing many of our expenses and operating metrics.

Note: In accordance with the accounting treatment applicable to each of our recent acquisitions, Knight-Swift's reported results do not include the comparative operating results of the acquired entities prior to the respective acquisition date. Accordingly, comparisons between the ~~first~~ quarter and year-to-date September 30, 2022 results and prior periods may not be meaningful.


									Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.			YTD 2022 vs.
															2022			2021			2022			2021			QTD 2021		YTD 2021
											(Dollars in thousands)													Increase (Decrease)
		Quarter Ended March 31,								Increase (Decrease)
			2022			2021
			(Dollars in thousands)
Salaries, wages, and benefits	Salaries, wages, and benefits		$	536,056		$	370,370					44.7	%	Salaries, wages, and benefits	$	559,849		$	500,673		$	1,645,861		$	1,248,656		11.8	%	31.8	%
% of total revenue	% of total revenue		29.3		%	30.3		%				(100	bps)	% of total revenue	29.5		%	30.5		%	29.0		%	29.9		%	(100	bps)	(90	bps)
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge		32.5		%	32.7		%				(20	bps)	% of revenue, excluding truckload and LTL fuel surcharge	33.9		%	33.1		%	33.0		%	32.4		%	80	bps	60	bps

Salaries, wages, and benefits expense is primarily affected by the total number of miles driven by ~~company driving associates, the~~and rates we pay to our company driving associates, and employee benefits including healthcare, workers' compensation, and other benefits. To a lesser extent, non-driver employee headcount, compensation, and benefits affect this expense. Driving associate wages represent the largest component of salaries, wages, and benefits expense.

Several ongoing market factors have reduced the pool of available driving associates, contributing to a challenging driver sourcing market, which we believe will continue. Having a sufficient number of qualified driving associates is ~~our biggest~~a significant headwind, although we continue to seek ways to attract and retain qualified driving associates, including heavily investing in our recruiting efforts, our driving academies, technology, our equipment, and terminals that improve the experience of driving associates. We expect labor costs (related to both driving associates and non-driver employees) to remain inflationary, which we expect will result in additional pay increases in the future, thereby increasing our salaries, wages, and benefits expense.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— Consolidated salaries, wages, and benefits increased by ~~$165.7~~$59.2 million for the ~~first~~third quarter of 2022, as compared to the ~~first~~third quarter of 2021. This increase includes ~~$135.2~~$18.0 million from the ~~first~~third quarter 2022 results of ~~ACT and~~ MME. The remaining increase pertained to driving associate pay rates and non-driver salaries and wages, partially offset by ~~an 11.9%~~a 3.2% decrease in miles driven by company driving associates, excluding ACT and MME.

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Fuel $ 190,489 $ 118,236 61.1 %
% of total revenue 10.4 % 9.7 % 70 bps
% of revenue, excluding truckload and LTL fuel surcharge 11.6 % 10.4 % 120 bps

~~Fuel expense consists primarily~~•Comparison Between Year-to-Date September 30, 2022 and 2021— Consolidated salaries, wages, and benefits increased by $397.2 million for year-to-date September 30, 2022, as compared to year-to-date September 30, 2021. This increase includes $308.6 million from year-to-date September 30, 2022 results of ~~diesel fuel expense for our company-owned tractors~~ACT and ~~fuel taxes.~~MME. The ~~primary factors affecting our fuel expense are the cost of diesel fuel, the fuel economy of our equipment,~~remaining increase pertained to driving associate pay rates, non-driver salaries and ~~the~~wages, higher benefit costs, partially offset by a 5.8% decrease in miles driven by company driving ~~associates.~~associates, excluding ACT and MME.

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	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands)												Increase (Decrease)



Fuel	$	231,128		$	146,422		$	678,763		$	390,713		57.9	%	73.7	%
% of total revenue	12.2		%	8.9		%	11.9		%	9.3		%	330	bps	260	bps
% of revenue, excluding truckload and LTL fuel surcharge	14.0		%	9.7		%	13.6		%	10.1		%	430	bps	350	bps

Fuel expense consists primarily of diesel fuel expense for our company-owned tractors. The primary factors affecting our fuel expense are the cost of diesel fuel, the fuel economy of our equipment, and the miles driven by company driving associates.

Our fuel surcharge programs help to offset increases in fuel prices, but generally apply only to loaded miles for our Truckload ~~segment~~and LTL segments and typically do not offset non-paid empty miles, idle time, or out-of-route miles driven. Typical fuel surcharge programs involve a computation based on the change in national or regional fuel prices. These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue for our Truckload ~~segment.~~and LTL segments. Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue. Due to this time lag, our fuel expense, net of fuel surcharge, negatively impacts our operating income during periods of sharply rising fuel costs and positively impacts our operating income during periods of falling fuel costs. We continue to utilize our fuel efficiency initiatives such as trailer blades, idle-control, management of tractor speeds, fleet updates for more fuel-efficient engines, management of fuel procurement, and driving associate training programs that we believe contribute to controlling our fuel expense.

•Comparison Between Quarters Ended September 30, 2022 and 2021— The ~~$72.3~~$84.7 million increase in consolidated fuel expense for the ~~first~~third quarter is attributable to higher average DOE fuel prices and partially offset by a decrease in total miles driven by company driving associates, excluding ACT and MME. Average DOE fuel prices were $5.09 per gallon for the third quarter of 2022 and $3.36 per gallon for the third quarter of 2021.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The $288.1 million increase in consolidated fuel expense for year-to-date September 30, 2022, includes ~~$27.0~~$79.8 million of fuel expense from ACT's and MME's ~~the first quarter of~~year-to-date September 30, 2022 results. The remaining year-over-year increase is attributable to higher average DOE fuel prices, ~~when compared to the same period last year. Average DOE fuel prices were $4.36 per gallon for the first quarter of 2022 and $2.91 per gallon for the first quarter of 2021. This was~~ partially offset by ~~the~~a decrease in total miles driven by company driving associates, excluding ACT and MME, discussed above. Average DOE fuel prices were $4.99 per gallon for year-to-date September 30, 2022 and $3.16 per gallon for year-to-date September 30, 2021.

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Operations and maintenance $ 95,883 $ 68,070 40.9 %
% of total revenue 5.2 % 5.6 % (40 bps)
% of revenue, excluding truckload and LTL fuel surcharge 5.8 % 6.0 % (20 bps)

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands)												Increase (Decrease)



Operations and maintenance	$	115,918		$	86,951		$	318,525		$	226,334		33.3	%	40.7	%
% of total revenue	6.1		%	5.3		%	5.6		%	5.4		%	80	bps	20	bps
% of revenue, excluding truckload and LTL fuel surcharge	7.0		%	5.8		%	6.4		%	5.9		%	120	bps	50	bps

Operations and maintenance expense consists of direct operating expenses, such as driving associate hiring and recruiting expenses, equipment maintenance, and tire expense. Operations and maintenance expenses are primarily affected by the age of our company-owned fleet of tractors and trailers and the miles driven. We expect the driver market to remain competitive throughout 2022, which could increase future driving associate development and recruiting costs and negatively affect our operations and maintenance expense. We expect to continue refreshing our tractor and trailer fleet in the coming quarters, subject to availability of new revenue equipment, to maintain or improve the average age of our equipment.

•Comparison Between the Quarters Ended September 30, 2022 and 2021 — The increase of ~~$27.8~~$29.0 million for the ~~first~~third quarter of 2022 ~~includes $12.4 million in operations and maintenance expense from ACT's and MME's first quarter 2022 results. The remaining increase~~ was attributed to higher maintenance expenses due to inflation, higher port per diem expenses as we navigate a backlog of shipping containers at ports, ~~where~~and increased hiring expenses as we ~~operate,~~work to improve our seated truck count.

•Comparison Between Year-to-Date September 30, 2022 and ~~higher~~2021 — The increase of $92.2 million for year-to-date September 30, 2022 includes $29.8 million in operations and maintenance expense ~~due~~from ACT's and MME's year-to-date September 30, 2022 results. The remaining increase was attributed to ~~inflation.~~

~~Table of ContentsGlossary of Terms~~the factors listed above.

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED~~


									Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.			YTD 2022 vs.
															2022			2021			2022			2021			QTD 2021		YTD 2021
											(Dollars in thousands)													Increase (Decrease)
		Quarter Ended March 31,								Increase (Decrease)
			2022			2021
			(Dollars in thousands)
Insurance and claims	Insurance and claims		$	98,192		$	55,643					76.5	%	Insurance and claims	$	116,493		$	73,757		$	316,769		$	188,176		57.9	%	68.3	%
% of total revenue	% of total revenue		5.4		%	4.5		%				90	bps	% of total revenue	6.1		%	4.5		%	5.6		%	4.5		%	160	bps	110	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge		6.0		%	4.9		%				110	bps	% of revenue, excluding truckload and LTL fuel surcharge	7.1		%	4.9		%	6.3		%	4.9		%	220	bps	140	bps

Insurance and claims expense consists of premiums for liability, physical damage, and cargo, and will vary based upon the frequency and severity of claims, our level of self-insurance, and premium expense. In recent years, insurance carriers have raised premiums for many businesses, including transportation companies, and as a result, our insurance and claims expense could increase in the future, or we could raise our self-insured retention limits or reduce excess coverage limits when our policies are renewed or replaced. In 2021, we expanded our insurance offerings to third-party carriers, earning additional premium revenues, which were partially offset by increased insurance reserves. Insurance and claims expense also varies based on the number of miles driven by company driving associates and independent contractors, the frequency and severity of accidents, trends in development factors used in actuarial accruals, and developments in large, prior-year claims. In future periods, our higher self-insured retention limits or lower excess coverage limits may cause increased volatility in our consolidated insurance and claims expense.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— Consolidated insurance and claims expense increased by ~~$42.5~~$42.7 million for the ~~first~~third quarter of 2022, as compared to the ~~first~~third quarter of 2021. The increase was primarily due to an increase of insurance reserves incurred through our third-party carrier insurance program. ~~The remaining increase is primarily due to the inclusion of $9.2 million of insurance and claims expense from ACT's and MME's first quarter 2022 results.~~

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Operating taxes and licenses $ 29,037 $ 22,048 31.7 %
% of total revenue 1.6 % 1.8 % (20 bps)
% of revenue, excluding truckload and LTL fuel surcharge 1.8 % 1.9 % (10 bps)

Operating taxes and licenses include state franchise taxes, state and federal highway use taxes, property taxes, vehicle license and registration fees, fuel and mileage taxes, among others. The expense is impacted by changes in the tax rates and registration fees associated with our tractor fleet and regional operating facilities.

~~The quarter over quarter increase of $7.0 million is primarily composed of $8.2 million of operating taxes and licenses expense from ACT's and MME's first quarter 2022 results.~~

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Communications $ 5,870 $ 5,037 16.5 %
% of total revenue 0.3 % 0.4 % (10 bps)
% of revenue, excluding truckload and LTL fuel surcharge 0.4 % 0.4 % — bps

~~Communications expense is comprised of costs associated with our tractor and trailer tracking systems, information technology systems, and phone systems.~~

~~The quarter over quarter increase of $0.8 million is primarily composed of $1.1 million of communications expense from ACT's and MME's first quarter 2022 results.~~

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Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Depreciation and amortization of property and equipment $ 145,044 $ 119,915 21.0 %
% of total revenue 7.9 % 9.8 % (190 bps)
% of revenue, excluding truckload and LTL fuel surcharge 8.8 % 10.6 % (180 bps)
•Comparison Between Year-to-Date September 30, 2022 and 2021— Consolidated insurance and claims expense increased by $128.6 million for year-to-date September 30, 2022, as compared to the same period last year. The increase was primarily due to an increase of insurance reserves incurred through our third-party carrier insurance program. The remaining increase is primarily due to the inclusion of $18.2 million of insurance and claims expense from ACT's and MME's year-to-date September 30, 2022 results.


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands)												Increase (Decrease)



Operating taxes and licenses	$	26,628		$	27,475		$	85,869		$	71,240		(3.1	%)	20.5	%
% of total revenue	1.4		%	1.7		%	1.5		%	1.7		%	(30	bps)	(20	bps)
% of revenue, excluding truckload and LTL fuel surcharge	1.6		%	1.8		%	1.7		%	1.8		%	(20	bps)	(10	bps)

Operating taxes and licenses include state franchise taxes, state and federal highway use taxes, property taxes, vehicle license and registration fees, and fuel and mileage taxes, among others. The expense is impacted by changes in the tax rates and registration fees associated with our tractor fleet and regional operating facilities.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— Operating taxes and licenses expenses decreased by $0.8 million, but remained relatively flat as a percentage of revenue, excluding truckload and LTL fuel surcharge.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The year-over-year increase in operating taxes and licenses expenses of $14.6 million for year-to-date September 30, 2022 was primarily composed of ACT's and MME's 2022 results.


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands)												Increase (Decrease)



Communications	$	5,095		$	6,612		$	16,709		$	16,284		(22.9	%)	2.6	%
% of total revenue	0.3		%	0.4		%	0.3		%	0.4		%	(10	bps)	(10	bps)
% of revenue, excluding truckload and LTL fuel surcharge	0.3		%	0.4		%	0.3		%	0.4		%	(10	bps)	(10	bps)

Communications expense is comprised of costs associated with our tractor and trailer tracking systems, information technology systems, and phone systems.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— The year-over-year decrease in communications expense of $1.5 million for the third quarter of 2022 was primarily due to the implementation of new technology on our revenue equipment.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The year-over-year increase in communications expense $0.4 million for year-to-date September 30, 2022 was primarily composed of ACT's and MME's 2022 results.

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands)												Increase (Decrease)



Depreciation and amortization of property and equipment	$	150,363		$	138,570		$	442,889		$	382,091		8.5	%	15.9	%
% of total revenue	7.9		%	8.4		%	7.8		%	9.1		%	(50	bps)	(130	bps)
% of revenue, excluding truckload and LTL fuel surcharge	9.1		%	9.2		%	8.9		%	9.9		%	(10	bps)	(100	bps)

Depreciation relates primarily to our owned tractors, trailers, buildings, electronic logging devices, other communication units, and other similar assets. Changes to this fixed cost are generally attributed to increases or decreases to company-owned equipment, the relative percentage of owned versus leased equipment, and fluctuations in new equipment purchase ~~prices, which have historically been precipitated in part by new or proposed federal and state regulations.~~prices. Depreciation can also be affected by the cost of used equipment that we sell or trade and the replacement of older used equipment. Management periodically reviews the condition, average age, and reasonableness of estimated useful lives and salvage values of our equipment and considers such factors in light of our experience with similar assets, used equipment market conditions, and prevailing industry ~~practice.~~practices.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— Consolidated depreciation and amortization of property and equipment increased by ~~$25.1~~$11.8 million for the ~~first~~third quarter of 2022, as compared to the same period last year. This increase includes ~~$15.3~~MME's results of $2.1 million from the third quarter of ~~expense from~~2022. The remaining increase was related to an increase in owned versus leased equipment and higher deprecation for capital improvements made to our terminals.

•Comparison Between Year-to-Date September 30, 2022 and 2021— Consolidated depreciation and amortization of property and equipment increased by $60.8 million for year-to-date September 30, 2022, as compared to the same period last year. These increases include ACT's and MME's ~~first quarter 2022 results.~~results of $34.3 million for year-to-date September 30, 2022. The remaining increase was primarily related to an increase in owned versus leased equipment.

We expect consolidated depreciation and amortization of property and equipment to increase in total and as a percentage of consolidated revenue, excluding truckload and LTL fuel surcharge, as we currently do not plan to use operating leases as a primary means of funding our equipment purchases, terminal improvements, or terminal expansions in the remainder of 2022.


									Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.			YTD 2022 vs.
															2022			2021			2022			2021			QTD 2021		YTD 2021
											(Dollars in thousands)													Increase (Decrease)
		Quarter Ended March 31,								Increase (Decrease)
			2022			2021
			(Dollars in thousands)
Amortization of intangibles	Amortization of intangibles		$	16,166		$	11,749					37.6	%	Amortization of intangibles	$	16,254		$	15,719		$	48,635		$	39,452		3.4	%	23.3	%
% of total revenue	% of total revenue		0.9		%	1.0		%				(10	bps)	% of total revenue	0.9		%	1.0		%	0.9		%	0.9		%	(10	bps)	—	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge		1.0		%	1.0		%				—	bps	% of revenue, excluding truckload and LTL fuel surcharge	1.0		%	1.0		%	1.0		%	1.0		%	—	bps	—	bps

Amortization of intangibles relates to intangible assets identified with the 2017 Merger and various acquisitions. See Note 3 in Part I, Item 1, of this Quarterly Report for more details regarding details of our acquisitions.

The ~~increase~~increases of ~~$4.4~~$0.5 million for the ~~first~~third quarter of 2022 and $9.2 million for year-to-date September 30, 2022, as compared to the same ~~period~~periods last year, ~~was~~were attributed to the ACT, MME, UTXL, and Eleos acquisitions during 2021.

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Rental expense $ 13,401 $ 16,864 (20.5 %)
% of total revenue 0.7 % 1.4 % (70 bps)
% of revenue, excluding truckload and LTL fuel surcharge 0.8 % 1.5 % (70 bps)

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.		YTD 2022 vs.
	2022			2021			2022			2021			QTD 2021		YTD 2021
	(Dollars in thousands)												Increase (Decrease)



Rental expense	$	15,216		$	12,002		$	42,109		$	42,265		26.8	%	(0.4	%)
% of total revenue	0.8		%	0.7		%	0.7		%	1.0		%	10	bps	(30	bps)
% of revenue, excluding truckload and LTL fuel surcharge	0.9		%	0.8		%	0.8		%	1.1		%	10	bps	(30	bps)

Rental expense consists primarily of payments for tractors and trailers financed with operating leases. The primary factors affecting the expense are the size of our revenue equipment fleet and the relative percentage of owned versus leased equipment.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— The quarter over quarter increase of $3.2 million includes $1.2 million of additional expense in 2022 from MME's operating results and additional expense related to the incorporation of new facilities as we expand our network.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The $0.2 million decrease in consolidated rental expenses for year-to-date of ~~$3.5 million was~~September 30, 2022, compared to year-to-date September 30, 2021, is primarily due to an increase in our owned versus leased equipment.

~~Table~~ This was partially offset by $4.6 million of ~~Contents~~additional expense from ACT's and MME's operating results included during year-to-date September 30, 2022.~~Glossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED~~

We expect consolidated rental expense to continue to decrease both in total and as a percentage of consolidated revenue, excluding truckload and LTL fuel surcharge, as we currently do not plan to use operating leases as a primary means of funding our equipment purchases infor the remainder of 2022.


									Quarter-to-Date September 30,						Year-to-Date September 30,						QTD 2022 vs.			YTD 2022 vs.
															2022			2021			2022			2021			QTD 2021		YTD 2021
											(Dollars in thousands)													Increase (Decrease)
		Quarter Ended March 31,								Increase (Decrease)
			2022			2021
			(Dollars in thousands)
Purchased transportation	Purchased transportation		$	386,446		$	258,230					49.7	%	Purchased transportation	$	364,394		$	352,061		$	1,135,750		$	914,448		3.5	%	24.2	%
% of total revenue	% of total revenue		21.2		%	21.1		%				10	bps	% of total revenue	19.2		%	21.4		%	20.0		%	21.9		%	(220	bps)	(190	bps)
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge		23.5		%	22.8		%				70	bps	% of revenue, excluding truckload and LTL fuel surcharge	22.1		%	23.3		%	22.7		%	23.7		%	(120	bps)	(100	bps)

Purchased transportation expense is comprised of payments to independent contractors in our trucking operations, as well as payments to third-party capacity providers related to logistics, freight management, and non-trucking services in our logistics and intermodal businesses. Purchased transportation is generally affected by capacity in the market as well as changes in fuel prices. As capacity tightens, our payments to third-party capacity providers and to independent contractors tend to increase. Additionally, as fuel prices increase, payments to third-party capacity providers and independent contractors increase.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— Consolidated purchased transportation expense increased by ~~$128.2~~$12.3 million for the ~~first~~third quarter of 2022, as compared to the same ~~periods~~period last ~~year. This increase~~year, primarily due to inflationary pressures within our intermodal rail network.

•Comparison Between Year-to-Date September 30, 2022 and 2021— Consolidated purchased transportation expense increased by $221.3 million for year-to-date September 30, 2022, as compared to the same period last year, primarily due to increased load volumes within our logistics business. Purchased transportation expense also includes ~~$4.6 million of expense from~~ ACT's and MME's first quarter 2022 results. The comparative first quarter increases were primarily due to payments made to third-party carriers, partially offset by a decrease in miles driven by independent contractorsresults of ~~2.5%.~~$12.8 million for year-to-date September 30, 2022.

We expect purchased transportation will increase as a percentage of revenue if we grow our logistics and intermodal businesses faster than our full truckload and LTL businesses. The increase could be partially offset if independent contractors exit the market due to regulatory changes.

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Impairments $ 810 $ — 100.0 %

~~In 2022, we incurred impairment charges associated with building improvements (within our non-reportable segments).~~

Quarter Ended March 31, Increase (Decrease)
2022 2021
(Dollars in thousands)
Miscellaneous operating expenses $ 11,509 $ 14,593 (21.1 %)

~~Miscellaneous operating expenses primarily consist of legal and professional services fees, general and administrative expenses, other costs, as well as net gain on sales of equipment.~~

Year-over-year consolidated miscellaneous operating expenses decreased during the first quarter primarily due to a $23.9 million increase in gain on sales of equipment, excluding ACT and MME. This was partially offset by $10.2 million in expenses from ACT's and MME's first quarter 2022 results and year-over-year increases from legal settlements and various administrative expenses classified as miscellaneous.

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	Quarter-to-Date September 30,				Year-to-Date September 30,				QTD 2022 vs.		YTD 2022 vs.
	2022		2021		2022		2021		QTD 2021		YTD 2021
	(Dollars in thousands)								Increase (Decrease)



Impairments	$	—	$	—	$	810	$	—	—	%	100.0	%

In 2022, we incurred impairment charges associated with building improvements (within our non-reportable segments).


	Quarter-to-Date September 30,				Year-to-Date September 30,				QTD 2022 vs.		YTD 2022 vs.
	2022		2021		2022		2021		QTD 2021		YTD 2021
	(Dollars in thousands)								Increase (Decrease)



Miscellaneous operating expenses	$	30,060	$	12,116	$	62,965	$	38,040	148.1	%	65.5	%

Miscellaneous operating expenses primarily consist of legal and professional services fees, general and administrative expenses, other costs, as well as net gain on sales of equipment.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— The $17.9 million increase in net consolidated miscellaneous operating expenses is comprised of a $6.8 million decrease in gain on sales of equipment, excluding ACT and MME, a net increase of $2.4 million in legal settlements expense, and higher operating expenses associated with increased travel time and return to work programs.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The $24.9 million increase in net consolidated miscellaneous operating expenses includes $24.6 million of additional expense from ACT's and MME's operating results for year-to-date September 30, 2022, a net increase in legal settlements expense of $3.3 million, and higher operating expenses associated with increased travel time and return to work programs. This was offset by a $24.0 million increase in gain on sales of equipment, excluding ACT and MME.

Consolidated Other Expenses ~~net~~(Income)


							Quarter-to-Date September 30,						Year-to-Date September 30,				QTD 2022 vs.		YTD 2022 vs.
													2022		2021		2022		2021		QTD 2021		YTD 2021
									(Dollars in thousands)										Increase (Decrease)
		Quarter Ended March 31,						Increase (Decrease)
			2022		2021
			(Dollars in thousands)

Interest expense	Interest expense		$	6,680	$	3,486				91.6	%	Interest expense	$	14,679	$	7,179	$	30,704	$	13,972	104.5	%	119.8	%
Other expense (income), net			14,405		(16,105)					(189.4	%)
Other (income) expenses, net												Other (income) expenses, net	(8,488)		(4,072)		31,493		(37,017)		108.4	%	(185.1	%)
Income tax expense	Income tax expense		69,174		45,329					52.6	%	Income tax expense	65,679		61,059		206,943		158,171		7.6	%	30.8	%

Interest expense — Interest expense is comprised of debt and finance lease interest expense as well as amortization of deferred loan costs. Interest expense increased during the ~~first~~third quarter and year-to-date of 2022 due to both higher interest rates and higher overall debt balances from the 2021 Debt Agreement which was entered into on September 3, 2021 and replaced the July 2021 Term Loan and 2017 Debt Agreement. Additional details regarding our debt are discussed in Note 6 in Part I, Item 1 of this Quarterly Report.

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Other ~~expense~~ (income), expenses, net — Other ~~expense~~ (income), expenses, net is primarily comprised of losses and (gains) from our various equity investments, including our ~~TRP investments accounted for under the equity method,~~investment in Embark, as well as certain other non-operating income and expense items that may arise outside of the normal course of business.

~~We incurred $14.4~~•Comparison Between the Quarters Ended September 30, 2022 and 2021— The $4.4 million ~~of expense~~increase in the condensed consolidated statement of comprehensive income in the first quarter of 2022, representing an unfavorable change of $30.5 million, as compared to income of $16.1 million in the first quarter of 2021. The change wasother (income) expenses, net is primarily driven by ~~current quarter net losses within~~gains from our portfolio of investments ~~including~~in the third quarter. The third quarter of 2021 included the write-off of deferred debt issuance costs from replacing our previous term loan and credit facility with a new credit facility.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The $68.5 million unfavorable change in other (income) expenses, net is primarily driven by unrealized ~~loss~~losses from the mark-to-market adjustment of our investment in ~~Embark.~~Embark for year-to-date September 30, 2022 compared to gains for year-to-date September 30, 2021.

Income tax expense — In addition to the discussion below, Note 4 in Part I, Item 1 of this Quarterly Report provides further analysis related to income taxes.

•Comparison Between the Quarters Ended September 30, 2022 and 2021— The ~~$23.8~~$4.6 million increase in consolidated income tax expense was primarily due to the year over year reduction of favorable discrete items primarily associated with the ACT acquisition in the third quarter of 2021. The effective tax rate of 25.2% for the third quarter of 2022, an increase from 22.8% for the third quarter of 2021, was due to the discrete items from the third quarter of 2021 mentioned above.

•Comparison Between Year-to-Date September 30, 2022 and 2021— The $48.8 million increase in consolidated income tax expense was primarily due to an increase in income before income taxes. ~~The~~This resulted in an effective tax rate ~~was~~of 24.9% for ~~the first quarter of~~year-to-date September 30, 2022 compared to ~~25.9%~~24.4% for ~~the first quarter of~~year-to-date September 30, 2021.

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Non-GAAP Financial Measures

The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted EPS," "Adjusted Operating Income," ~~and~~ "Adjusted Operating Ratio," and "Free Cash Flow," as we define them, are not presented in accordance with GAAP. These financial measures supplement our GAAP results in evaluating certain aspects of our business. We believe that using these measures improves comparability in analyzing our performance because they remove the impact of items from our operating results that, in our opinion, do not reflect our core operating performance. Management and the Board focus on Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, and Adjusted Operating Ratio as key measures of our performance, all of which are reconciled to the most comparable GAAP financial measures and further discussed below. Management and the Board use Free Cash Flow as a key measure of our liquidity. Free Cash Flow does not represent residual cash flow available for discretionary expenditures. We believe our presentation of these non-GAAP financial measures is useful because it provides investors and securities analysts the same information that we use internally for purposes of assessing our core operating performance.

Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, ~~and~~ Adjusted Operating Ratio, and Free Cash Flow are not substitutes for their comparable GAAP financial measures, such as net income, cash flows from operating activities, operating income, or other measures prescribed by GAAP. There are limitations to using non-GAAP financial measures. Although we believe that they improve comparability in analyzing our period to period performance, they could limit comparability to other companies in our industry if those companies define these measures differently. Because of these limitations, our non-GAAP financial measures should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.

Pursuant to the requirements of Regulation G, the following tables reconcile GAAP consolidated net income attributable to Knight-Swift to non-GAAP consolidated Adjusted Net Income attributable to Knight-Swift, GAAP consolidated earnings per diluted share to non-GAAP consolidated Adjusted EPS, GAAP consolidated operating ratio to non-GAAP consolidated Adjusted Operating Ratio, GAAP reportable segment operating income to non-GAAP reportable segment Adjusted Operating Income, ~~and~~ GAAP reportable segment operating ratio to non-GAAP reportable segment Adjusted Operating ~~Ratio.~~Ratio, and GAAP cash flow from operations to non-GAAP Free Cash Flow.

~~Non-GAAP Reconciliation:~~

~~Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS~~

Quarter Ended March 31,
2022 2021
(In thousands)
GAAP: Net income attributable to Knight-Swift $ 208,337 $ 129,790
Adjusted for:
Income tax expense attributable to Knight-Swift 69,174 45,329
Income before income taxes attributable to Knight-Swift 277,511 175,119
Amortization of intangibles 1
16,166 11,749
Impairments 2
810 —
Legal accruals 3
5,055 1,242
Adjusted income before income taxes 299,542 188,110
Provision for income tax expense at effective rate (74,679) (48,677)
Non-GAAP: Adjusted Net Income Attributable to Knight-Swift $ 224,863 $ 139,433

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Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS


	Quarter-to-Date September 30,				Year-to-Date September 30,
	2022		2021		2022		2021
	(In thousands)
GAAP: Net income attributable to Knight-Swift	$	194,795	$	206,178	$	622,624	$	488,772
Adjusted for:
Income tax expense attributable to Knight-Swift	65,679		61,059		206,943		158,171
Income before income taxes attributable to Knight-Swift	260,474		267,237		829,567		646,943
Amortization of intangibles 1	16,254		15,719		48,635		39,452


Impairments 2	—		—		810		—
Legal accruals 3	(2,640)		(5,005)		415		(2,884)





Transaction fees 4	—		2,307		—		2,966

Write-off of deferred debt issuance costs 5	—		1,024		—		1,024
Adjusted income before income taxes	274,088		281,282		879,427		687,501
Provision for income tax expense at effective rate	(69,121)		(64,202)		(219,408)		(167,990)
Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	$	204,967	$	217,080	$	660,019	$	519,511

Note: Since the numbers reflected in the table below are calculated on a per share basis, they may not foot due to rounding.


		Quarter Ended March 31,			Quarter-to-Date September 30,						Year-to-Date September 30,
			2022			2021			2022		2021		2022		2021
GAAP: Earnings per diluted share	GAAP: Earnings per diluted share		$	1.25		$	0.77	GAAP: Earnings per diluted share	$	1.21	$	1.23	$	3.80	$	2.93
Adjusted for:	Adjusted for:							Adjusted for:
Income tax expense attributable to Knight-Swift	Income tax expense attributable to Knight-Swift		0.42			0.27		Income tax expense attributable to Knight-Swift	0.41		0.37		1.26		0.95
Income before income taxes attributable to Knight-Swift	Income before income taxes attributable to Knight-Swift		1.67			1.04		Income before income taxes attributable to Knight-Swift	1.61		1.60		5.07		3.88
Amortization of intangibles 1	Amortization of intangibles 1		0.10			0.07		Amortization of intangibles 1	0.10		0.09		0.30		0.24

Impairments 2	Impairments 2		—			—		Impairments 2	—		—		—		—
Legal accruals 3	Legal accruals 3		0.03			0.01		Legal accruals 3	(0.02)		(0.03)		—		(0.02)

Transaction fees 4								Transaction fees 4	—		0.01		—		0.02

Write-off of deferred debt issuance costs 5								Write-off of deferred debt issuance costs 5	—		0.01		—		0.01
Adjusted income before income taxes	Adjusted income before income taxes		1.80			1.12		Adjusted income before income taxes	1.70		1.68		5.37		4.12
Provision for income tax expense at effective rate	Provision for income tax expense at effective rate		(0.45)			(0.29)		Provision for income tax expense at effective rate	(0.43)		(0.38)		(1.34)		(1.01)
Non-GAAP: Adjusted EPS	Non-GAAP: Adjusted EPS		$	1.35		$	0.83	Non-GAAP: Adjusted EPS	$	1.27	$	1.30	$	4.03	$	3.11

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the ACT Acquisition, and other acquisitions. Refer to Note 3 in Part I, Item 1 of this Quarterly Report for additional details regarding our acquisitions.

2 "Impairments" reflects the non-cash impairment of building improvements (within our non-reportable segments).

3 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following:

•~~First quarter~~During the second and third quarters of 2022, ~~legal expense reflects costs~~the Company decreased the estimated exposure related to certain ~~settlements~~accrued legal matters previously identified as probable and ~~class action~~estimable in prior periods based on recent settlement agreements. Additional 2022 legal costs relate to certain lawsuits arising from employee and contract related matters.

•~~First~~Third quarter 2021 reversal related to an accrued legal ~~expense reflects~~matter previously identified as probable in 2019. This was based on the recent decision of the appellate court, resulting in a change to a remote likelihood that a loss was incurred. Additional 2021 legal costs ~~related~~relate to certain class action lawsuits arising from employee and contract related matters.

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4 "Transaction fees" consisted of legal and professional fees associated with the acquisitions of UTXL and ACT. The transaction fees are included within "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income.

5 "Write-off of deferred debt issuance costs" was incurred from replacing the 2017 Debt Agreement with the 2021 Debt Agreement.

Non-GAAP Reconciliation: Consolidated Adjusted Operating Income and Adjusted Operating Ratio


		Quarter Ended March 31,				Quarter-to-Date September 30,								Year-to-Date September 30,
			2022				2021				2022			2021			2022			2021
GAAP Presentation	GAAP Presentation		(Dollars in thousands)							GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue		$	1,826,989			$	1,223,014		Total revenue	$	1,896,839		$	1,642,445		$	5,684,959		$	4,181,160
Total operating expenses	Total operating expenses		(1,528,903)				(1,060,755)			Total operating expenses	(1,631,398)			(1,372,358)			(4,795,654)			(3,557,699)
Operating income	Operating income		$	298,086			$	162,259		Operating income	$	265,441		$	270,087		$	889,305		$	623,461
Operating ratio	Operating ratio		83.7		%		86.7		%	Operating ratio	86.0		%	83.6		%	84.4		%	85.1		%

Non-GAAP Presentation	Non-GAAP Presentation									Non-GAAP Presentation
Total revenue	Total revenue		$	1,826,989			$	1,223,014		Total revenue	$	1,896,839		$	1,642,445		$	5,684,959		$	4,181,160
Truckload and LTL fuel surcharge	Truckload and LTL fuel surcharge		(179,111)				(89,909)			Truckload and LTL fuel surcharge	(246,857)			(131,873)			(692,568)			(324,611)
Revenue, excluding truckload and LTL fuel surcharge	Revenue, excluding truckload and LTL fuel surcharge		1,647,878				1,133,105			Revenue, excluding truckload and LTL fuel surcharge	1,649,982			1,510,572			4,992,391			3,856,549

Total operating expenses	Total operating expenses		1,528,903				1,060,755			Total operating expenses	1,631,398			1,372,358			4,795,654			3,557,699
Adjusted for:	Adjusted for:									Adjusted for:
Truckload and LTL fuel surcharge	Truckload and LTL fuel surcharge		(179,111)				(89,909)			Truckload and LTL fuel surcharge	(246,857)			(131,873)			(692,568)			(324,611)
Amortization of intangibles 1	Amortization of intangibles 1		(16,166)				(11,749)			Amortization of intangibles 1	(16,254)			(15,719)			(48,635)			(39,452)

Impairments 2	Impairments 2		(810)				—			Impairments 2	—			—			(810)			—
Legal accruals 3	Legal accruals 3		(5,055)				(1,242)			Legal accruals 3	2,640			5,005			(415)			2,884

Transaction fees 4										Transaction fees 4	—			(2,307)			—			(2,966)
Adjusted Operating Expenses	Adjusted Operating Expenses		1,327,761				957,855			Adjusted Operating Expenses	1,370,927			1,227,464			4,053,226			3,193,554
Adjusted Operating Income	Adjusted Operating Income		$	320,117			$	175,250		Adjusted Operating Income	$	279,055		$	283,108		$	939,165		$	662,995
Adjusted Operating Ratio	Adjusted Operating Ratio		80.6		%		84.5		%	Adjusted Operating Ratio	83.1		%	81.3		%	81.2		%	82.8		%

1 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 1.

2 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 2.

3 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 3.

4 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 4.

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Non-GAAP Reconciliation: Reportable Segment Adjusted Operating Income and Adjusted Operating Ratio

Truckload Segment


		Quarter Ended March 31,				Quarter-to-Date September 30,								Year-to-Date September 30,
			2022				2021				2022			2021			2022			2021
GAAP Presentation	GAAP Presentation		(Dollars in thousands)							GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue		$	1,080,531			$	962,947		Total revenue	$	1,160,735		$	1,041,332		$	3,430,075		$	2,990,137
Total operating expenses	Total operating expenses		(875,414)				(804,464)			Total operating expenses	(984,933)			(834,789)			(2,842,860)			(2,456,654)
Operating income	Operating income		$	205,117			$	158,483		Operating income	$	175,802		$	206,543		$	587,215		$	533,483
Operating ratio	Operating ratio		81.0		%		83.5		%	Operating ratio	84.9		%	80.2		%	82.9		%	82.2		%

Non-GAAP Presentation	Non-GAAP Presentation									Non-GAAP Presentation
Total revenue	Total revenue		$	1,080,531			$	962,947		Total revenue	$	1,160,735		$	1,041,332		$	3,430,075		$	2,990,137
Fuel surcharge	Fuel surcharge		(138,661)				(89,909)			Fuel surcharge	(192,685)			(107,867)			(538,277)			(300,605)
Intersegment transactions	Intersegment transactions		(336)				(224)			Intersegment transactions	(281)			(260)			(1,016)			(953)
Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions		941,534				872,814			Revenue, excluding fuel surcharge and intersegment transactions	967,769			933,205			2,890,782			2,688,579

Total operating expenses	Total operating expenses		875,414				804,464			Total operating expenses	984,933			834,789			2,842,860			2,456,654
Adjusted for:	Adjusted for:									Adjusted for:
Fuel surcharge	Fuel surcharge		(138,661)				(89,909)			Fuel surcharge	(192,685)			(107,867)			(538,277)			(300,605)
Intersegment transactions	Intersegment transactions		(336)				(224)			Intersegment transactions	(281)			(260)			(1,016)			(953)
Amortization of intangibles 1	Amortization of intangibles 1		(324)				(324)			Amortization of intangibles 1	(324)			(323)			(971)			(971)

Adjusted Operating Expenses	Adjusted Operating Expenses		736,093				714,007			Adjusted Operating Expenses	791,643			726,339			2,302,596			2,154,125
Adjusted Operating Income	Adjusted Operating Income		$	205,441			$	158,807		Adjusted Operating Income	$	176,126		$	206,866		$	588,186		$	534,454
Adjusted Operating Ratio	Adjusted Operating Ratio		78.2		%		81.8		%	Adjusted Operating Ratio	81.8		%	77.8		%	79.7		%	80.1		%

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in historical Knight acquisitions.

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~~Logistics Segment~~

Quarter Ended March 31,
2022 2021
GAAP Presentation (Dollars in thousands)
Total revenue $ 282,039 $ 118,887
Total operating expenses (242,438) (111,310)
Operating income $ 39,601 $ 7,577
Operating ratio 86.0 % 93.6 %
Non-GAAP Presentation
Total revenue $ 282,039 $ 118,887
Intersegment transactions (1,868) (3,165)
Revenue, excluding intersegment transactions 280,171 115,722
Total operating expenses 242,438 111,310
Adjusted for:
Intersegment transactions (1,868) (3,165)
Amortization of intangibles 1
(334) —
Adjusted Operating Expenses 240,236 108,145
Adjusted Operating Income $ 39,935 $ 7,577
Adjusted Operating Ratio 85.7 % 93.5 %

1~~"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.~~

LTL Segment

~~Quarter Ended March 31, 2022~~

~~GAAP Presentation~~

~~(Dollars in thousands)~~

~~Total revenue~~

~~255,125~~

~~Total operating expenses~~

~~(228,748)~~

~~Operating income~~

~~26,377~~

~~Operating ratio~~

~~89.7~~

~~Non-GAAP Presentation~~

~~Total revenue~~

~~255,125~~

~~Fuel surcharge~~

~~(40,450)~~

~~Revenue, excluding fuel surcharge and intersegment transactions~~

~~214,675~~

~~Total operating expenses~~

~~228,748~~

~~Adjusted for:~~

~~Fuel surcharge~~

~~(40,450)~~

~~Amortization of intangibles~~ 1

~~(3,945)~~

~~Adjusted Operating Expenses~~

~~184,353~~

~~Adjusted Operating Income~~

~~30,322~~

~~Adjusted Operating Ratio~~

~~85.9~~


	Quarter-to-Date September 30,						Year-to-Date September 30,
	2022			2021			2022			2021
GAAP Presentation	(Dollars in thousands)
Total revenue	$	278,615		$	191,906		$	817,587		$	191,906
Total operating expenses	(247,756)			(174,437)			(716,584)			(174,437)
Operating income	$	30,859		$	17,469		$	101,003		$	17,469
Operating ratio	88.9		%	90.9		%	87.6		%	90.9		%

Non-GAAP Presentation
Total revenue	$	278,615		$	191,906		$	817,587		$	191,906
Fuel surcharge	(54,172)			(24,006)			(154,291)			(24,006)

Revenue, excluding fuel surcharge and intersegment transactions	224,443			167,900			663,296			167,900

Total operating expenses	247,756			174,437			716,584			174,437
Adjusted for:
Fuel surcharge	(54,172)			(24,006)			(154,291)			(24,006)

Amortization of intangibles 1	(4,032)			(3,498)			(11,972)			(3,498)





Adjusted Operating Expenses	189,552			146,933			550,321			146,933
Adjusted Operating Income	$	34,891		$	20,967		$	112,975		$	20,967
Adjusted Operating Ratio	84.5		%	87.5		%	83.0		%	87.5		%

1"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified with the ACT and MME acquisitions.

Logistics Segment


	Quarter-to-Date September 30,						Year-to-Date September 30,
	2022			2021			2022			2021
GAAP Presentation	(Dollars in thousands)
Total revenue	$	210,673		$	226,338		$	741,374		$	511,962
Total operating expenses	(183,214)			(199,210)			(630,565)			(462,901)
Operating income	$	27,459		$	27,128		$	110,809		$	49,061
Operating ratio	87.0		%	88.0		%	85.1		%	90.4		%

Non-GAAP Presentation
Total revenue	$	210,673		$	226,338		$	741,374		$	511,962

Intersegment transactions	(709)			(4,964)			(3,920)			(12,699)
Revenue, excluding intersegment transactions	209,964			221,374			737,454			499,263

Total operating expenses	183,214			199,210			630,565			462,901
Adjusted for:

Intersegment transactions	(709)			(4,964)			(3,920)			(12,699)
Amortization of intangibles 1	(335)			(334)			(1,003)			(431)


Adjusted Operating Expenses	182,170			193,912			625,642			449,771
Adjusted Operating Income	$	27,794		$	27,462		$	111,812		$	49,492
Adjusted Operating Ratio	86.8		%	87.6		%	84.8		%	90.1		%

1"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Intermodal Segment


		Quarter Ended March 31,				Quarter-to-Date September 30,								Year-to-Date September 30,
			2022				2021				2022			2021			2022			2021
GAAP Presentation	GAAP Presentation		(Dollars in thousands)							GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue		$	109,222			$	107,066		Total revenue	$	130,777		$	112,801		$	372,870		$	335,245
Total operating expenses	Total operating expenses		(94,052)				(103,609)			Total operating expenses	(117,943)			(103,257)			(330,694)			(316,432)
Operating income	Operating income		$	15,170			$	3,457		Operating income	$	12,834		$	9,544		$	42,176		$	18,813
Operating ratio	Operating ratio		86.1		%		96.8		%	Operating ratio	90.2		%	91.5		%	88.7		%	94.4		%

Non-GAAP Presentation	Non-GAAP Presentation									Non-GAAP Presentation
Total revenue	Total revenue		$	109,222			$	107,066		Total revenue	$	130,777		$	112,801		$	372,870		$	335,245

Intersegment transactions	Intersegment transactions		(30)				(95)			Intersegment transactions	—			(47)			(47)			(226)
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions		109,192				106,971			Revenue, excluding intersegment transactions	130,777			112,754			372,823			335,019

Total operating expenses	Total operating expenses		94,052				103,609			Total operating expenses	117,943			103,257			330,694			316,432
Adjusted for:	Adjusted for:									Adjusted for:

Intersegment transactions	Intersegment transactions		(30)				(95)			Intersegment transactions	—			(47)			(47)			(226)

Adjusted Operating Expenses	Adjusted Operating Expenses		94,022				103,514			Adjusted Operating Expenses	117,943			103,210			330,647			316,206
Adjusted Operating Income	Adjusted Operating Income		$	15,170			$	3,457		Adjusted Operating Income	$	12,834		$	9,544		$	42,176		$	18,813
Adjusted Operating Ratio	Adjusted Operating Ratio		86.1		%		96.8		%	Adjusted Operating Ratio	90.2		%	91.5		%	88.7		%	94.4		%

Non-GAAP Reconciliation: Free Cash Flow


	~~Quarter Ended March 31,~~Year-to-Date September 30, 2022

GAAP: Cash flows from operations	$	~~456,860~~1,099,195
Adjusted for:
Proceeds from sale of property and equipment, including assets held for sale	~~60,532~~139,545
Purchases of property and equipment	~~(164,974)~~(496,237)
Non-GAAP: Free Cash Flow	$	~~352,418~~742,503

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Liquidity and Capital Resources

Sources of Liquidity

Our primary sources of liquidity are funds provided by operations and the following:


Source	~~March 31,~~September 30, 2022
	(In thousands)
Cash and cash equivalents, excluding restricted cash	$	~~242,860~~194,082
Availability under 2021 Revolver, due September 2026 1	~~870,569~~924,754
Availability under 2021 RSA, due April 2024 2	55,700
Availability under 2021 Prudential Notes, issuance ending October 2023 3	87,857
Total unrestricted liquidity	$	~~1,256,986~~1,262,393
Cash and cash equivalents – restricted 4	~~130,587~~147,681
Restricted investments, held-to-maturity, amortized cost 4	~~8,302~~7,827
Total liquidity, including restricted cash and restricted investments	$	~~1,395,875~~1,417,901

1 As of ~~March 31,~~September 30, 2022, we had ~~$165.0~~$146.0 million in borrowings under our ~~$1.1~~$1.1 billion 2021 Revolver. We additionally had ~~$64.4~~$29.2 million in outstanding letters of credit (discussed below), issued under the Revolver, leaving ~~$870.6~~$924.8 million available under the Revolver.

2 Based on eligible receivables at ~~March 31,~~September 30, 2022, our borrowing base for the 2021 RSA was $400.0 million, while outstanding borrowings were $279.0 million. We additionally had $65.3 million in outstanding letters of credit (discussed below), leaving $55.7 million available under the 2021 RSA. Refer to Note 5 in Part I, Item 1 of this Quarterly Report for more information regarding the 2021 RSA.

3 As of ~~March 31,~~September 30, 2022, we had $37.1 million outstanding principal on our shelf notes issued under our $125.0 million 2021 Prudential Notes, leaving $87.9 million available for issuance under the 2021 Prudential Notes.

4 Restricted cash and restricted investments are primarily held by our captive insurance companies for claims payments. "Cash and cash equivalents – restricted" consists of ~~$128.8~~$145.0 million, included in "Cash and cash equivalents —– restricted" inon the condensed consolidated balance sheet and held by Mohave and Red Rock for claims payments. The remaining ~~$1.8~~$2.7 million is included in "Other long-term assets" and is held in escrow accounts to meet statutory requirements.

Uses of Liquidity

Our business requires substantial amounts of cash for operating activities, including salaries and wages paid to our employees, contract payments to independent contractors, insurance and claims payments, tax payments, and others. We also use large amounts of cash and credit for the following activities:

Capital Expenditures — When justified by customer demand, as well as our liquidity and our ability to generate acceptable returns, we make substantial cash capital expenditures to maintain a modern company tractor fleet, refresh and expand our trailer fleet, expand our network of LTL service centers, and, to a lesser extent, fund upgrades to our terminals and technology in our various service offerings. In connection with our business strategy, we regularly evaluate acquisition and strategic partnership opportunities. We expect net cash capital expenditures, ~~including net cash capital expenditures of our LTL segment,~~ will be in the range of ~~$550.0~~$525.0 – ~~$600.0~~$575.0 million for full-year 2022. This range excludes cash outlays for potential acquisitions. We believe we have ample flexibility in our trade cycle and purchase agreements to alter our current plans if economic and other conditions warrant.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Over the long-term, we will continue to have significant capital requirements, which may require us to seek additional borrowing, lease financing, or equity capital. The availability of financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions. If such additional borrowing, lease financing, or equity capital is not available at the time we need it, then we may need to borrow more under the 2021 Revolver (if not then fully drawn), extend the maturity of then-outstanding debt, rely on alternative financing arrangements, engage in asset sales, limit our fleet size, or operate our revenue equipment for longer periods.

There can be no assurance that we will be able to obtain additional debt under our existing financial arrangements to satisfy our ongoing capital requirements. However, we believe the combination of our expected cash flows, financing available through operating and finance leases, available funds under our accounts receivable securitization, and availability under the 2021 Revolver will be sufficient to fund our expected capital expenditures for at least the next twelve months.

Principal and Interest Payments — As of ~~March 31,~~September 30, 2022, we had debt, accounts receivable securitization, and finance lease obligations of ~~$2.0~~$1.9 billion, which are discussed under "Material Debt Agreements," below. Certain cash flows from operations are committed to minimum payments of principal and interest on our debt and lease obligations. Additionally, when our financial position allows, we periodically make voluntary prepayments on our outstanding debt balances.

Letters of Credit — Pursuant to the terms of the 2021 Debt Agreement and the 2021 RSA, our lenders may issue standby letters of credit on our behalf. When we have certain letters of credit outstanding, the availability under the 2021 Revolver or 2021 RSA is reduced accordingly. As of September 30, 2022, we also had outstanding letters of credit of $94.8 million pursuant to a bilateral agreement which do not impact the availability of the 2021 Revolver and 2021 RSA. Standby letters of credit are typically issued for the benefit of regulatory authorities, insurance companies and state departments of insurance for the purpose of satisfying certain collateral requirements, primarily related to our automobile, workers' compensation, and general insurance liabilities.

Share Repurchases — From time to time, and depending on ~~free cash flow~~Free Cash Flow1 availability, debt levels, common stock prices, general economic and market conditions, as well as internal approval requirements, we may repurchase shares of our outstanding common stock. As of ~~March 31,~~September 30, 2022, the Company had ~~$47.9~~$200.0 million remaining under the ~~2020~~2022 Knight-Swift Share Repurchase Plan. Subsequently, on April 25, 2022, the Board authorized $350.0 million in share repurchases, replacing the 2020 Knight-Swift Share Repurchase Plan, which had approximately $42.8 million of authorized purchases remaining upon termination. Additional details regarding our share repurchase plans are discussed in Note 10 in Part I, Item 1 of this Quarterly Report.

Working Capital

We had a working capital surplus of ~~$300.2~~$562.0 million as of ~~March 31,~~September 30, 2022 and $339.5 million as of December 31, 2021.

________

1Refer to "Non-GAAP Financial Measures."

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Material Debt Agreements

As of ~~March 31,~~September 30, 2022, we had ~~$2.0~~$1.9 billion in material debt obligations at the following carrying values:

•$~~169.8~~199.7 million: 2021 Term Loan ~~A-1,~~A-2, due September 2024~~December 2022,~~, net of ~~$0.2~~$0.3 million in deferred loan costs

•$~~199.6~~798.6 million: 2021 Term Loan ~~A-2,~~A-3, due September ~~2024,~~2026, net of $1.4 million in deferred loan costs

•$278.6 million: 2021 RSA outstanding borrowings, net of $0.4 million in deferred loan costs

•$~~798.4 million: 2021 Term Loan A-3,~~ ~~due~~ ~~September 2026, net of $1.6 million in deferred loan costs~~

•~~$278.5 million: 2021 RSA outstanding borrowings, net of $0.5 million in deferred loan costs~~

•~~$329.5~~412.5 million: Finance lease obligations

•$~~165.0~~146.0 million: 2021 Revolver, due September 2026

•$~~43.8~~42.5 million: Other, net of $0.1 million in deferred loan costs

As of December 31, 2021, we had ~~$2.1~~$2.1 billion in material debt obligations at the following carrying values:

•$199.7 million: 2021 Term Loan A-1, due December 2022, net of $0.3 million in deferred loan costs

•$199.6 million: 2021 Term Loan A-2, due September 2024, net of $0.4 million in deferred loan costs

•$798.4 million: 2021 Term Loan A-3, due September 2026, net of $1.6 million in deferred loan costs

•$278.5 million: 2021 RSA outstanding borrowings, net of $0.5 million in deferred loan costs

•$306.2 ~~million~~:million: Finance lease obligations

•$260.0 million: 2021 Revolver, due September 2026

•$52.3 million: Other, net of $0.1 million in deferred loan costs


Cash Flow Analysis


		Quarter Ended March 31,				Change			Year-to-Date September 30,				Change
		2022		2021					2022		2021
		(In thousands)							(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	456,860	$	306,113	$	150,747	Net cash provided by operating activities	$	1,099,195	$	817,524	$	281,671
Net cash used in investing activities	Net cash used in investing activities	(110,187)		(74,141)		(36,046)		Net cash used in investing activities	(358,626)		(1,548,757)		1,190,131
Net cash used in financing activities		(323,249)		(185,366)		(137,883)
Net cash (used in) provided by financing activities								Net cash (used in) provided by financing activities	(748,829)		873,309		(1,622,138)

Net Cash Provided by Operating Activities

Comparison Between ~~Quarter Ended March 31,~~Year-to-Date September 30, 2022 and 2021 — The ~~$150.7~~$281.7 million increase in net cash provided by operating activities was primarily due to a ~~$135.8~~$265.8 million increase in operating income, ~~due~~including the operating results of ACT and MME for year-to-date September 30, 2022. The remaining difference is attributed to various changes in working capital. Note: Factors affecting the ~~factors~~increase in operating income are discussed in "Results of Operations — Consolidated Operating and Other ~~Expenses" above. The remaining difference is attributed to various changes in working capital.~~Expenses."

Net Cash Used in Investing Activities

Comparison Between ~~Quarter Ended March 31,~~Year-to-Date September 30, 2022 and 2021 — The ~~$36.0 million increase~~$1.2 billion decrease in net cash used in investing activities was primarily due to a ~~$60.6~~$1.3 billion decrease in net cash invested in acquisitions and was partially offset by a $160.6 million increase in net cash capital expenditures, including ~~the first quarter~~year-to-date September 30, 2022 investing activities of ACT and ~~MME,~~MME.

Net Cash (Used in) Provided by Financing Activities

Comparison Between Year-to-Date September 30, 2022 and ~~was partially offset~~2021 — Net cash used in financing activities increased by $1.6 billion, primarily due to the $1.2 billion reduction in debt proceeds, a ~~$38.0~~$246.3 million ~~decrease~~increase in repurchases of our common stock, and a $204.0 million increase in net ~~cash invested in acquisitions.~~repayments on our Revolver.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

~~Net Cash Used in Financing Activities~~

~~Comparison Between Quarter Ended March 31, 2022 and 2021 —~~ Net cash used in financing activities increased by $137.9 million, primarily due to an increase in repurchases of our common stock of $91.2 million and a $42.2 million increase in repayments of finance leases and long-term debt, including the first quarter 2022 financing activities from ACT and MME.


Seasonality

Discussion regarding the impact of seasonality on our business is included in Note 1 in the notes to the condensed consolidated financial statements, included in Part I, Item 1 of this Quarterly Report, incorporated by reference herein.


Inflation

Most of our operating expenses are inflation-sensitive, with inflation generally leading to increased costs of operations. Price increases in manufacturer revenue equipment ~~has~~have impacted the cost for us to acquire new equipment. Cost increases have also impacted the cost of parts for equipment repairs and maintenance. The qualified driver shortage experienced by the trucking industry overall has had the effect of increasing compensation paid to our driving associates. We have also experienced inflation in insurance and claims cost related to health insurance and claims, as well as auto liability insurance and claims. Prolonged periods of inflation could cause interest rates, fuel, wages, and other costs to increase as well. Any of these factors could adversely affect our results of operations unless freight rates correspondingly increase.


Recently Issued Accounting Pronouncements

See Note 2 in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference, for the impact of recently issued accounting pronouncements on the Company's condensed consolidated financial statements.


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure from variable interest rates, primarily related to our 2021 Debt Agreement and 2021 RSA. These variable interest rates are impacted by changes in short-term interest rates. We primarily manage interest rate exposure through a mix of variable rate debt (weighted average rate of ~~1.1%~~4.0% as of ~~March 31,~~September 30, 2022) and fixed rate equipment lease financing. Assuming the level of borrowings as of ~~March 31,~~September 30, 2022, a hypothetical one percentage point increase in interest rates would increase our annual interest expense by ~~$16.6~~$14.7 million.

Commodity Price Risk

We have commodity exposure with respect to fuel used in company-owned tractors. Increases in fuel prices would continue to raise our operating costs, even after applying fuel surcharge revenue. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. The weekly average of diesel price per gallon in the US increased to ~~$4.36~~$5.09 for the ~~first~~third quarter of 2022 from an average of ~~$2.91~~$3.36 in the ~~first~~third quarter of 2021. The weekly average diesel price per gallon in the US increased to $4.99 for the year-to-date period ended September 30, 2022 from an average of $3.16 for year-to-date September 30, 2021. We cannot predict the extent or speed of potential changes in fuel price levels in the future, the degree to which the lag effect of our fuel surcharge programs will impact us as a result of the timing and magnitude of such changes, or the extent to which effective fuel surcharges can be maintained and collected to offset such increases. We generally have not used derivative financial instruments to hedge our fuel price exposure in the past, but continue to evaluate this possibility. To mitigate the impact of rising fuel costs, we contract with some of our fuel suppliers to buy fuel at a fixed price or within banded pricing for a specified period, usually not exceeding twelve months. However, these purchase commitments only cover a small portion of our fuel consumption. Accordingly, fuel price fluctuations may still negatively impact us.

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ITEM 4.			CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board. Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures. Based on this evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (2) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~March 31,~~September 30, 2022, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We base our internal control over financial reporting on the criteria set forth in the 2013 COSO Internal Control: Integrated Framework.

We have confidence in our disclosure controls and procedures and internal control over financial reporting. Nevertheless, our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors, misstatements, or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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PART II OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS

Information about our legal proceedings is included in Note 9 of the notes to our condensed consolidated financial statements, included in Part I, Item 1, of this Quarterly Report for the period ended ~~March 31,~~September 30, 2022, and is incorporated by reference herein. Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's overall financial position, operating results, or cash flows after taking into account any existing accruals. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.


ITEM 1A.			RISK FACTORS

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our 2021 Annual Report in the section entitled "Item 1A. Risk Factors," describes some of the risks and uncertainties associated with our business.


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value that May Yet be Purchased Under the Plans or Programs 1
January 1, 2022 to January 31, 2022 — $ — — $ 192,825,135
February 1, 2022 to February 28, 2022 1,434,998 $ 53.61 1,434,998 $ 115,895,786
March 1, 2022 to March 31, 2022 1,288,494 $ 52.74 1,288,494 $ 47,943,813
Total 2,723,492 $ 53.20 2,723,492 $ 47,943,813


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value That May Yet be Purchased Under the Plans or Programs 1
	(in thousands, except per share data)








July 1, 2022 to July 31, 2022	—	$	—	—	$	200,041
August 1, 2022 to August 31, 2022	—	$	—	—	$	200,041
September 1, 2022 to September 30, 2022	—	$	—	—	$	200,041
Total	—	$	—	—	$	200,041

1On April 25, 2022, we announced that the Board had approved the $350.0 million 2022 Knight-Swift Share Repurchase Plan, replacing the 2020 Knight-Swift Share Repurchase Plan. There is no expiration date associated with the 2022 Knight-Swift Share Repurchase Plan. See Note 10 in Part I, Item 1 of this Quarterly ~~Report.~~Report regarding our share repurchase plans.


ITEM 3.			DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.			MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.			OTHER INFORMATION

None.

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ITEM 6.			EXHIBITS

Exhibit
Number

Description

Page or Method of Filing

2.1*

~~Agreement and Plan of Merger, dated as of April 9, 2017, by and among Swift Transportation Company, Bishop Merger Sub, Inc., and Knight Transportation, Inc.~~

~~Incorporated by reference to Exhibit 2.1 of Form 8-K filed on April 13, 2017~~

2.2*

Stock Purchase Agreement, dated as of July 5, 2021, by and among AAA Cooper Transportation, the Stockholders of AAA Cooper Transportation, Knight-Swift Transportation Holdings Inc., and Reid B. Dove, in his capacity as Sellers’ Representative

~~Incorporated by reference to Exhibit 2.2 of Form 10-Q for the quarter ended September 30, 2021~~

3.1

Fourth Amended and Restated Certificate of Incorporation of Knight-Swift Transportation Holdings Inc.

Incorporated by reference to Exhibit 3.1 of Form 10-Q for the quarter ended June 30, 2020

3.2

Fourth Amended and Restated By-laws of Knight-Swift Transportation Holdings Inc.

Incorporated by reference to Exhibit 3.1 of Form 8-K filed on February 9, 2022

~~10.1~~**

~~Form of Senior Executive RSU Award Notice~~

~~Filed herewith~~

31.1

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by David A. Jackson, the Company's Chief Executive Officer (principal executive officer).

Filed herewith

31.2

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Adam W. Miller, the Company's Chief Financial Officer (principal financial officer).

Filed herewith

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by David A. Jackson, the Company's Chief Executive Officer.

Furnished herewith

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Adam W. Miller, the Company's Chief Financial Officer.

Furnished herewith

101.INS

Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Calculation Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Presentation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Document

Filed herewith

104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Filed herewith

* Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to supplementally furnish to the SEC a copy of any omitted schedule upon request by the SEC.

** Management contract or compensatory plan, contract, or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

Date:

~~May 4,~~November 2, 2022

/s/ David A. Jackson

David A. Jackson

Chief Executive Officer and President, in his capacity as

such and on behalf of the registrant

Date:

~~May 4,~~November 2, 2022

/s/ Adam W. Miller

Adam W. Miller

Chief Financial Officer, in his capacity as such and on

behalf of the registrant

5662


Reconciliation of Cash, Restricted Cash, and Equivalents:	March 31, 2022		December 31, 2021		March 31, 2021		December 31, 2020
	(In thousands)
Condensed Consolidated Balance Sheets
Cash and cash equivalents	$	242,860	$	261,001	$	194,650	$	156,699
Cash and cash equivalents – restricted 1	128,774		87,241		47,867		39,328
Other long-term assets 1	1,813		1,781		1,366		1,250
Condensed Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents	$	373,447	$	350,023	$	243,883	$	197,277