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 June 30, ~~2022~~2023

☐ 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 approximately ~~160,665,000~~161,294,000 shares of the registrant's common stock outstanding as of July ~~27, 2022~~.26, 2023.

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			4

Condensed Consolidated Balance Sheets (Unaudited) — June 30 ~~2022~~, 2023 and December 31, ~~2021~~2022			4

Condensed Consolidated Statements of Comprehensive Income (Unaudited) — Quarter ~~Quarter~~ and ~~Year-t~~Year-to-Date ~~o-Date~~ ended June 30 , ~~2022~~2023 and ~~2021~~2022			5

Condensed Consolidated Statements of Cash Flows (Unaudited) — Quarter and ~~Year-to-~~Year-to-Date ~~Date~~ ended June 30 , ~~2022~~2023 and ~~2021~~2022			6

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) —Quarter ~~Year-to-Date~~ and Year-to-Da te ended June 30 , ~~2022~~2023 and ~~2021~~2022			8

Note 1 — Introduction and Basis of Presentation			10



Note 2 — Recently Issued Accounting Pronouncements			11

Note 3 — Acquisitions			11







Note 4 — Income Taxes			1312



Note 5 — Accounts Receivable Securitization			1312

Note 6 — Debt and Financing			1514

Note 7 — Defined Benefit Pension Plan			1716

Note 8 — Purchase Commitments			1716

Note 9 — Contingencies and Legal Proceedings			17

Note 10 — Share Repurchase Plans			1918

Note 11 — Weighted Average Shares Outstanding			1918

Note 12 — Fair Value Measurement			2019

Note 13 — Related Party Transactions			2322

Note 14 — Financial Information by Segment and Geography			2422

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2524

Item 3. Quantitative and Qualitative Disclosures About Market Risk			56

Item 4. Controls and Procedures			5756
PART II OTHER INFORMATION
Item 1. Legal Proceedings			5857

Item 1A. Risk Factors			5857

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5857

Item 3. Defaults Upon Senior Securities			5857

Item 4. Mine Safety Disclosures			5857

Item 5. Other Information			5857

Item 6. Exhibits			5958

Signatures			6059

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
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, maturing on September 3, 2026
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~~which matured 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

2023 Term Loan			The Company's term loan entered into on June 22, 2023, 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.
2022 RSA			Sixth Amendment to the Amended and Restated Receivables Sales Agreement, entered into on October 3, 2022 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 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
IRS			Internal Revenue Service

~~LIBOR~~			~~London InterBank Offered Rate~~


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

RSU			Restricted Stock Unit
SEC			United States Securities and Exchange Commission
SOFR			Secured overnight financing rate as administered by the Federal Reserve Bank of New York



US			The United States of America
U.S. Xpress			U.S. Xpress Enterprises, Inc.
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)


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(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	$	198,021	$	261,001	Cash and cash equivalents	$	228,957	$	196,770
Cash and cash equivalents – restricted	Cash and cash equivalents – restricted	111,449		87,241		Cash and cash equivalents – restricted	251,438		185,792
Restricted investments, held-to-maturity, amortized cost	Restricted investments, held-to-maturity, amortized cost	7,856		5,866		Restricted investments, held-to-maturity, amortized cost	3,082		7,175
Trade receivables, net of allowance for doubtful accounts of $22,124 and $21,663, respectively		1,010,768		911,336
Trade receivables, net of allowance for doubtful accounts of $25,693 and $22,980, respectively						Trade receivables, net of allowance for doubtful accounts of $25,693 and $22,980, respectively	712,197		842,294
Contract balance – revenue in transit	Contract balance – revenue in transit	20,422		22,936		Contract balance – revenue in transit	13,608		15,859
Prepaid expenses	Prepaid expenses	79,405		90,507		Prepaid expenses	100,896		108,081
Assets held for sale	Assets held for sale	11,195		8,166		Assets held for sale	59,310		40,602
Income tax receivable	Income tax receivable	6,880		909		Income tax receivable	17,303		58,974
Acquisition escrow						Acquisition escrow	444,657		—
Other current assets	Other current assets	27,421		26,318		Other current assets	53,662		38,025
Total current assets	Total current assets	1,473,417		1,414,280		Total current assets	1,885,110		1,493,572
Gross property and equipment	Gross property and equipment	5,368,062		5,118,897		Gross property and equipment	5,980,256		5,740,383
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(1,766,873)		(1,563,533)		Less: accumulated depreciation and amortization	(2,018,107)		(1,905,340)
Property and equipment, net	Property and equipment, net	3,601,189		3,555,364		Property and equipment, net	3,962,149		3,835,043
Operating lease right-of-use-assets	Operating lease right-of-use-assets	165,643		147,540		Operating lease right-of-use-assets	200,708		192,358
Goodwill	Goodwill	3,518,589		3,515,135		Goodwill	3,519,339		3,519,339
Intangible assets, net	Intangible assets, net	1,798,668		1,831,049		Intangible assets, net	1,744,056		1,776,569
Other long-term assets	Other long-term assets	157,372		192,132		Other long-term assets	126,530		134,785
Total assets	Total assets	$	10,714,878	$	10,655,500	Total assets	$	11,437,892	$	10,951,666
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	220,469	$	224,844	Accounts payable	$	223,482	$	220,849
Accrued payroll and purchased transportation	Accrued payroll and purchased transportation	245,679		217,084		Accrued payroll and purchased transportation	159,066		171,381
Accrued liabilities	Accrued liabilities	124,072		128,536		Accrued liabilities	81,766		81,528
Claims accruals – current portion	Claims accruals – current portion	240,021		206,607		Claims accruals – current portion	366,238		311,822

Finance lease liabilities and long-term debt – current portion	Finance lease liabilities and long-term debt – current portion	235,775		262,423		Finance lease liabilities and long-term debt – current portion	73,304		71,466
Operating lease liabilities – current portion	Operating lease liabilities – current portion	37,787		35,322		Operating lease liabilities – current portion	41,565		36,961

Total current liabilities	Total current liabilities	1,103,803		1,074,816		Total current liabilities	945,421		894,007
Revolving line of credit	Revolving line of credit	129,000		260,000		Revolving line of credit	210,000		43,000
Long-term debt – less current portion	Long-term debt – less current portion	1,028,617		1,037,552		Long-term debt – less current portion	1,265,204		1,024,668
Finance lease liabilities – less current portion	Finance lease liabilities – less current portion	327,320		256,166		Finance lease liabilities – less current portion	333,009		344,377
Operating lease liabilities – less current portion	Operating lease liabilities – less current portion	123,274		107,614		Operating lease liabilities – less current portion	153,765		149,992
Accounts receivable securitization	Accounts receivable securitization	278,594		278,483		Accounts receivable securitization	338,641		418,561
Claims accruals – less current portion	Claims accruals – less current portion	206,418		210,714		Claims accruals – less current portion	205,605		201,838
Deferred tax liabilities	Deferred tax liabilities	874,601		874,877		Deferred tax liabilities	899,891		907,893
Other long-term liabilities	Other long-term liabilities	11,994		11,828		Other long-term liabilities	5,313		12,049
Total liabilities	Total liabilities	4,083,621		4,112,050		Total liabilities	4,356,849		3,996,385
Commitments and contingencies (Notes 3, 7, 8, and 9)		0		0
Commitments and contingencies (Notes 7, 8, and 9)						Commitments and contingencies (Notes 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; 160,639 and 165,980 shares issued and outstanding as of June 30, 2022 and December 31, 2021, respectively.		1,606		1,660

Common stock, par value $0.01 per share; 500,000 shares authorized; 161,276 and 160,706 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.						Common stock, par value $0.01 per share; 500,000 shares authorized; 161,276 and 160,706 shares issued and outstanding as of June 30, 2023 and December 31, 2022, respectively.	1,613		1,607
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2,797)		(563)		Accumulated other comprehensive loss	(815)		(2,436)
Additional paid-in capital	Additional paid-in capital	4,372,916		4,350,913		Additional paid-in capital	4,412,069		4,392,266
Retained earnings	Retained earnings	2,249,333		2,181,142		Retained earnings	2,657,415		2,553,567
Total Knight-Swift stockholders' equity	Total Knight-Swift stockholders' equity	6,621,058		6,533,152		Total Knight-Swift stockholders' equity	7,070,282		6,945,004
Noncontrolling interest	Noncontrolling interest	10,199		10,298		Noncontrolling interest	10,761		10,277
Total stockholders’ equity	Total stockholders’ equity	6,631,257		6,543,450		Total stockholders’ equity	7,081,043		6,955,281
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	10,714,878	$	10,655,500	Total liabilities and stockholders’ equity	$	11,437,892	$	10,951,666

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

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Comprehensive Income (Unaudited)


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter-to-Date June 30,				Year-to-Date June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(In thousands, except per share data)									(In thousands, except per share data)
Revenue:	Revenue:									Revenue:
Revenue, excluding truckload and LTL fuel surcharge	Revenue, excluding truckload and LTL fuel surcharge	$	1,694,531	$	1,212,872	$	3,342,409	$	2,345,977	Revenue, excluding truckload and LTL fuel surcharge	$	1,390,448	$	1,694,531	$	2,840,741	$	3,342,409
Truckload and LTL fuel surcharge	Truckload and LTL fuel surcharge	266,600		102,829		445,711		192,738		Truckload and LTL fuel surcharge	162,531		266,600		349,170		445,711
Total revenue	Total revenue	1,961,131		1,315,701		3,788,120		2,538,715		Total revenue	1,552,979		1,961,131		3,189,911		3,788,120
Operating expenses:	Operating expenses:									Operating expenses:
Salaries, wages, and benefits	Salaries, wages, and benefits	549,956		377,613		1,086,012		747,983		Salaries, wages, and benefits	533,237		549,956		1,069,979		1,086,012
Fuel	Fuel	257,146		126,055		447,635		244,291		Fuel	168,300		257,146		356,059		447,635
Operations and maintenance	Operations and maintenance	106,724		71,313		202,607		139,383		Operations and maintenance	101,380		106,724		200,691		202,607
Insurance and claims	Insurance and claims	102,084		58,776		200,276		114,419		Insurance and claims	137,306		102,084		275,345		200,276
Operating taxes and licenses	Operating taxes and licenses	30,204		21,717		59,241		43,765		Operating taxes and licenses	28,332		30,204		54,222		59,241
Communications	Communications	5,744		4,635		11,614		9,672		Communications	6,184		5,744		11,933		11,614
Depreciation and amortization of property and equipment	Depreciation and amortization of property and equipment	147,482		123,606		292,526		243,521		Depreciation and amortization of property and equipment	156,381		147,482		312,347		292,526
Amortization of intangibles	Amortization of intangibles	16,215		11,984		32,381		23,733		Amortization of intangibles	16,505		16,215		32,688		32,381
Rental expense	Rental expense	13,492		13,399		26,893		30,263		Rental expense	16,073		13,492		31,141		26,893
Purchased transportation	Purchased transportation	384,910		304,157		771,356		562,387		Purchased transportation	258,259		384,910		538,988		771,356
Impairments	Impairments	—		—		810		—		Impairments	—		—		—		810
Miscellaneous operating expenses	Miscellaneous operating expenses	21,396		11,331		32,905		25,924		Miscellaneous operating expenses	36,992		21,396		67,701		32,905

Total operating expenses	Total operating expenses	1,635,353		1,124,586		3,164,256		2,185,341		Total operating expenses	1,458,949		1,635,353		2,951,094		3,164,256
Operating income	Operating income	325,778		191,115		623,864		353,374		Operating income	94,030		325,778		238,817		623,864
Other (expenses) income:	Other (expenses) income:									Other (expenses) income:
Interest income	Interest income	675		270		1,136		564		Interest income	5,508		675		10,557		1,136
Interest expense	Interest expense	(9,345)		(3,307)		(16,025)		(6,793)		Interest expense	(24,354)		(9,345)		(47,445)		(16,025)
Other (expenses) income, net		(25,576)		16,840		(39,981)		32,945
Other income (expenses), net										Other income (expenses), net	9,679		(25,576)		19,382		(39,981)
Total other (expenses) income, net	Total other (expenses) income, net	(34,246)		13,803		(54,870)		26,716		Total other (expenses) income, net	(9,167)		(34,246)		(17,506)		(54,870)
Income before income taxes	Income before income taxes	291,532		204,918		568,994		380,090		Income before income taxes	84,863		291,532		221,311		568,994
Income tax expense	Income tax expense	72,090		51,783		141,264		97,112		Income tax expense	21,959		72,090		54,694		141,264
Net income	Net income	219,442		153,135		427,730		282,978		Net income	62,904		219,442		166,617		427,730
Net loss (income) attributable to noncontrolling interest		50		(331)		99		(384)
Net loss attributable to noncontrolling interest										Net loss attributable to noncontrolling interest	422		50		993		99
Net income attributable to Knight-Swift	Net income attributable to Knight-Swift	219,492		152,804		427,829		282,594		Net income attributable to Knight-Swift	63,326		219,492		167,610		427,829
Other comprehensive loss		(1,862)		—		(2,234)		—
Other comprehensive income (loss)										Other comprehensive income (loss)	531		(1,862)		1,621		(2,234)
Comprehensive income	Comprehensive income	$	217,630	$	152,804	$	425,595	$	282,594	Comprehensive income	$	63,857	$	217,630	$	169,231	$	425,595

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	1.35	$	0.92	$	2.61	$	1.70	Basic	$	0.39	$	1.35	$	1.04	$	2.61
Diluted	Diluted	$	1.35	$	0.92	$	2.60	$	1.69	Diluted	$	0.39	$	1.35	$	1.04	$	2.60

Dividends declared per share:	Dividends declared per share:	$	0.12	$	0.10	$	0.24	$	0.18	Dividends declared per share:	$	0.14	$	0.12	$	0.28	$	0.24

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	162,365		165,577		163,863		165,751		Basic	161,116		162,365		161,018		163,863
Diluted	Diluted	163,166		166,585		164,801		166,750		Diluted	161,940		163,166		161,917		164,801

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 Cash Flows (Unaudited)


		Year-to-Date June 30,					Year-to-Date June 30,
		2022		2021			2023		2022
		(In thousands)					(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	427,730	$	282,978	Net income	$	166,617	$	427,730
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	324,907		267,254		Depreciation and amortization of property, equipment, and intangibles	345,035		324,907
Gain on sale of property and equipment	Gain on sale of property and equipment	(57,808)		(25,592)		Gain on sale of property and equipment	(35,180)		(57,808)

Impairments	Impairments	810		—		Impairments	—		810
Deferred income taxes	Deferred income taxes	(2,439)		(9,541)		Deferred income taxes	(8,002)		(2,439)
Non-cash lease expense	Non-cash lease expense	19,795		26,743		Non-cash lease expense	22,138		19,795
Loss (gain) on equity securities		50,937		(8,858)
Non-cash adjustment to fair value of convertible note		—		(12,631)
(Gain) loss on equity securities						(Gain) loss on equity securities	(1,870)		50,937

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	25,603		18,205		Other adjustments to reconcile net income to net cash provided by operating activities	36,277		25,603
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	(103,740)		(70,067)		Trade receivables	126,429		(103,740)
Income tax receivable	Income tax receivable	(5,971)		(26,466)		Income tax receivable	41,671		(5,971)
Accounts payable	Accounts payable	2,060		28,935		Accounts payable	5,072		2,060
Accrued liabilities and claims accrual	Accrued liabilities and claims accrual	50,822		6,512		Accrued liabilities and claims accrual	46,408		50,822
Operating lease liabilities	Operating lease liabilities	(19,772)		(28,311)		Operating lease liabilities	(22,187)		(19,772)
Other assets and liabilities	Other assets and liabilities	7,050		10,343		Other assets and liabilities	(218)		7,050
Net cash provided by operating activities	Net cash provided by operating activities	719,984		459,504		Net cash provided by operating activities	722,190		719,984
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	4,306		2,850		Proceeds from maturities of held-to-maturity investments	3,620		4,306
Purchases of held-to-maturity investments	Purchases of held-to-maturity investments	(6,399)		(2,555)		Purchases of held-to-maturity investments	(30)		(6,399)
Proceeds from sale of property and equipment, including assets held for sale	Proceeds from sale of property and equipment, including assets held for sale	104,239		127,068		Proceeds from sale of property and equipment, including assets held for sale	98,755		104,239
Purchases of property and equipment	Purchases of property and equipment	(295,522)		(247,549)		Purchases of property and equipment	(517,856)		(295,522)
Expenditures on assets held for sale	Expenditures on assets held for sale	(449)		(765)		Expenditures on assets held for sale	(634)		(449)
Net cash, restricted cash, and equivalents invested in acquisitions	Net cash, restricted cash, and equivalents invested in acquisitions	(1,291)		(63,305)		Net cash, restricted cash, and equivalents invested in acquisitions	—		(1,291)
Investment in convertible note		—		(25,000)

Other cash flows from investing activities	Other cash flows from investing activities	(9,190)		12,340		Other cash flows from investing activities	155		(9,190)
Net cash used in investing activities	Net cash used in investing activities	(204,306)		(196,916)		Net cash used in investing activities	(415,990)		(204,306)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayment of finance leases and long-term debt		(66,440)		(50,428)
Repayments of finance leases and long-term debt						Repayments of finance leases and long-term debt	(38,148)		(66,440)
Proceeds from long-term debt						Proceeds from long-term debt	250,000		—
Borrowings (repayments) on revolving lines of credit, net						Borrowings (repayments) on revolving lines of credit, net	167,000		(131,000)

Repayments on revolving lines of credit, net		(131,000)		(155,000)
Borrowings under accounts receivable securitization		—		80,000
Repayment of accounts receivable securitization		—		(15,000)
Repayments of accounts receivable securitization						Repayments of accounts receivable securitization	(80,000)		—

Proceeds from common stock issued	Proceeds from common stock issued	5,057		5,302		Proceeds from common stock issued	3,222		5,057
Repurchases of the Company's common stock	Repurchases of the Company's common stock	(299,941)		(53,661)		Repurchases of the Company's common stock	—		(299,941)
Dividends paid	Dividends paid	(39,721)		(30,332)		Dividends paid	(45,940)		(39,721)

Other cash flows from financing activities	Other cash flows from financing activities	(20,316)		(8,679)		Other cash flows from financing activities	(19,510)		(20,316)
Net cash used in financing activities		(552,361)		(227,798)
Net (decrease) increase in cash, restricted cash, and equivalents		(36,683)		34,790
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	236,624		(552,361)
Net increase (decrease) in cash, restricted cash, and equivalents						Net increase (decrease) in cash, restricted cash, and equivalents	542,824		(36,683)
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	385,345		350,023
Cash, restricted cash, and equivalents at end of period	Cash, restricted cash, and equivalents at end of period	$	313,340	$	232,067	Cash, restricted cash, and equivalents at end of period	$	928,169	$	313,340

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

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued


		Year-to-Date June 30,					Year-to-Date June 30,
		2022		2021			2023		2022
		(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	$	14,097	$	5,719	Interest	$	45,851	$	14,097
Income taxes	Income taxes	154,819		133,284		Income taxes	16,870		154,819
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	$	3,085	$	8,063	Equipment acquired included in accounts payable	$	30,789	$	3,085
Financing provided to independent contractors for equipment sold						Financing provided to independent contractors for equipment sold	3,778		—
Transfers from property and equipment to assets held for sale						Transfers from property and equipment to assets held for sale	80,947		29,510

Transfers from property and equipment to assets held for sale		29,510		51,310
Noncontrolling interest associated with acquisition		—		10,281
Purchase price adjustment on acquisition	Purchase price adjustment on acquisition	2,163		—		Purchase price adjustment on acquisition	—		2,163
Contingent consideration associated with acquisitions and investments	Contingent consideration associated with acquisitions and investments	1,717		5,000		Contingent consideration associated with acquisitions and investments	—		1,717

Right-of-use assets obtained in exchange for operating lease liabilities	Right-of-use assets obtained in exchange for operating lease liabilities	37,897		4,146		Right-of-use assets obtained in exchange for operating lease liabilities	30,564		37,897
Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions		—		560

Property and equipment obtained in exchange for finance lease liabilities	Property and equipment obtained in exchange for finance lease liabilities	101,904		55,370		Property and equipment obtained in exchange for finance lease liabilities	19,797		101,904
Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities		—		42,298


Reconciliation of Cash, Restricted Cash, and Equivalents:	Reconciliation of Cash, Restricted Cash, and Equivalents:	June 30, 2022		December 31, 2021		June 30, 2021		December 31, 2020		Reconciliation of Cash, Restricted Cash, and Equivalents:	June 30, 2023		December 31, 2022		June 30, 2022		December 31, 2021
		(In thousands)									(In thousands)
Consolidated Balance Sheets	Consolidated Balance Sheets									Consolidated Balance Sheets
Cash and cash equivalents	Cash and cash equivalents	$	198,021	$	261,001	$	179,032	$	156,699	Cash and cash equivalents	$	228,957	$	196,770	$	198,021	$	261,001
Cash and cash equivalents – restricted 1	Cash and cash equivalents – restricted 1	111,449		87,241		51,637		39,328		Cash and cash equivalents – restricted 1	251,438		185,792		111,449		87,241
Acquisition escrow 2										Acquisition escrow 2	444,657		—		—		—
Other long-term assets 1	Other long-term assets 1	3,870		1,781		1,398		1,250		Other long-term assets 1	3,117		2,783		3,870		1,781
Consolidated Statements of Cash Flows	Consolidated Statements of Cash Flows									Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents	Cash, restricted cash, and equivalents	$	313,340	$	350,023	$	232,067	$	197,277	Cash, restricted cash, and equivalents	$	928,169	$	385,345	$	313,340	$	350,023

________

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

2 Reflects restricted cash for the U.S. Xpress acquisition which closed on July 1, 2023.

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

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


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 607 6 2,369 2,375 2,375
Common stock issued to the Board 18 — 873 873 873
Common stock issued under ESPP 35 — 1,809 1,809 1,809
Company shares repurchased (6,001) (60) (299,881) (299,941) (299,941)
Shares withheld – RSU settlement (20,316) (20,316) (20,316)
Employee stock-based compensation expense 16,952 16,952 16,952
Cash dividends paid and dividends accrued ($0.24 per share) (39,441) (39,441) (39,441)
Net income attributable to Knight-Swift 427,829 427,829 427,829
Other comprehensive income (2,234) (2,234) (2,234)
Net loss attributable to noncontrolling interest (99) (99)
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 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 418 5 3,391 3,396 3,396
Common stock issued to the Board 12 — 575 575 575
Common stock issued under ESPP 31 — 1,331 1,331 1,331
Company shares repurchased (1,303) (13) (53,648) (53,661) (53,661)
Shares withheld – RSU settlement (7,947) (7,947) (7,947)
Employee stock-based compensation expense 19,194 19,194 19,194
Cash dividends paid and dividends accrued ($0.18 per share) (30,069) (30,069) (30,069)
Net income attributable to Knight-Swift 282,594 282,594 282,594
Investment in noncontrolling interest — 10,281 10,281
Distribution to noncontrolling interest (65) (65)
Net income attributable to noncontrolling interest 384 384
Balances – June 30, 2021 165,711 $ 1,657 $ 4,325,915 $ 1,757,689 $ — $ 6,085,261 $ 12,792 $ 6,098,053


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

















Balances – December 31, 2022	160,706	$	1,607	$	4,392,266	$	2,553,567	$	(2,436)	$	6,945,004	$	10,277	$	6,955,281

Common stock issued to employees	512	5		158						163				163
Common stock issued to the Board	18	—		977						977				977

Common stock issued under ESPP	40	1		2,081						2,082				2,082

Shares withheld – RSU settlement						(18,271)				(18,271)				(18,271)
Employee stock-based compensation expense				16,587						16,587				16,587
Cash dividends paid and dividends accrued ($0.28 per share)						(45,491)				(45,491)				(45,491)
Net income						167,610				167,610		(993)		166,617
Other comprehensive income								1,621		1,621				1,621
Investment in noncontrolling interest												1,716		1,716
Distribution to noncontrolling interest												(239)		(239)


Balances – June 30, 2023	161,276	$	1,613	$	4,412,069	$	2,657,415	$	(815)	$	7,070,282	$	10,761	$	7,081,043


	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	607	6		2,369						2,375				2,375
Common stock issued to the Board	18	—		873						873				873

Common stock issued under ESPP	35	—		1,809						1,809				1,809
Company shares repurchased	(6,001)	(60)				(299,881)				(299,941)				(299,941)
Shares withheld – RSU settlement						(20,316)				(20,316)				(20,316)
Employee stock-based compensation expense				16,952						16,952				16,952
Cash dividends paid and dividends accrued ($0.24 per share)						(39,441)				(39,441)				(39,441)
Net income						427,829				427,829		(99)		427,730
Other comprehensive loss								(2,234)		(2,234)				(2,234)




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

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

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


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


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)
Balances – March 31, 2023	161,009	$	1,610	$	4,401,276	$	2,623,373	(1,346)		$	7,024,913	$	10,681	$	7,035,594

Common stock issued to employees	230	2		115						117				117
Common stock issued to the Board	18	—		977						977				977

Common stock issued under ESPP	19	1		1,041						1,042				1,042

Shares withheld – RSU settlement						(6,523)				(6,523)				(6,523)
Employee stock-based compensation expense				8,660						8,660				8,660
Cash dividends paid and dividends accrued ($0.14 per share)						(22,761)				(22,761)				(22,761)
Net income						63,326				63,326		(422)		62,904
Other comprehensive income								531		531				531
Investment in noncontrolling interest												741		741
Distribution to noncontrolling interest												(239)		(239)


Balances – June 30, 2023	161,276	$	1,613	$	4,412,069	$	2,657,415	$	(815)	$	7,070,282	$	10,761	$	7,081,043


	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 – March 31, 2022	163,635	$	1,636	$	4,360,889	$	2,209,104	(935)		$	6,570,694	$	10,249	$	6,580,943

Common stock issued to employees	243	3		1,961						1,964				1,964
Common stock issued to the Board	18	—		873						873				873

Common stock issued under ESPP	21	—		1,000						1,000				1,000
Company shares repurchased	(3,278)	(33)				(155,027)				(155,060)				(155,060)
Shares withheld – RSU settlement						(4,708)				(4,708)				(4,708)
Employee stock-based compensation expense				8,193						8,193				8,193
Cash dividends paid and dividends accrued ($0.12 per share)						(19,528)				(19,528)				(19,528)
Net income						219,492				219,492		(50)		219,442
Other comprehensive loss								(1,862)		(1,862)				(1,862)




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

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

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


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 half of 2022,~~year-to-date period ended June 30, 2023, the Company operated an average of ~~18,010~~18,002 tractors (comprised of ~~16,165~~16,128 company tractors and ~~1,845~~1,874 independent contractor tractors) and ~~72,111~~79,700 trailers within the Truckload segment and leasing activities within the non-reportable segments. The LTL segment operated an average of ~~3,110~~3,163 tractors and ~~8,352~~8,419 trailers. Additionally, the Intermodal segment operated an average of ~~603~~631 tractors and ~~11,259~~12,835 intermodal containers. As of June 30, ~~2022,~~2023, the Company's 4four reportable segments were Truckload, LTL, Logistics, 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~~2022 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 first half 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 acquired the following 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.~~

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

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

Seasonality

In the full 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~~weather. At the same time, operating expenses generally ~~increase. Tractor~~increase, and tractor productivity of the Company's Truckload fleet, independent contractors and 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 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.

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 2 — Recently Issued Accounting Pronouncements

Date Issued

Reference

Description

Expected Adoption Date and Method

Financial Statement Impact

March ~~2022~~2023

ASU No. ~~2022-02: Financial Instruments – Credit Losses~~2023-01: Leases (ASC ~~326)~~842), ~~Troubled Debt Restructurings and Vintage Disclosures~~Common Control Arrangements

The amendments in this ASU require that leasehold improvements associated with common control leases be amortized by the lessee over the useful life of the leasehold improvements and that leasehold improvements associated with common control leases be accounted for as a ~~creditor incorporates troubled debt restructurings into~~transfer between entities under common control through an adjustment to equity if the ~~allowance for credit losses and disclose current-period gross writeoffs by year~~lessee no longer controls the use of ~~origination for financing receivables and net investments in leases.~~the asset.

January ~~2023,~~2024, Prospective or retrospective

Currently under evaluation, but not expected to be material

~~June 2022~~July 2023

ASU No. ~~2022-03: Fair Value Measurements~~2023-03: Presentation of Financial Statements (ASC ~~820)~~205), ~~Fair Value Measurement of~~ Income Statement—Reporting Comprehensive Income (ASC 220), Distinguishing Liabilities from Equity ~~Securities Subject to Contractual Sale Restrictions~~(ASC 480), Equity (ASC 505), and Compensation—Stock Compensation (ASC 718)

The amendments in this ASU ~~clarify~~reflect alignment to Staff Accounting Bulletin No. 120 ("SAB 120") that ~~a contractual restriction on~~was issued by the ~~sale of an equity security is not considered part~~SEC in November 2021. SAB 120 provides guidance to entities issuing share-based awards shortly before announcing material, nonpublic information. The guidance indicates that entities should consider such material nonpublic information to adjust the observable market if the effect of the ~~unit of account~~release of the ~~equity security,~~material nonpublic information is expected to affect the share price and ~~not considered~~the share-based awards are non-routine in ~~measuring fair value.~~nature.

~~January 2024, Prospective~~July 2023, prospective adoption

NoCurrently under evaluation, but not expected to be material ~~impact~~

Note 3 — Acquisitions

~~Developments~~U.S. Xpress

On July 1, 2023, the Company closed on the acquisition of Chattanooga, Tennessee-based U.S. Xpress Enterprises, Inc. ("U.S. Xpress"). The transaction was partially funded using the $444.7 million recorded as "Acquisition Escrow" on the Company's condensed consolidated balance sheet as of June 30, 2023, which was financed through the Company's existing credit facilities and the 2023 Term Loan. The Company has not completed the initial accounting for this transaction as it is still in the preliminary stages of assessing the fair value of the underlying tangible and intangible assets. The results of U.S. Xpress will be included in our consolidated results beginning in the third quarter of 2023.

See Note 6 for more information about the Company's credit facilities and the 2023 Term Loan.

The Company did not complete any other material acquisitions during the ~~six months~~year-to-date period ended June 30, ~~2022 related to the Company's 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 during the first quarter of 2022.2023.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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.~~

During the quarter ended June 30, 2022, the Company's condensed consolidated operating results included ACT's total revenue of $245.2 million and net income of $26.6 million. ACT's net income during the quarter ended June 30, 2022 included $3.5 million related to the amortization of intangible assets acquired in the ACT Acquisition.

During the year-to-date period ended June 30, 2022, the Company's condensed consolidated operating results included ACT's total revenue of $462.9 million and net income of $42.7 million. ACT's net income during the year-to-date period ended June 30, 2022 included $7.0 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-to-Date June 30, Year-to-Date June 30,
2021 2021
(in thousands, except per share data)
Total revenue $ 1,515,793 $ 2,928,025
Net income attributable to Knight-Swift 165,096 304,285
Earnings per share – diluted 0.99 1.82

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 June 30, 2022, contingent consideration of $5.0 million associated with the transaction was included in "Accrued liabilities" in the Company's condensed consolidated balance sheets. 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 June 1, 2021 acquisition date.

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~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.

~~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 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.

Note 4 — Income Taxes

Effective Tax Rate — The quarter-to-date June 30, ~~2022~~2023 and June 30, ~~2021~~2022 effective tax rates were 25.9% and 24.7%, respectively. The year-to-date June 30, 2023 and June 30, 2022 effective tax rates were 24.7% and ~~25.3%, respectively. The year-to-date June 30, 2022 and June 30, 2021 effective tax rates were~~ 24.8% ~~and 25.5%~~, 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~~During the quarter, the IRS concluded its audit of one of the Company's subsidiaries' previously filed amended federal income tax return. As a ~~decrease of up to $0.3 million in~~result, the Company no longer has unrecognized tax ~~benefits relating to federal deductions may be necessary within the next twelve months.~~benefits.

Interest and Penalties — The Company had no accrued interest and penalties related to unrecognized tax benefits as of June 30, 2023. Accrued interest and penalties related to unrecognized tax benefits were approximately $~~0.1~~0.2 millionas of ~~June 30, 2022~~ ~~and~~ December 31, ~~2021.~~2022.

Tax Examinations — Certain of the Company's subsidiaries are currently under examination by ~~Federal and~~ various state jurisdictions for tax years ranging from ~~2014~~2019 to ~~2019~~2021. 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.

Note 5 — Accounts Receivable Securitization

On October 3, 2022, the Company entered into the 2022 RSA, which further amended the 2021 RSA. The 2022 RSA is a secured borrowing that is collateralized by the Company's eligible receivables, for which the Company is the servicing agent. The Company's receivable originator subsidiaries sell, on a revolving basis, undivided interests in all of their eligible accounts receivable to Swift Receivables Company II, LLC ("SRCII") who in turn sells a variable percentage ownership in those receivables to the various purchasers. The Company's eligible receivables are included in "Trade receivables, net of allowance for doubtful accounts" in the consolidated balance sheets. As of June 30, ~~2022,~~2023, 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~~2022 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 June 30, ~~2022.~~2023. 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.

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The following table summarizes the key terms of the ~~2021~~2022 RSA (dollars in thousands):


			2022 RSA

			(Dollars in thousands)
Effective date			~~April 23, 2021~~October 3, 2022
Final maturity date			~~April 23, 2024~~October 1, 2025
Borrowing capacity			$~~400,000~~475,000
Accordion option 1			$100,000
Unused commitment fee rate 2			20 to 40 basis points
Program fees on outstanding balances 3			one month ~~LIBOR~~SOFR + credit adjustment spread 10 basis points + 82.5 basis points

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

2The ~~2021~~2022 RSA commitment ~~fees rate~~fee rates are based on the percentage of the maximum borrowing capacity utilized.

3As identified within the ~~2021~~2022 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for ~~LIBOR.~~SOFR.

Availability under the ~~2021~~2022 RSA is calculated as follows:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(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	$	381,000	$	456,400
Less: outstanding borrowings 1	Less: outstanding borrowings 1	(279,000)		(279,000)		Less: outstanding borrowings 1	(339,000)		(419,000)
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	$	42,000	$	37,400

1Outstanding borrowings are included in "Accounts receivable securitization" in the condensed consolidated balance sheets and are offset by deferred loan costs of $0.4 million as of June 30, ~~2022~~2023 and ~~$0.5 million as of~~ December 31, ~~2021.~~2022, respectively. Interest accrued on the aggregate principal balance at a rate of ~~1.9%~~6.1% and ~~0.9%~~5.1% as of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, respectively.

Refer to Note 12 for information regarding the fair value of the ~~2021~~2022 RSA.

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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:


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(In thousands)					(In thousands)
2021 Term Loan A-1, due December 3, 2022, net 1 2		$	169,853	$	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	199,681		199,607		2021 Term Loan A-2, due September 3, 2024, net 1 2	199,828		199,755
2021 Term Loan A-3, due September 3, 2026, net 1 2	2021 Term Loan A-3, due September 3, 2026, net 1 2	798,528		798,352		2021 Term Loan A-3, due September 3, 2026, net 1 2	798,882		798,705

2023 Term Loan, due September 3, 2026, net 1 3						2023 Term Loan, due September 3, 2026, net 1 3	249,002		—
Prudential Notes, net 1	Prudential Notes, net 1	39,113		47,265		Prudential Notes, net 1	28,206		35,960
Other	Other	4,062		5,069		Other	2,009		3,042
Total long-term debt, including current portion	Total long-term debt, including current portion	1,211,237		1,249,969		Total long-term debt, including current portion	1,277,927		1,037,462
Less: current portion of long-term debt	Less: current portion of long-term debt	(182,620)		(212,417)		Less: current portion of long-term debt	(12,723)		(12,794)
Long-term debt, less current portion	Long-term debt, less current portion	$	1,028,617	$	1,037,552	Long-term debt, less current portion	$	1,265,204	$	1,024,668


		June 30, 2022		December 31, 2021			June 30, 2023		December 31, 2022
		(In thousands)					(In thousands)
Total long-term debt, including current portion	Total long-term debt, including current portion	$	1,211,237	$	1,249,969	Total long-term debt, including current portion	$	1,277,927	$	1,037,462
2021 Revolver, due September 3, 2026 1 3		129,000		260,000

2021 Revolver, due September 3, 2026 1 4						2021 Revolver, due September 3, 2026 1 4	210,000		43,000
Long-term debt, including revolving line of credit	Long-term debt, including revolving line of credit	$	1,340,237	$	1,509,969	Long-term debt, including revolving line of credit	$	1,487,927	$	1,080,462

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

2As of June 30, ~~2022,~~2023, the carrying amounts of the ~~2021 Term Loan A-1,~~ 2021 Term Loan A-2 and 2021 Term Loan A-3 werenet of ~~$0.1 million, $0.3~~$0.2 million and ~~$1.5~~$1.1 million in deferred loan costs, respectively. As of December 31, ~~2021,~~2022, the carrying amounts of the ~~2021 Term Loan A-1,~~ 2021 Term Loan A-2 and 2021 Term Loan A-3 werenet of ~~$0.3 million, $0.4~~$0.2 million and ~~$1.6~~$1.3 million in deferred loan costs, respectively.

3As of June 30, 2023, the carrying amount of the 2023 Term Loan was net of $1.0 million in deferred loan costs.

4The Company also had outstanding letters of credit of ~~$99.0~~$11.3 million and ~~$64.0~~$15.8 million under the 2021 Revolver, primarily related to workers' compensation and self-insurance liabilities at June 30, ~~2022~~2023 and December 31, 2022, respectively. The Company also had outstanding letters of credit of $245.8 million and $173.1 million under a separate bilateral agreement which do not impact the availability of the 2021 Revolver as of June 30, 2023 and December 31, 2022, respectively.

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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.~~Company's prior debt agreements. 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-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

September 3, 2024

September 3, 2026

Interest rate margin reference rate

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

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 June 30, ~~2022,~~2023, interest accrued at ~~1.83%~~5.98% on the 2021 Term ~~Loans~~Loan A-2, 6.11% on the 2021 Term Loan A-3, and ~~1.95%~~6.17% 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 June 30, ~~2022,~~2023, 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 June 30, ~~2022,~~2023, 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 material domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

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2023 Term Loan —On June 22, 2023, the Company entered into the $250.0 million 2023 Term Loan (an unsecured credit facility) with a group of banks. The 2023 Term Loan matures on September 3, 2026. There are no scheduled principal payments due until maturity. The 2023 Term Loan contains terms similar to the 2021 Debt Agreement. The proceeds received from the 2023 Term Loan were used to pay fees, commissions and expenses in connection with the Company's acquisition of U.S. Xpress. The interest rate applicable to the 2023 Term Loan is subject to a leverage-based grid and as of June 30, 2023 is equal to SOFR plus the 0.1% SOFR adjustment plus 1.375%. As of June 30, 2023, interest accrued at 6.58% on the 2023 Term Loan.

ACT's Prudential Notes — The 2021 Prudential Notes allow ACT to borrow up to $125.0 million, less amounts 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 June 30, ~~2022~~,2023, ACT had ~~$87.9~~$98.2 million available for issuance under the agreement.

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

Note 7 — Defined Benefit Pension Plan

Net periodic pension income and benefits paid during the quarters ended June 30, 2023 and 2022 were immaterial.

Assumptions

A weighted-average discount rate of 4.86% was used to determine benefit obligations as of June 30, 2023.

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


	Quarter-to-Date June 30,				Year-to-Date June 30,
	2023		2022		2023		2022
Discount rate	4.65	%	3.38	%	4.76	%	2.89	%
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 — Purchase Commitments

As of June 30, 2023, the Company had outstanding commitments to purchase revenue equipment of $533.2 million in the remainder of 2023 ($351.4 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 June 30, 2023, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $47.4 million in the remainder of 2023, $15.9 million from 2024 through 2025, $1.0 million from 2026 through 2027, and none thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

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Note ~~7 — Defined Benefit Pension Plan~~

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

~~Assumptions~~

~~A weighted-average discount rate of 4.33% was used to determine benefit obligations as of June 30, 2022.~~

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

Quarter-to-Date June 30, Year-to-Date June 30,
2022 2022
Discount rate 3.38 % 2.89 %
Expected long-term rate of return on pension plan assets 6.00 % 6.00 %

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

~~Note 8 — Purchase Commitments~~

As of June 30, 2022, the Company had outstanding commitments to purchase revenue equipment of $554.6 million in the remainder of 2022 ($419.0 million of which were tractor commitments), $87.8 million in 2023 ($79.6 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 June 30, 2022, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $47.3 million in the remainder of 2022, $14.2 million from 2023 through 2024, $1.2 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

The Company is party to certain legal proceedings incidental to its business. The majority of these claims relate to bodily injury, property damage, cargo and workers' compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated.

Information is provided below regarding the nature, status, and contingent loss amounts, if any, associated with ~~the Company's~~ pending legal ~~matters.~~matters that may be material to the Company. 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. Cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies.

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 ~~$15.9~~$11.0 million, relating to the Company's outstanding legal proceedings as of June 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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2023.

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 June 30, ~~2022.~~2023. The Company paid this settlement on July 10, 2023.

~~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 June 30, 2022, the Company has 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. This was the only material change related to our self insurance policies during the first half of 2022.

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Note 10 — Share Repurchase Plans

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").

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.

The Company made no share repurchases during the quarter and year-to-date periods ended June 30, 2023.$0

The following table presents the Company's repurchases of its common stock during 2022 under the respective share repurchase plans, excluding advisory fees:


Share Repurchase Plan	Share Repurchase Plan		Quarter-to-Date June 30, 2022			Year-to-Date June 30, 2022			Share Repurchase Plan		Quarter-to-Date June 30, 2022			Year-to-Date June 30, 2022
Board Approval Date	Board Approval Date	Authorized Amount	Shares	Amount		Shares	Amount		Board Approval Date	Authorized Amount	Shares	Amount		Shares	Amount
			(shares and dollars in thousands)								(shares and dollars in thousands)
November 24, 2020 1		$250,000	98	$	5,101	2,821	$	149,982
November 24, 2020									November 24, 2020	$250,000	98	$	5,101	2,821	$	149,982
April 19, 2022 1	April 19, 2022 1	$350,000	3,180	$	149,959	3,180	$	149,959	April 19, 2022 1	$350,000	3,180	$	149,959	3,180	$	149,959
			3,278	$	155,060	6,001	$	299,941			3,278	$	155,060	6,001	$	299,941
			Quarter-to-Date June 30, 2021			Year-to-Date June 30, 2021

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

1 $200.0 million remained available under the 2022 Knight-Swift Repurchase Plan as of June 30, ~~2022. $192.8 million remained available under the 2020 Knight-Swift Share Repurchase Plan as of~~2023 and December 31, ~~2021~~2022.

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-to-Date June 30,		Year-to-Date June 30,			Quarter-to-Date June 30,		Year-to-Date June 30,
		2022	2021	2022	2021		2023	2022	2023	2022
		(In thousands)					(In thousands)
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	162,365	165,577	163,863	165,751	Basic weighted average common shares outstanding	161,116	162,365	161,018	163,863
Dilutive effect of equity awards	Dilutive effect of equity awards	801	1,008	938	999	Dilutive effect of equity awards	824	801	899	938
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	163,166	166,585	164,801	166,750	Diluted weighted average common shares outstanding	161,940	163,166	161,917	164,801
Anti-dilutive shares excluded from diluted earnings per share 1		575	31	341	47
Anti-dilutive shares excluded from earnings per diluted share 1						Anti-dilutive shares excluded from earnings per diluted share 1	110	575	61	341

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:


			June 30, 2022				December 31, 2021						June 30, 2023				December 31, 2022
		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	$	96,098	$	96,098	$	75,769	$	75,769	Equity method investments	Other long-term assets	$	90,095	$	90,095	$	103,517	$	103,517

Investments in equity securities	Investments in equity securities	Other long-term assets	15,859		15,859		74,201		74,201		Investments in equity securities	Other long-term assets	3,054		3,054		1,668		1,668
Convertible note	Convertible note	Other current assets	10,736		10,736		10,141		10,141		Convertible note	Other current assets	11,936		11,936		11,341		11,341

Financial Liabilities:	Financial Liabilities:										Financial Liabilities:

2021 Term Loan A-1, due December 2022 1		Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	$	169,853	$	170,000	$	199,676	$	200,000
2021 Term Loan A-2, due September, 2024 1		Long-term debt – less current portion	199,681		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	199,828		200,000		199,755		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	798,528		800,000		798,352		800,000		2021 Term Loan A-3, due September 2026 1	Long-term debt – less current portion	798,882		800,000		798,705		800,000
2023 Term Loan, due September 2026 2											2023 Term Loan, due September 2026 2	Long-term debt – less current portion	249,002		250,000		—		—
2021 Revolver, due September 2026	2021 Revolver, due September 2026	Revolving line of credit	129,000		129,000		260,000		260,000		2021 Revolver, due September 2026	Revolving line of credit	210,000		210,000		43,000		43,000
2021 Prudential Notes 2		Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	39,113		39,184		47,265		47,354

2021 RSA, due April 2024 3		Accounts receivable securitization	278,594		279,000		278,483		279,000
2021 Prudential Notes 3											2021 Prudential Notes 3	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	28,206		28,242		35,960		36,014
2022 RSA, due October 2025 4											2022 RSA, due October 2025 4	Accounts receivable securitization	338,641		339,000		418,561		419,000
Contingent consideration	Contingent consideration	Accrued liabilities, Other long-term liabilities	14,817		14,817		13,100		13,100		Contingent consideration	Accrued liabilities, Other long-term liabilities	1,717		1,717		4,217		4,217

1As of June 30, ~~2022,~~2023, the carrying amounts of the ~~2021 Term Loan A-1,~~ 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of ~~$0.1 million, $0.3~~$0.2 million and ~~$1.5~~$1.1 million in deferred loan costs, respectively. As of December 31, ~~2021,~~2022, the carrying amounts of the ~~2021 Term Loan A-1,~~ 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of ~~$0.3 million, $0.4~~$0.2 million and ~~$1.6~~$1.3 million in deferred loan costs, respectively.

2As of June 30, 2023, the carrying amount of the 2023 Term Loan was net of $1.0 million in deferred loan costs.

3As of June 30, 2023, the carrying amount of the 2021 Prudential Notes was net of approximately $36,000 in deferred loan costs and included $1.4 millionin fair value adjustments. As of December 31, 2022, the carrying amount of the 2021 Prudential Notes was net of~~$0.1 million in deferred loan costs and included~~ ~~$2.0 million in fair value adjustments. As of December 31, 2021, the carrying amount of the 2021 Prudential Notes was~~ ~~net of~~ ~~$0.1~~ $0.1 million in deferred loan costs and included $~~2.4~~1.7 million in fair value adjustments.

34The carrying amount of the ~~2021~~2022 RSA was net of $0.4 million ~~and~~ ~~$0.5 million~~ in deferred loan costs as of June 30, ~~2022~~2023 and December 31, ~~2021, respectively~~2022..

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

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 June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


				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 June 30, 2022
As of June 30, 2023												As of June 30, 2023
Convertible notes 1	Convertible notes 1	$	10,736	$	—	$	—	$	10,736	$	736	Convertible notes 1	$	11,936	$	—	$	—	$	11,936	$	1,936
Investments in equity securities 2	Investments in equity securities 2	15,859		15,859		—		—		(42,888)		Investments in equity securities 2	3,054		3,054		—		—		(49,532)

As of December 31, 2021
As of December 31, 2022												As of December 31, 2022
Convertible notes 1	Convertible notes 1	$	10,141	$	—	$	—	$	10,141	$	141	Convertible notes 1	$	11,341	$	—	$	—	$	11,341	$	1,341
Investments in equity securities 2	Investments in equity securities 2	74,201		74,201		—		—		14,456		Investments in equity securities 2	1,668		1,668		—		—		(50,918)

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

1Convertible notes — The condensed consolidated statements of comprehensive income include the fair value activities from the Company's convertible notes within "Other income (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 Company recognized unrealized gains of $0.3 million during the ~~quarter~~quarters ended June 30, 2022, the Company recognized $0.3 million of unrealized gains associated with a $10.0 million face value convertible note entered into in November of 2021. During the quarter ended June 30, 2021, the Company recognized an unrealized gain on its convertible note with Embark of $12.6 million. The Embark convertible note balance is excluded from the June 30, 20222023 and ~~December 31, 2021 convertible notes balances in the table above, as it was converted to an equity security in November of 2021.~~2022.

•Year-to-date Gain (Loss) Activities: ~~During~~The Company recognized unrealized gains of $0.6 million during the year-to-date ~~period~~periods ended June 30, 2022, the Company recognized $0.6 million of unrealized gains associated with the $10.0 million face value convertible note, discussed above. During the year-to-date period ended June 30, 2021, the Company recognized an unrealized gain on its convertible note with Embark of $12.6 million.2023 and 2022.

2Investments in equity securities — The condensed consolidated statements of comprehensive income include the fair value activities from the Company's investments in equity securities within "Other income (expenses) ~~income,~~, net". 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 June 30, 2023, the Company recognized unrealized gains of $0.1 million from the Company's various investments in equity securities. During the quarter ended June 30, 2022, the Company recognized a loss of $30.7 million, ~~consisting~~which consisted of $35.1 million in unrealized losses, primarily from mark-to-market adjustments of the Company's equity investment in Embark. This was partially offset by $4.4 million in realized gains from the Company's other investments in equity securities. During the quarter ended June 30, 2021, the Company recognized a loss of $1.5 million from its other investments in equity securities, which consisted of $2.3 million in unrealized losses, partially offset by $0.8 million in realized gains.

•Year-to-date Gain (Loss) Activities: During the year-to-date period ended June 30, 2023, the Company recognized unrealized gains of $1.4 million from the Company's various investments in equity securities. During the year-to-date period ended June 30, 2022, the Company recognized a loss of $51.5 million, which consisted of $55.9 million, ~~in unrealized losses,~~ primarily from mark-to-market adjustments of the Company's investment in Embark. This was partially offset by $4.4 million in realized gains from the Company's other investments in equity securities. During the year-to-date period ended June 30, 2021, the Company recognized an $8.9 million gain from its investments in equity securities, which consisted of $4.6 million in unrealized gains and $4.3 million in realized gains from its other equity investments.

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~~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 June 30, ~~2022~~2023 and December 31, ~~2021:~~2022:


				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		Total Gain (Loss)			Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Gain (Loss)
		(In thousands)											(In thousands)
As of June 30, 2022
As of June 30, 2023												As of June 30, 2023
Contingent consideration 1												Contingent consideration 1	$	1,717	$	—	$	—	$	1,717	$	2,500
As of December 31, 2022												As of December 31, 2022
Contingent consideration 1	Contingent consideration 1	$	14,817	$	—	$	—	$	14,817	$	—	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 recognized a gain of $2.5 million during the quarter and year-to-date periods ended June 30, 2023 and did not recognize any gains (losses) ~~during~~in the quarter orand year-to-date periods ended June 30, 2022 ~~and 2021~~ related to the revaluation of these liabilities. Refer to Note 3 for information regarding material components of these liabilities.

Nonrecurring Fair Value Measurements (Assets) — As of June 30, 2023, the Company had no major categories of assets estimated at fair value that were measured on a nonrecurring basis.

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 ~~June 30, 2022 and~~ December 31, ~~2021:~~2022:


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Loss
	(In thousands)



As of ~~June 30,~~December 31, 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~~

Table of ~~certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment).~~ContentsGlossary of Terms

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Nonrecurring Fair Value Measurements (Liabilities) — As of June 30, ~~2022~~2023 and December 31, ~~2021,~~2022, 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:

•$~~23.0~~14.3 million and ~~$15.1~~$23.0 million for the ~~quarter-to-date periods~~quarters ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

•$~~57.8~~35.2 million and ~~$25.6~~$57.8 million for the year-to-date periods ended June 30, 2023 and 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:
Estimated
Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs
(In thousands)
As of June 30, 2022
US equity funds $ 12,352 $ 12,352 $ — $ —
International equity funds 5,200 5,200 — —
Fixed income funds 37,404 37,404 — —
Cash and cash equivalents 936 936 — —
Total pension plan assets $ 55,892 $ 55,892 $ — $ —
As of December 31, 2021
US equity funds $ 14,877 $ 14,877 $ — $ —
International equity funds 6,304 6,304 — —
Fixed income funds 47,873 47,873 — —
Cash and cash equivalents 1,413 1,413 — —
Total pension plan assets $ 70,467 $ 70,467 $ — $ —

~~Note 13 — Related Party Transactions~~

Quarter-to-Date June 30, Year-to-Date June 30,
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
(In thousands)
Facility and Equipment Leases:
Certain affiliates 1
$ — $ 108 $ — $ 88 $ — $ 186 $ — $ 145
Other Services:
Certain affiliates 1
$ 33 $ 9 $ 7 $ 9 $ 38 $ 18 $ 13 $ 18

June 30, 2022 December 31, 2021
Receivable Payable Receivable Payable
(In thousands)
Certain affiliates 1
$ 23 $ 61 $ 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.


			Fair Value Measurements at Reporting Date Using:
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
As of June 30, 2023
US equity funds	$	7,469	$	7,469	$	—	$	—
International equity funds	3,680		3,680		—		—
Fixed income funds	42,824		42,824		—		—
Cash and cash equivalents	576		576		—		—
Total pension plan assets	$	54,549	$	54,549	$	—	$	—

As of December 31, 2022
US equity funds	$	10,901	$	10,901	$	—	$	—
International equity funds	4,828		4,828		—		—
Fixed income funds	34,728		34,728		—		—
Cash and cash equivalents	2,078		2,078		—		—
Total pension plan assets	$	52,535	$	52,535	$	—	$	—

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Note 13 — Related Party Transactions


	Quarter-to-Date June 30,								Year-to-Date June 30,
	2023				2022				2023				2022
	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)







Facility and Equipment Leases	$	—	$	21	$	—	$	108	$	—	$	46	$	—	$	186







Other Services	$	—	$	259	$	33	$	9	$	27	$	393	$	38	$	18


	June 30, 2023				December 31, 2022
	Receivable		Payable		Receivable		Payable
	(In thousands)



Certain affiliates 1	$	—	$	53	$	24	$	39

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

Note 14 — Financial Information by Segment and Geography

Segment Information


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter-to-Date June 30,				Year-to-Date June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue:	Revenue:	(In thousands)								Revenue:	(In thousands)
Truckload	Truckload	$	1,188,809	$	985,858	$	2,269,340	$	1,948,805	Truckload	$	953,659	$	1,188,809	$	1,965,904	$	2,269,340
LTL	LTL	283,847		—		538,972		—		LTL	267,105		283,847		522,409		538,972
Logistics	Logistics	248,662		166,737		530,701		285,624		Logistics	119,943		248,662		258,226		530,701
Intermodal	Intermodal	132,871		115,378		242,093		222,444		Intermodal	104,327		132,871		214,899		242,093
Subtotal	Subtotal	$	1,854,189	$	1,267,973	$	3,581,106	$	2,456,873	Subtotal	$	1,445,034	$	1,854,189	$	2,961,438	$	3,581,106
Non-reportable segments	Non-reportable segments	128,112		66,795		245,751		117,464		Non-reportable segments	130,110		128,112		272,096		245,751
Intersegment eliminations	Intersegment eliminations	(21,170)		(19,067)		(38,737)		(35,622)		Intersegment eliminations	(22,165)		(21,170)		(43,623)		(38,737)
Total revenue	Total revenue	$	1,961,131	$	1,315,701	$	3,788,120	$	2,538,715	Total revenue	$	1,552,979	$	1,961,131	$	3,189,911	$	3,788,120

Quarter-to-Date June 30, Year-to-Date June 30,
2022 2021 2022 2021
Operating income (loss): (In thousands)
Truckload $ 206,296 $ 168,457 $ 411,413 $ 326,940
LTL 43,767 — 70,144 —
Logistics 43,749 14,356 83,350 21,933
Intermodal 14,172 5,812 29,342 9,269
Subtotal $ 307,984 $ 188,625 $ 594,249 $ 358,142
Non-reportable segments 17,794 2,490 29,615 (4,768)
Operating income $ 325,778 $ 191,115 $ 623,864 $ 353,374
Quarter-to-Date June 30, Year-to-Date June 30,
2022 2021 2022 2021
Depreciation and amortization of property and equipment: (In thousands)
Truckload $ 112,719 $ 105,206 $ 223,068 $ 207,091
LTL 15,321 — 30,581 —
Logistics 546 289 1,142 497
Intermodal 4,236 3,940 8,100 7,758
Subtotal $ 132,822 $ 109,435 $ 262,891 $ 215,346
Non-reportable segments 14,660 14,171 29,635 28,175
Depreciation and amortization of property and equipment $ 147,482 $ 123,606 $ 292,526 $ 243,521


	Quarter-to-Date June 30,				Year-to-Date June 30,
	2023		2022		2023		2022
Operating income (loss):	(In thousands)
Truckload	$	67,911	$	206,296	$	183,810	$	411,413
LTL	30,238		43,767		56,820		70,144
Logistics	9,566		43,749		22,386		83,350
Intermodal	(6,632)		14,172		(1,530)		29,342
Subtotal	$	101,083	$	307,984	$	261,486	$	594,249
Non-reportable segments	(7,053)		17,794		(22,669)		29,615
Operating income	$	94,030	$	325,778	$	238,817	$	623,864

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED


	Quarter-to-Date June 30,				Year-to-Date June 30,
	2023		2022		2023		2022
Depreciation and amortization of property and equipment:	(In thousands)
Truckload	$	116,430	$	112,719	$	233,232	$	223,068
LTL	16,820		15,321		33,008		30,581
Logistics	987		546		2,030		1,142
Intermodal	4,777		4,236		9,209		8,100
Subtotal	$	139,014	$	132,822	$	277,479	$	262,891
Non-reportable segments	17,367		14,660		34,868		29,635
Depreciation and amortization of property and equipment	$	156,381	$	147,482	$	312,347	$	292,526

Geographical Information

In the aggregate, total revenue from the Company's international operations was less than 5.0% of consolidated total revenue for the quarter and year-to-date periods ended June 30, ~~2022~~2023 and ~~2021.~~2022. Additionally, long-lived assets on the Company's international subsidiary balance sheets were less than 5.0% of consolidated total assets as of June 30, ~~2022~~2023 and December 31, ~~2021.~~2022.

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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:

•our ability to gain market share and adapt to market conditions, the ability of our infrastructure to support future growth, and the ability, desire, and effects of expanding our service offerings (including expansion of our LTL network), whether we grow organically or through potential acquisitions,

•~~the future impact of acquisitions, including achievement of anticipated synergies and the anticipated risks regarding our 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,~~future capital expenditures, equipment prices (including used equipment) and ~~effects of expanding our logistics, brokerage, LTL, and intermodal operations, whether organically or inorganically,~~

•~~future equipment prices,~~availability, our equipment purchasing or leasing plans (including containers in our Intermodal segment), and mix of our owned versus leased revenue equipment, 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, including exposure through our Iron Insurance line of business,

•the expected freight environment, including freight demand, capacity, seasonality, 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, including our expected need or desire to incur indebtedness and our ability to comply with debt covenants,

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

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

•future rates, operating profitability and margin, asset utilization, and return on capital,

•future third-party service provider relationships and availability, including pricing terms,

•future contracted pay rates with independent contractors, ability to lease equipment to independent contractors, and compensation arrangements with driving associates,

•future capital allocation, capital structure, capital requirements, and growth strategies and opportunities,

•future share repurchases and dividends,

•future tax rates,

•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,

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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,~~

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

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

•future purchased transportation expense,

•the U.S. Xpress transaction, including integration efforts and any future effects of the acquisition, 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 II, Item 1A "Risk Factors" of our Quarterly Report for the quarter period ended March 31, 2023, Part I, Item 1A "Risk Factors" in our ~~2021~~2022 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~~2022 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 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, and Intermodal. Additionally, we have various non-reportable segments.

Key Financial Highlights — First Half of ~~2022~~2023

During the first half of 2022, each reportable segment achieved meaningful revenue growth while improving margins, leading to consolidated revenue growth of 42.5%, excluding truckload and LTL fuel surcharge. Consolidated operating income ~~improved 76.5%~~decreased 61.7% to ~~$623.9~~$238.8 million in the first half of ~~2022,~~2023, as compared to the same period last year. Net income attributable to Knight-Swift ~~increased by 51.4%~~decreased 60.8% to ~~$427.8~~$167.6 million.

•Truckload — ~~81.9%~~90.7% operating ratio during the first half of ~~2022.~~2023. The Adjusted Operating Ratio1 ~~improved by 270 basis points to 78.6% for the first half of 2022, supported by a 9.6% increase~~was 89.1%, with an 11.8% year-over-year decrease in revenue, excluding fuel surcharge and intersegment transactions, ~~compared to the same period last year.~~driven by a 3.0% decrease in miles per tractor and an 11.8% decrease in revenue per tractor.

•LTL — ~~87.0%~~89.1% operating ratio during the first half of ~~2022. Yield remains strong and we continue to capture both revenue and cost synergies, leading to an 82.2%~~2023. The Adjusted Operating Ratio1. was 85.4%, a 320 basis point increase year-over-year, as a result of softer volumes, higher wages, and the decline in fuel surcharge revenue year-over-year.

•Logistics — ~~84.3%~~91.3% operating ratio during the first half of ~~2022.~~2023. The Adjusted Operating Ratio1 was ~~84.1%~~90.9%, ~~with operating income improvement of 280.0%. Load~~while load count ~~grew by 60.9%, leading to an 89.8% increase in revenue, excluding intersegment transactions.~~decreased 29.2%.

•Intermodal — ~~87.9%~~100.7% operating ratio during the first half of ~~2022,~~2023, with a ~~790 basis point improvement compared to this time last year, leading to a 216.6%~~16.3% decrease in average revenue per load, partially offset by an increase in ~~operating income with revenue growth~~load count of ~~8.9%, excluding intersegment transactions.~~6.1% year-over-year.

•Non-reportable Segments — Revenue ~~growth of 109.2% was supported by the activities within our~~grew 10.7% year-over-year, though operating ~~segments of insurance, equipment maintenance, equipment leasing, and warehousing, leading~~income fell to a ~~$34.4~~loss of $22.7 million ~~improvement~~driven by a $37.8 million operating loss (or $0.18 per diluted share) in ~~operating income~~our third-party insurance business primarily as a result of increased frequency and unfavorable claim development during the first half of ~~2022, compared to~~ the ~~same period last year.~~year and premium collection issues associated with small carriers.

•~~Embark~~Acquisition of U.S. Xpress —~~The value of our 2021 initial investment in Embark declined, resulting in an unrealized loss that negatively impacted earnings per diluted share and Adjusted EPS~~1 ~~by $0.23 during~~Having closed on July 1, 2023, our synergy teams of leaders from Knight, Swift, and U.S. Xpress are now fully engaged in sharing information, best practices, and further defining opportunities for improvement, and action plans to execute on those opportunities are well under way. We expect to apply a similar approach to integration as we used successfully in the ~~first half~~Knight-Swift merger, using cross-functional teams composed of ~~2022.~~leaders from Knight, Swift, and U.S. Xpress, and we remain encouraged given the positive outcome of the Knight-Swift merger and certain similarities in this transaction.

•Liquidity and Capital — During the ~~first half of 2022,~~year-to-date period ended June 30, 2023, we generated ~~$720.0~~$722.2 million in operating cash ~~flows. Our~~flows and Free Cash Flow1~~was $528.7~~ of $303.1 million. We paid down ~~$38.8 million in long-term debt, $27.6~~$29.3 million in finance lease liabilities, ~~and $19.8~~$22.2 million in ~~cash~~operating lease liabilities, and $123.0 million on our ~~operating lease liabilities. We also repurchased $299.9~~revolving credit facilities prior to obtaining financing of $250.0 million ~~worth~~under the 2023 Term Loan and $210.0 million from our revolving credit facilities to fund the $444.7 million set aside for escrow associated with the closing of ~~our shares and issued $39.7 million in dividends to our stockholders. Gain on sale~~the U.S. Xpress acquisition. As of ~~revenue equipment increased to $57.8 million in the first half~~June 30, 2023, we had a balance of ~~2022, compared to $25.6 million in the first half of 2021.~~

~~We ended the first half of 2022 with $198.0~~$229.0 million in unrestricted cash and cash equivalents, ~~$129.0 million outstanding on the 2021 Revolver, $1.2~~$1.3 billion face value outstanding on the 2021 Term Loans and ~~$6.6~~2023 Term Loan, and $7.1 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.

________

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

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Key Financial Data and Operating Metrics


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter-to-Date June 30,						Year-to-Date June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
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	$	1,961,131		$	1,315,701		$	3,788,120		$	2,538,715		Total revenue	$	1,552,979		$	1,961,131		$	3,189,911		$	3,788,120
Revenue, excluding truckload and LTL fuel surcharge	Revenue, excluding truckload and LTL fuel surcharge	$	1,694,531		$	1,212,872		$	3,342,409		$	2,345,977		Revenue, excluding truckload and LTL fuel surcharge	$	1,390,448		$	1,694,531		$	2,840,741		$	3,342,409
Net income attributable to Knight-Swift	Net income attributable to Knight-Swift	$	219,492		$	152,804		$	427,829		$	282,594		Net income attributable to Knight-Swift	$	63,326		$	219,492		$	167,610		$	427,829
Earnings per diluted share	Earnings per diluted share	$	1.35		$	0.92		$	2.60		$	1.69		Earnings per diluted share	$	0.39		$	1.35		$	1.04		$	2.60
Operating ratio	Operating ratio	83.4		%	85.5		%	83.5		%	86.1		%	Operating ratio	93.9		%	83.4		%	92.5		%	83.5		%

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	$	230,189		$	162,998		$	455,052		$	302,431		Adjusted Net Income Attributable to Knight-Swift 1	$	78,618		$	230,189		$	197,109		$	455,052
Adjusted EPS 1	Adjusted EPS 1	$	1.41		$	0.98		$	2.76		$	1.81		Adjusted EPS 1	$	0.49		$	1.41		$	1.22		$	2.76
Adjusted Operating Ratio 1	Adjusted Operating Ratio 1	79.9		%	83.1		%	80.3		%	83.8		%	Adjusted Operating Ratio 1	91.8		%	79.9		%	90.2		%	80.3		%

Revenue equipment statistics by segment:	Revenue equipment statistics by segment:													Revenue equipment statistics by segment:
Truckload	Truckload													Truckload
Average tractors 2	Average tractors 2	18,055			18,034			18,010			18,129			Average tractors 2	17,851			18,055			18,002			18,010
Average trailers 3	Average trailers 3	73,010			60,858			72,111			60,382			Average trailers 3	79,911			73,010			79,700			72,111
LTL	LTL													LTL
Average tractors 4	Average tractors 4	3,129			N/A			3,110			N/A			Average tractors 4	3,163			3,129			3,163			3,110
Average trailers 5	Average trailers 5	8,402			N/A			8,352			N/A			Average trailers 5	8,452			8,402			8,419			8,352
Intermodal	Intermodal													Intermodal
Average tractors	Average tractors	623			611			603			605			Average tractors	656			623			631			603
Average containers	Average containers	11,491			10,842			11,259			10,844			Average containers	12,842			11,491			12,835			11,259

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 ~~2.7~~2.6 years and ~~2.4~~2.7 years as of June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

3~~Second quarter 2022~~Our average trailers includes 8,377 and 6,014 trailers related to leasing activities recorded within our non-reportable ~~operating segments. Second quarter 2021 does not include 5,201 trailers related to leasing activities recorded within our non-reportable operating segments.~~ segments for the quarters ended June 30, 2023 and 2022, respectively. Our trailer fleet within the Truckload segment had a weighted average age of ~~8.6~~10.0 years and ~~8.3~~8.6 years as of June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

~~The year-to-date period ending June 30, 2022~~Our average trailers includes 8,683 and 6,783 trailers related to leasing activities recorded within our non-reportable ~~operating segments. The~~segments for the year-to-date period ~~ending~~ June 30, ~~2021 does not include 5,481 trailers related to leasing activities recorded within our non-reportable operating segments.~~2023 and 2022, respectively.

4Our LTL tractor fleet had a weighted average age of ~~4.6~~4.2 years and 4.6 years as of June 30, 2023 and 2022, ~~and~~respectively. Our LTL tractor fleet includes 604 and 700 tractors from ACT's and MME's dedicated and other businesses for the quarters ended June 30, 2023 and 2022, respectively. Our LTL tractor fleet includes 611 and 698 tractors from ACT's and MME's dedicated and other businesses for the ~~quarter and~~ year-to-date ~~periods ended~~ period June 30, 2023 and 2022., respectively.

5Our LTL trailer fleet had a weighted average age of ~~8.0~~8.4 years and 8.0 years as of June 30, 2023 and 2022, respectively. Our LTL trailer fleet includes 778 and i962 trailers from ACT's and MME's dedicated and other businesses for the quarters ended June 30, 2023~~ncludes 962~~ and 2022, respectively. Our LTL trailer fleet includes 778 and 935 trailers from ACT's and MME's dedicated and other businesses for the ~~quarter and~~ year-to-date ~~periods ended~~ period June 30, 2023 and 2022.

, respectively.

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Market Trends and Outlook

The national unemployment rate ~~remained at~~was 3.6%1 ~~from March 31, 2022 to June 30, 2022, as compared to 5.9%~~1 as of June 30, ~~2021.~~2023, as compared to 3.6%1 as of June 30, 2022. The US gross domestic product, which is the broadest measure of goods and services produced across the economy, ~~decreased~~increased by ~~0.9%~~2.4%2 on a year-over-year basis, per preliminary third-party forecasts. The ~~decrease,~~increase, compared to ~~2021,~~the 2022 decrease of 0.9%, reflected ~~decreases~~increases in ~~private inventory investment, residential~~consumer spending, nonresidential fixed investment, ~~federal government spending,~~ state and local government spending, private inventory investment, and ~~nonresidential fixed investment~~federal government spending that were partly offset by ~~increases~~decreases in exports and ~~personal consumption expenditures.~~residential fixed investment. Early estimates of the second quarter ~~2022~~2023 US employment cost index indicate a year-over-year increase of ~~5.1%~~4.5%1 and a sequential increase of ~~1.3%~~1.0%1.

The freight market outlook for the ~~second half~~remainder of ~~2022~~2023 includes the following:

•~~Overall consumer~~Continued softness in freight demand ~~moderates~~through the third quarter with modest seasonal uplift in the fourth quarter;

•~~Continued decline~~Non-contract rates improve modestly after bottoming in ~~non-contract opportunities~~the second quarter but remain below contract rates through the third quarter while contract rate declines slow sequentially;

•~~Less visibility on peak season surge~~Capacity continues to exit at an accelerating rate;

•~~Strong~~Expect trailer pool service, which facilitates preloaded trailer pick-ups and/or drop trailer deliveries, to continue to be a differentiator when demand ~~for trailer pools continues~~

•~~Depressed spot rates combined with higher fuel, maintenance, and equipment costs disincentivize new entrants and pressure highly leveraged carriers~~recovers;

•LTL demand under modest pressure but remains ~~strong with increases in revenue per hundredweight remaining in the double digits year-over-year~~more stable than truckload;

•~~Sourcing and retaining drivers improves but remains challenging~~LTL year-over-year improvement in revenue, excluding fuel surcharge per hundredweight;

•~~Inflationary pressure~~Cost per mile stabilizes on ~~equipment, maintenance, labor, and other cost items continues~~a year-over-year basis in the back half of the year;

•~~Used equipment market normalizes~~Equipment availability continues to improve;

•Demand for used tractors weakens as small carriers struggle; and

•Labor alternatives in the ~~year progresses~~general economy remain attractive, providing a headwind to hiring and utilization until freight conditions improve.

Based on the above market factors, our Company outlook for the remainder of 2023 includes the following:

Legacy Knight-Swift business

•Truckload rates continue to be pressured, with a year-over-year decrease in overall revenue per mile of high single to low double digits for the full year;

•Truckload tractor count down modestly with miles per tractor improving on a year-over-year basis in the second half of ~~2022 includes~~ the ~~following:~~

•~~Rates inflect negatively year-over-year late in the third quarter and into the fourth quarter as the moderating spot market yields less non-contract opportunities~~year;

•~~Stable truck count~~LTL revenue, excluding fuel surcharge increases modestly year-over-year with ~~a modest sequential improvement in miles per tractor~~relatively stable margin profile and typical seasonality;

•~~Year-over-year increases in LTL revenue with improved margins~~

•~~Increased~~ Logistics ~~load volumes offset by a reduced~~volume and revenue per load remains under pressure into the third quarter before improving sequentially in the fourth quarter, with an operating ratio inof approximately 90% for the ~~high 80s~~year;

•Intermodal ~~margins to remain in~~operating ratio roughly breakeven for the ~~double digits~~full year with volumes ~~improving year-over-year~~up year over year; and

•~~Continued~~Non-reportable segments to have modest revenue growth ~~in revenue~~for the year and operating income ~~within~~in the ~~non-reportable segments~~second half roughly in line on a year-over-year basis as insurance losses are expected to moderate.

•~~Inflationary pressure in most cost areas including maintenance, equipment,~~Combined Knight-Swift and ~~non-driving labor~~U.S. Xpress

•Equipment gains to be ~~approximately $20 – $25~~in the range of $10 million ~~in total for the rest of the year~~to $15 million quarterly;

•~~Increased~~Expect approximately $20 million increase in interest ~~rates expected to negatively impact earnings~~expense in the ~~back~~second half of 2023 as compared to the ~~year~~first half, reflecting approximately $800 million additional debt from U.S. Xpress acquisition and assuming the Federal Reserve rate hiking cycle is nearly complete;

•Net cash capital expenditures ~~expected range of $550 – $600 million~~ for the full year ~~2022, excluding potential acquisitions~~2023 expected range of $700 million – $750 million, which has been updated from $640 million to $690 million to include anticipated expenditures for U.S. Xpress; and

•~~Approximate~~Expected tax rate of 25% to 26% for the full year ~~2022~~2023.

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

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 working together to further build out a super-regional network that we expect will provide additional yield and revenue opportunities. As of the fourth quarter of 2022, ACT and MME are on the same platform. We experienced some challenges in the integration, but believe the material challenges were addressed during the first quarter of 2023. 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.~~offerings even as we work to improve the underwriting profitability of our insurance program as well as reduce our exposure to small carrier risk in the current market.

We anticipate that rent expense as a percentage of revenue, excluding truckload and LTL fuel surcharge, will increase over the remainder of 2023 as we incorporate equipment from U.S. Xpress's lease portfolio into our fleet. 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.~~2023. 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.~~2023. 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. In periods of declining prices the opposite is true. Overall, we remain committed to long-term profitability as we continue to leverage opportunities across the Knight-Swift brands, and efficiently deploy our assets, while maintaining a relentless focus on cost control. This includes seeking acquisition opportunities to improve earnings, gain customers, and reach more professional drivers, as illustrated by the acquisition of U.S. Xpress and our intention to expand the geographic footprint of our LTL network.

________

1Source: bls.gov

2Source: bea.gov

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


Results of Operations — Summary

~~Note:~~ In accordance with the accounting treatment applicable to each of our 2021 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 second quarter and first half 2022 results and prior periods may not be meaningful.

Operating Results: Second Quarter ~~2022~~2023 Compared to Second Quarter ~~2021~~2022

The ~~$66.7~~$156.2 million ~~increase~~decrease in net income attributable to Knight-Swift to ~~$219.5~~$63.3 million during the second quarter of ~~2022~~2023 from ~~$152.8~~$219.5 million during the same period last year includes the following:

•Contributor — $~~37.8~~138.4 million ~~increase~~decrease in operating income within our Truckload ~~segment, driven by an 11.2% increase in~~segment. Quarter-over-quarter miles per tractor decreased 3.3% during the second quarter of 2023, and revenue, excluding fuel surcharge and intersegment ~~transactions.~~

•~~Contributor —~~ ~~$43.8 million of operating income from our LTL segment in the second quarter of 2022.~~

•~~Contributor —~~ ~~$29.4 million increase in operating income within our Logistics segment. Revenue, excluding intersegment~~ transactions ~~increased~~declined by ~~52.5%, as we grew load count by 48.2% while increasing revenue per load by 2.9%~~15.5%.

•Contributor — ~~$8.4~~$34.2 million ~~improvement~~decrease in operating income within our Logistics segment due to 35.0% decline in load count.

•Contributor — $20.8 million decrease in operating income within our Intermodal segment, ~~supported~~driven by a 24.5% decrease in revenue ~~growth of 15.2%.~~per load, partially offset by a 4.0% increase in load count.

•Contributor — ~~$15.3~~$24.8 million ~~increase~~decrease in operating income within the non-reportable segments, ~~supported~~primarily due to a $15.0 million operating loss from our Iron Insurance line of business.

•Contributor —$13.5 million decrease in operating income within our LTL segment partly due to a 3.9% decrease in shipments per day.

•Contributor —$15.0 million increase in consolidated interest expense primarily driven by ~~revenue growth of $61.3 million from the insurance, equipment maintenance, equipment leasing, and warehousing operating segments.~~higher interest rates.

•Offset — $~~42.4~~35.3 million ~~reduction~~increase in "Other income (expenses) ~~income,~~, net," primarily driven by an unrealized loss ~~from the mark-to-market adjustment of~~on our investment in Embark recorded in the second quarter of 2022 ~~compared to~~and a net gain inrecorded within our portfolio of investments during the ~~same~~second quarter of ~~last year.~~2023.

•Offset — $~~20.3~~50.1 million ~~increase~~decrease in consolidated income tax expense, primarily due to ~~an increase in income before income taxes.~~a reduction of pre-tax income. This resulted in an effective tax rate of 25.9% for the second quarter of 2023, and 24.7% for the second quarter of ~~2022 and 25.3% for the second quarter of 2021.~~2022.

Operating Results: First Half ~~of 2022~~2023 Compared to First Half ~~of 2021~~2022

The ~~$145.2~~$260.2 million ~~increase~~decrease in net income attributable to Knight-Swift to ~~$427.8~~$167.6 million during the first half of ~~2022~~2023 from ~~$282.6~~$427.8 million during the same period last year includes the following:

•Contributor — $~~84.5~~227.6 million ~~increase~~decrease in operating income within our Truckload ~~segment, driven by a~~ ~~9.6%~~ ~~increase in~~segment. Miles per tractor decreased 3.0% during the first half of 2023, and revenue, excluding fuel surcharge and intersegment ~~transactions.~~transactions declined by 11.8%.

•Contributor — ~~$70.1~~$61.0 million ofdecrease in operating income within our Logistics segment due to a 29.2% decline in load count.

•Contributor — $30.9 million decrease in operating income within our Intermodal segment, driven by a 16.3% decrease in revenue per load.

•Contributor — $52.3 million decrease in operating income within the non-reportable segments, primarily due to a $37.8 million operating loss from our ~~LTL segment in the first half~~Iron Insurance line of ~~2022.~~business.

•Contributor — $~~61.4~~31.4 million increase in ~~operating income within our Logistics segment. Revenue, excluding intersegment transactions, increased~~consolidated interest expense primarily driven by ~~89.8%, as load volumes grew by~~ ~~60.9%~~ ~~while revenue per load increased by~~ ~~18.0%~~.higher interest rates.

•Contributor — ~~$20.1~~$13.3 million ~~improvement~~decrease in operating income within our ~~Intermodal~~LTL segment ~~supported by revenue growth, as revenue~~partly due to a 4.7% decrease in shipments per ~~load increased 37.8% and rail congestion and allocations reduced load counts by 21.0%.~~

•~~Contributor —~~ $34.4 million increase in operating income within the non-reportable segments, supported by revenue growth of $128.3 million from the insurance, equipment maintenance, equipment leasing, and warehousing operating segments.day.

•Offset — ~~$72.9~~$59.4 million ~~reduction~~increase in "Other income (expenses) ~~income,~~, net," primarily driven by an unrealized loss ~~from the mark-to-market adjustment of~~on our investment in Embark ~~compared to a gain~~recorded in the first half of ~~2021.~~2022 and a net gain recorded within our portfolio of investments during the first half of 2023.

•Offset — ~~$44.2~~$86.6 million ~~increase~~decrease in consolidated income tax expense was primarily due to ~~an increase in income before income taxes.~~a reduction of pre-tax income. This resulted in an effective tax rate of 24.7% for the first half of 2023, and 24.8% for the first half of ~~2022 and 25.5% for the first half of 2021.~~2022.

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

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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 (Loss)


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter-to-Date June 30,				Year-to-Date June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue:	Revenue:	(In thousands)								Revenue:	(In thousands)
Truckload	Truckload	$	1,188,809	$	985,858	$	2,269,340	$	1,948,805	Truckload	$	953,659	$	1,188,809	$	1,965,904	$	2,269,340
LTL	LTL	283,847		—		538,972		—		LTL	267,105		283,847		522,409		538,972
Logistics	Logistics	248,662		166,737		530,701		285,624		Logistics	119,943		248,662		258,226		530,701
Intermodal	Intermodal	132,871		115,378		242,093		222,444		Intermodal	104,327		132,871		214,899		242,093
Subtotal	Subtotal	$	1,854,189	$	1,267,973	$	3,581,106	$	2,456,873	Subtotal	$	1,445,034	$	1,854,189	$	2,961,438	$	3,581,106
Non-reportable segments	Non-reportable segments	128,112		66,795		245,751		117,464		Non-reportable segments	130,110		128,112		272,096		245,751
Intersegment eliminations	Intersegment eliminations	(21,170)		(19,067)		(38,737)		(35,622)		Intersegment eliminations	(22,165)		(21,170)		(43,623)		(38,737)
Total revenue	Total revenue	$	1,961,131	$	1,315,701	$	3,788,120	$	2,538,715	Total revenue	$	1,552,979	$	1,961,131	$	3,189,911	$	3,788,120


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter-to-Date June 30,				Year-to-Date June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Operating income (loss):	Operating income (loss):	(In thousands)								Operating income (loss):	(In thousands)
Truckload	Truckload	$	206,296	$	168,457	$	411,413	$	326,940	Truckload	$	67,911	$	206,296	$	183,810	$	411,413
LTL	LTL	43,767		—		70,144		—		LTL	30,238		43,767		56,820		70,144
Logistics	Logistics	43,749		14,356		83,350		21,933		Logistics	9,566		43,749		22,386		83,350
Intermodal	Intermodal	14,172		5,812		29,342		9,269		Intermodal	(6,632)		14,172		(1,530)		29,342
Subtotal	Subtotal	$	307,984	$	188,625	$	594,249	$	358,142	Subtotal	$	101,083	$	307,984	$	261,486	$	594,249
Non-reportable segments	Non-reportable segments	17,794		2,490		29,615		(4,768)		Non-reportable segments	(7,053)		17,794		(22,669)		29,615
Operating income	Operating income	$	325,778	$	191,115	$	623,864	$	353,374	Operating income	$	94,030	$	325,778	$	238,817	$	623,864

Table of Contents Glossary 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 ~~13,342~~approximately 13,500 irregular route and ~~4,713~~4,500 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 100 facilities and a door count of ~~4,300.~~approximately 4,400. Our LTL segment operates approximately ~~3,100~~3,200 tractors and ~~8,400~~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 ~~73,000~~80,000 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 LTL segments 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 Contents Glossary 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, supplemented by certain non-GAAP information. Refer to "Non-GAAP Financial Measures" 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~~For our Truckload segment this is calculated as average miles traveled with loaded trailer cargo per ~~order/shipment~~order.
For our LTL segment this is calculated as average miles traveled from the origin service center to the destination service center.

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~~xFSC 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~~xFSC 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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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

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 ~~13,342~~approximately 13,500 irregular route tractors and ~~4,713~~approximately 4,500 dedicated route tractors in use during the ~~quarter-to-date period~~quarter ended June 30, ~~2022.~~2023. 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 expense from tractors, trailers, and terminals, as well as compensating our non-driver employees.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands, except per tractor data)												Increase (Decrease)					(Dollars in thousands, except per tractor data)												Increase (Decrease)

Total revenue	Total revenue	$	1,188,809		$	985,858		$	2,269,340		$	1,948,805		20.6	%	16.4	%	Total revenue	$	953,659		$	1,188,809		$	1,965,904		$	2,269,340		(19.8	%)	(13.4	%)
Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions	$	981,479		$	882,560		$	1,923,013		$	1,755,374		11.2	%	9.6	%	Revenue, excluding fuel surcharge and intersegment transactions	$	829,373		$	981,479		$	1,695,353		$	1,923,013		(15.5	%)	(11.8	%)
GAAP: Operating income	GAAP: Operating income	$	206,296		$	168,457		$	411,413		$	326,940		22.5	%	25.8	%	GAAP: Operating income	$	67,911		$	206,296		$	183,810		$	411,413		(67.1	%)	(55.3	%)
Non-GAAP: Adjusted Operating Income 1	Non-GAAP: Adjusted Operating Income 1	$	206,619		$	168,781		$	412,060		$	327,588		22.4	%	25.8	%	Non-GAAP: Adjusted Operating Income 1	$	68,210		$	206,619		$	184,452		$	412,060		(67.0	%)	(55.2	%)
Average revenue per tractor 2	Average revenue per tractor 2	$	54,361		$	48,939		$	106,775		$	96,827		11.1	%	10.3	%	Average revenue per tractor 2	$	46,461		$	54,361		$	94,176		$	106,775		(14.5	%)	(11.8	%)
GAAP: Operating ratio 2	GAAP: Operating ratio 2	82.6		%	82.9		%	81.9		%	83.2		%	(30	bps)	(130	bps)	GAAP: Operating ratio 2	92.9		%	82.6		%	90.7		%	81.9		%	1,030	bps	880	bps
Non-GAAP: Adjusted Operating Ratio 1 2	Non-GAAP: Adjusted Operating Ratio 1 2	78.9		%	80.9		%	78.6		%	81.3		%	(200	bps)	(270	bps)	Non-GAAP: Adjusted Operating Ratio 1 2	91.8		%	78.9		%	89.1		%	78.6		%	1,290	bps	1,050	bps
Non-paid empty miles percentage 2	Non-paid empty miles percentage 2	14.6		%	13.0		%	14.4		%	12.9		%	160	bps	150	bps	Non-paid empty miles percentage 2	15.2		%	14.6		%	15.1		%	14.4		%	60	bps	70	bps
Average length of haul (miles) 2	Average length of haul (miles) 2	392			408			393			410			(3.9	%)	(4.1	%)	Average length of haul (miles) 2	385			392			388			393			(1.8	%)	(1.3	%)
Total miles per tractor 2	Total miles per tractor 2	19,542			20,913			38,460			41,841			(6.6	%)	(8.1	%)	Total miles per tractor 2	18,904			19,542			37,304			38,460			(3.3	%)	(3.0	%)
Average tractors 2 3	Average tractors 2 3	18,055			18,034			18,010			18,129			0.1	%	(0.7	%)	Average tractors 2 3	17,851			18,055			18,002			18,010			(1.1	%)	—	%
Average trailers 2 4	Average trailers 2 4	73,010			60,858			72,111			60,382			20.0	%	19.4	%	Average trailers 2 4	79,911			73,010			79,700			72,111			9.5	%	10.5	%

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

2 Defined under "Operating Statistics," above.

3 Includes ~~16,172~~15,995 and ~~16,144~~16,172 average company-owned tractors for the second quarter of ~~2022~~2023 and ~~2021,~~2022, respectively.

Includes ~~16,165~~16,128 and ~~16,225~~16,165 average company-owned tractors for ~~year-to-date periods ended June 30,~~the first half of 2023 and 2022, ~~and~~ respectivel~~2021, respectively.~~y.

4 ~~Second quarter~~ ~~2022~~Our average trailers includes 8,377 and 6,014 trailers related to leasing activities recorded within our non-reportable operating ~~segments. Second quarter 2021 does not include~~segments for the quarters ended June 30, 2023 ~~5,201~~and 2022, respectively. Our average trailers includes 8,683 and 6,783 trailers related to leasing activities recorded within our non-reportable operating ~~segments.~~

~~The~~segments for the year-to-date period ~~ending~~ June 30, ~~2022 includes~~ ~~6,783~~2023 ~~trailers related to leasing activities recorded within our non-reportable operating segments. The year-to-date period ending June 30, 2021 does not include~~and ~~5,481 trailers related to leasing activities recorded within our non-reportable operating segments.~~2022, respectively.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

Comparison Between the Quarters Ended June 30, ~~2022~~2023 and ~~2021~~2022 — ~~Our~~The Truckload segment ~~operated at~~experienced an extremely difficult environment, operating with a ~~78.9%~~91.8% Adjusted Operating Ratio ~~which improved by 200 basis points year-over-year. This, along with 11.2% growth~~as soft demand and a slight uptick in ~~revenue, excluding fuel surcharge~~driver turnover were headwinds to volumes and ~~intersegment transactions, led to a 22.4% improvement in Adjusted Operating Income.~~

utilization. Revenue per loaded mile, excluding fuel surcharge and intersegment transactions, ~~increased 21.2%. Miles per tractor decreased by 6.6%, which is an improvement from the~~declined 11.0% year-over-year ~~decrease of 9.6% for the first quarter of 2022. These factors ultimately led to an 11.1% increase in average revenue per tractor and improved margins.~~

~~We are making modest progress with seating our tractors, leading to improved utilization. We~~as new rates continue to ~~add scale by increasing~~take effect throughout our ~~trailer count which has grown to approximately 73,000 trailers~~portfolio and as ofpricing pressure intensified in the ~~second quarter of 2022.~~

~~Comparison Between Year-to-Date June 30, 2022 and 2021~~— ~~Our Truckload segment operated at a 78.6% Adjusted Operating Ratio, which improved by 270 basis points when compared to the first half of 2021. This, along with 9.6% growth in revenue,~~softer volume environment. Revenue, excluding fuel surcharge and intersegment transactions, ~~led to~~was $829.4 million, a ~~25.8% improvement~~decrease of 15.5% year-over-year. Miles per tractor decreased 3.3%, and revenue per tractor decreased 14.5% year-over-year as the improving revenue per tractor in our dedicated division was more than offset by declines in the over-the-road business. Cost per mile, net of fuel surcharge recovery, increased 2.7% year-over-year but was stable sequentially.

Comparison Between Year-to-Date June 30, 2023 and 2022 — The Truckload segment operated with an 89.1% Adjusted Operating ~~Income.~~

Ratio. Revenue, ~~per loaded mile,~~ excluding fuel surcharge and intersegment transactions, ~~increased 21.8% while miles~~was $1.7 billion, a decrease of 11.8% year-over-year. Miles per tractor decreased ~~by 8.1%. These factors ultimately led to a 10.3% increase in average~~3.0%, and revenue per tractor ~~and improved margins.~~decreased 11.8% year-over-year as the improving revenue per tractor in our dedicated division was more than offset by declines in the over-the-road business. Cost per mile, net of fuel surcharge recovery, increased 3.2% year-over-year.

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~~Fluctuations within each of these metrics isare 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;~~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.


	Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
	2023			2022			2023			2022			QTD 2022		YTD 2022
	(Dollars in thousands, except per tractor data)												Increase (Decrease)



Total revenue	$	267,105		$	283,847		$	522,409		$	538,972		(5.9	%)	(3.1	%)
Revenue, excluding fuel surcharge and intersegment transactions	$	228,578		$	224,178		$	442,507		$	438,853		2.0	%	0.8	%
GAAP: Operating income	$	30,238		$	43,767		$	56,820		$	70,144		(30.9	%)	(19.0	%)
Non-GAAP: Adjusted Operating Income 1	$	34,158		$	47,762		$	64,660		$	78,084		(28.5	%)	(17.2	%)
GAAP: Operating ratio 2	88.7		%	84.6		%	89.1		%	87.0		%	410	bps	210	bps
Non-GAAP: Adjusted Operating Ratio 1 2	85.1		%	78.7		%	85.4		%	82.2		%	640	bps	320	bps

LTL shipments per day 2	18,898			19,657			18,308			19,220			(3.9	%)	(4.7	%)
LTL weight per shipment 2	1,058			1,068			1,059			1,083			(0.9	%)	(2.2	%)
LTL average length of haul (miles) 2	545			522			540			522			4.4	%	3.4	%
LTL revenue per shipment 2	$	187.92		$	191.30		$	188.59		$	185.01		(1.8	%)	1.9	%
LTL revenue xFSC per shipment 2	$	160.66		$	151.64		$	159.60		$	151.18		5.9	%	5.6	%
LTL revenue per hundredweight 2	$	17.77		$	17.91		$	17.80		$	17.09		(0.8	%)	4.2	%
LTL revenue xFSC per hundredweight 2	$	15.19		$	14.20		$	15.07		$	13.97		7.0	%	7.9	%
LTL average tractors 2 3	3,163			3,129			3,163			3,110			1.1	%	1.7	%
LTL average trailers 2 4	8,452			8,402			8,419			8,352			0.6	%	0.8	%

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

2Defined under "Operating Statistics," above.

3Our LTL tractor fleet includes 604 and 700 tractors from ACT's and MME's dedicated and other businesses for the second quarter of 2023 and 2022, respectively. Our LTL tractor fleet includes 611 and 698 tractors from ACT's and MME's dedicated and other businesses for the year-to-date period June 30, 2023 and 2022, respectively.

4Our LTL trailer fleet includes 778 and 962 trailers from ACT's and MME's dedicated and other businesses for the second quarter of 2023 and 2022, respectively. Our LTL trailer fleet includes 778 and 935 trailers from ACT's and MME's dedicated and other businesses for the year-to-date period June 30, 2023 and 2022, respectively.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

~~Note:~~ ~~In accordance with~~Comparison Between 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-to-Date June 30, Year-to-Date June 30,
2022 2022
(Dollars in thousands, except per tractor data)
Total revenue $ 283,847 $ 538,972
Revenue, excluding fuel surcharge and intersegment transactions $ 224,178 $ 438,853
GAAP: Operating income $ 43,767 $ 70,144
Non-GAAP: Adjusted Operating Income 1
$ 47,762 $ 78,084
GAAP: Operating ratio 2
84.6 % 87.0 %
Non-GAAP: Adjusted Operating Ratio 1 2
78.7 % 82.2 %
LTL shipments per day 2
19,657 19,220
LTL weight per shipment 2
1,068 1,083
LTL average length of haul (miles) 2
522 522
LTL revenue per shipment 2
$ 191.30 $ 185.01
LTL revenue xFSR per shipment 2
$ 151.64 $ 151.18
LTL revenue per hundredweight 2
$ 17.91 $ 17.09
LTL revenue xFSR per hundredweight 2
$ 14.20 $ 13.97
LTL average tractors 2 3
3,129 3,110
LTL average trailers 2 4
8,402 8,352

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

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

3~~Includes 700 and 698 tractors from ACT's and MME's dedicated and other businesses for the~~ ~~quarter and year-to-date periods ended~~Quarters Ended June 30, 2023 and 2022.

4 — ~~Includes 962 and 935 trailers from ACT's and MME's dedicated and other businesses for the~~ ~~quarter and year-to-date periods ended June 30, 2022~~.

Our LTL segment ~~made significant strides in improving margins, operating at a 78.7%~~operated well, producing an 85.1% Adjusted Operating Ratio during the second quarter of ~~2022.~~2023, which represents a slight improvement sequentially but a 640 basis point degradation from the second quarter of 2022 as softer volumes, higher wages, and the decline in fuel surcharge revenues over the past year have pressured the Adjusted Operating Ratio. Shipments per day decreased 3.9% year-over-year with softer demand. Revenue per hundredweight increased 7.0% excluding fuel surcharge, ~~per hundredweight was $14.20,~~ while revenue per shipment increased by 5.9%, excluding fuel surcharge, ~~was $151.64. The ACT~~reflecting a 0.9% decrease in weight per shipment.

We expect our connected LTL network and ~~MME teams continue to achieve both customer and cost synergies as they connect their network~~the expanding use of ~~approximately 100 facilities and 4,300 doors.~~

~~Our LTL segment operated at an 82.2% Adjusted Operating Ratio during the first half of 2022. Revenue, excluding fuel surcharge, per hundredweight was $13.97, while~~shipment dimensioning technology will provide additional opportunities for revenue ~~per shipment, excluding fuel surcharge was $151.18.~~

growth. During the ~~back half of this year~~second quarter, we increased our door count by 50, and we expect door capacity ~~will~~to continue to grow by ~~300~~an additional 100 doors ~~across 9 new or expanded locations.~~through the remainder of 2023. 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 June 30, 2023 and 2022 — Our LTL segment produced an 85.4% Adjusted Operating Ratio during the first half of 2023, a 320 basis point degradation over the first half of 2022. Shipments per day decreased 4.7% with softer demand. Revenue per hundredweight increased 7.9% excluding fuel surcharge, while revenue per shipment increased by 5.6%, excluding fuel surcharge, reflecting a 2.2% decrease in weight per shipment.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

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 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-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands, except per load data)												Increase (Decrease)					(Dollars in thousands, except per load data)												Increase (Decrease)

Total revenue	Total revenue	$	248,662		$	166,737		$	530,701		$	285,624		49.1	%	85.8	%	Total revenue	$	119,943		$	248,662		$	258,226		$	530,701		(51.8	%)	(51.3	%)
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions	$	247,319		$	162,167		$	527,490		$	277,889		52.5	%	89.8	%	Revenue, excluding intersegment transactions	$	117,782		$	247,319		$	254,559		$	527,490		(52.4	%)	(51.7	%)
GAAP: Operating income	GAAP: Operating income	$	43,749		$	14,356		$	83,350		$	21,933		204.7	%	280.0	%	GAAP: Operating income	$	9,566		$	43,749		$	22,386		$	83,350		(78.1	%)	(73.1	%)
Non-GAAP: Adjusted Operating Income 1 2	Non-GAAP: Adjusted Operating Income 1 2	$	44,083		$	14,453		$	84,018		$	22,030		205.0	%	281.4	%	Non-GAAP: Adjusted Operating Income 1 2	$	9,900		$	44,083		$	23,054		$	84,018		(77.5	%)	(72.6	%)
Revenue per load 2	Revenue per load 2	$	2,257		$	2,193		$	2,471		$	2,094		2.9	%	18.0	%	Revenue per load 2	$	1,652		$	2,257		$	1,685		$	2,471		(26.8	%)	(31.8	%)
Gross margin percentage 2	Gross margin percentage 2	24.4		%	15.7		%	22.2		%	15.2		%	870	bps	700	bps	Gross margin percentage 2	19.4		%	24.4		%	19.6		%	22.2		%	(500	bps)	(260	bps)
GAAP: Operating ratio 2	GAAP: Operating ratio 2	82.4		%	91.4		%	84.3		%	92.3		%	(900	bps)	(800	bps)	GAAP: Operating ratio 2	92.0		%	82.4		%	91.3		%	84.3		%	960	bps	700	bps
Non-GAAP: Adjusted Operating Ratio 1 2	Non-GAAP: Adjusted Operating Ratio 1 2	82.2		%	91.1		%	84.1		%	92.1		%	(890	bps)	(800	bps)	Non-GAAP: Adjusted Operating Ratio 1 2	91.6		%	82.2		%	90.9		%	84.1		%	940	bps	680	bps

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

2 Defined under "Operating Statistics," above.

Comparison Between the Quarters Ended June 30, ~~2022~~2023 and ~~2021~~2022 — ~~Demand for our logistics service offering remains strong. We continue to leverage our fleet of approximately 73,000 trailers to support our power-only service offering.~~The Logistics ~~revenue, excluding intersegment transactions, increased 52.5% as we grew load count by 48.2% while increasing revenue per load by 2.9%. The~~segment Adjusted Operating Ratio ~~improved to 82.2%~~was 91.6%, ~~resulting in~~with a ~~205.0% increase in Adjusted Operating Income. Logistics~~gross margin ~~was~~ of 19.4% in the second quarter of 2023, down from 24.4% in the second quarter of 2022 ~~compared~~as pressure on top-line pricing is no longer being offset by corresponding reductions in purchased transportation costs. The brokerage space continues to endure soft demand, causing our load count to decline by 35.0% year-over-year, though our traditional brokerage volumes are seeing greater declines than our power-only service offering. The soft demand resulted in revenue per load decreasing by 26.8% year-over-year. W~~15.7%~~ ~~in the second quarter~~e continue to leverage our consolidated fleet of ~~2021.~~approximately 80,000 trailers as we build out our power-only service. We continue to innovate with technology intended to remove friction and allow seamless connectivity, leading to services that we expect will capture new opportunities for revenue growth.

Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — The Logistics ~~revenue, excluding intersegment transactions, increased 89.8% as we grew load count by 60.9% while increasing revenue per load by 18.0%. The~~segment Adjusted Operating Ratio ~~improved to 84.1%~~was 90.9%, ~~resulting in~~with a ~~281.4% increase in Adjusted Operating Income. Logistics~~gross margin ~~was~~ ~~22.2%~~of 19.6% in the first half of ~~2022, compared to~~ 2023, down s~~15.2%~~lightly from 22.2% in the first half of ~~2021.~~2022. The brokerage space continues to endure soft demand, causing our load count to decline by 29.2% and revenue per load to decrease by 31.8% during the first half of 2023 when compared to the first half of 2022.

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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 June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands, except per load data)												Increase (Decrease)					(Dollars in thousands, except per load data)												Increase (Decrease)

Total revenue	Total revenue	$	132,871		$	115,378		$	242,093		$	222,444		15.2	%	8.8	%	Total revenue	$	104,327		$	132,871		$	214,899		$	242,093		(21.5	%)	(11.2	%)
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions	$	132,854		$	115,294		$	242,046		$	222,265		15.2	%	8.9	%	Revenue, excluding intersegment transactions	$	104,327		$	132,854		$	214,899		$	242,046		(21.5	%)	(11.2	%)
GAAP: Operating income	GAAP: Operating income	$	14,172		$	5,812		$	29,342		$	9,269		143.8	%	216.6	%	GAAP: Operating income	$	(6,632)		$	14,172		$	(1,530)		$	29,342		(146.8	%)	(105.2	%)

Average revenue per load 1	Average revenue per load 1	$	3,642		$	2,616		$	3,560		$	2,583		39.2	%	37.8	%	Average revenue per load 1	$	2,749		$	3,642		$	2,979		$	3,560		(24.5	%)	(16.3	%)
GAAP: Operating ratio 1	GAAP: Operating ratio 1	89.3		%	95.0		%	87.9		%	95.8		%	(570	bps)	(790	bps)	GAAP: Operating ratio 1	106.4		%	89.3		%	100.7		%	87.9		%	1,710	bps	1,280	bps

Load count	Load count	36,474			44,073			67,989			86,041			(17.2	%)	(21.0	%)	Load count	37,945			36,474			72,138			67,989			4.0	%	6.1	%
Average tractors 1 2		623			611			603			605			2.0	%	(0.3	%)
Average containers 1		11,491			10,842			11,259			10,844			6.0	%	3.8	%
Average tractors 2																		Average tractors 2	656			623			631			603			5.3	%	4.6	%
Average containers 2																		Average containers 2	12,842			11,491			12,835			11,259			11.8	%	14.0	%

1 Defined under "Operating Statistics," above.

2 Includes ~~558~~595 and ~~555~~558 company-owned tractors for the second quarter of ~~2022~~2023 and ~~2021,~~2022, respectively.

Includes ~~546~~568 and ~~549~~546 company-owned tractors for the year-to-date periods ended June 30, ~~2022~~2023 and ~~2021,~~2022, respectively.

Comparison Between the Quarters Ended June 30, ~~2022~~2023 and ~~2021~~2022 — ~~Operating income increased by 143.8%, as~~The Intermodal segment operated with a 106.4% operating ratio ~~improved from 95.0%~~while total revenue decreased 21.5% to ~~89.3%. We saw meaningful improvements in street and rail velocity in many corridors after volumes in the beginning of the quarter were negatively impacted~~$104.3 million. While load count increased year-over-year by ~~longer container and chassis dwell times, as well as inconsistent rail network speeds. These factors contributed to a 39.2% increase in~~4.0%, revenue per load ~~partially offset by a 17.2% decrease in load count. Labor challenges within the rail network appear to be softening, leading to improved notification times and more consistency for our customers.~~

~~Network fluidity continues to be a rail market challenge. As~~declined 24.5% as a result of ~~our new network~~soft demand, competitive truck capacity, and the winding down of a container leasing project. With improved ~~service offering, we expect load volumes to inflect positive year-over-year beginning~~rail pricing going into effect in the ~~third quarter as we grow by adding new customers and expanding with existing customers. To position Intermodal for continued growth, we increased our container count by over 600 during the first~~second half of the year, initiatives to reduce chassis costs, and volume support from new bid awards and improved rail service, we ~~anticipate further growth during~~expect to improve the ~~second half.~~operating results of this segment moving forward. We remain focused on growing our load count and improving the efficiency of our assets as Intermodal continues to provide value to our customers and is complementary to the many services we offer.

We expect to continue to grow with new customers and expand with existing customers. With our container fleet count now approximately 12,800, we do not expect to order additional containers until we achieve meaningful improvement in our turns per container. Our capex strategy is shifting to chassis moving forward as we work to better optimize our operation and reduce equipment costs. We remain focused on growing our load count and improving the efficiency of our assets as Intermodal continues to provide value to our customers and is complementary to the many services we offer.

Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — ~~Operating income increased by 216.6%, as~~The Intermodal segment operated with a 100.7% operating ratio ~~improved from 95.8% to 87.9%. A 37.8% increase in revenue per load, partially offset by a 21.0% decrease in load count, led to an 8.9% increase in~~while revenue excluding intersegment ~~transactions.~~

transactions decreased 11.2% to $214.9 million. Load count increased year-over-year by 6.1%, reflecting continued load growth since transitioning western rail partners in January 2022.

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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~~$12.0 million in quarterly amortization of intangibles related to the 2017 Merger and various acquisitions).


		Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2023 vs.		YTD 2023 vs.
		2022		2021		2022		2021		QTD 2021		YTD 2021			2023		2022		2023		2022		QTD 2022		YTD 2022
		(Dollars in thousands)								Increase (Decrease)					(Dollars in thousands)								Increase (Decrease)

Total revenue	Total revenue	$	128,112	$	66,795	$	245,751	$	117,464	91.8	%	109.2	%	Total revenue	$	130,110	$	128,112	$	272,096	$	245,751	1.6	%	10.7	%
Operating income (loss)		$	17,794	$	2,490	$	29,615	$	(4,768)	614.6	%	721.1	%
Operating (loss) income														Operating (loss) income	$	(7,053)	$	17,794	$	(22,669)	$	29,615	(139.6	%)	(176.5	%)

~~Strong demand for~~Revenue growth slowed to 1.6% year-over-year, largely as a result of our actions designed to address the recent challenges within our third-party insurance ~~equipment maintenance, equipment leasing, and warehousing services led~~program, producing a $7.1 million operating loss within our non-reportable segments. Our efforts to ~~year-over-year~~improve our Iron Insurance line of business reduced its operating ~~income improvements of 614.6% for~~loss by $7.8 million since the first quarter to a $15.0 million operating loss (or $0.07 per diluted share) during the second quarter of 2023. We have made progress reducing the exposure basis of third party carrier risk, and ~~721.1%~~we are applying more stringent underwriting criteria and higher premiums for any retained risk as policies come up for renewal. The current operating loss is primarily due to ongoing claims development and the time it takes to work higher premiums through the portfolio.

Revenue growth of 10.7% between the first half of ~~2022. This was supported by year-over-year revenue growth of 91.8% for the second quarter~~2023 and ~~109.2% for~~ the first half of ~~2022. We~~2022 was offset by the challenges within our third-party insurance program, resulting in a $22.7 million operating loss within our non-reportable segments. Overall, our Iron Insurance line of business produced a $37.8 million operating loss (or $0.18 per diluted share) during the first half of 2023, primarily due to increased frequency and unfavorable claim development as well as insurance premium collection issues associated with small carriers who are struggling given the soft freight market conditions.

As noted previously, it will take some time for this pivot to fully materialize in the results, but we expect ~~continued~~sequential income growth and ~~income improvement~~a positive contribution for the non-reportable segments as a whole in the second half of the year, supported by continued revenue growth from ~~these~~the other activities within our non-reportable segments moving forward.

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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 second quarter and first half 2022 results and prior periods may not be meaningful.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Salaries, wages, and benefits	Salaries, wages, and benefits	$	549,956		$	377,613		$	1,086,012		$	747,983		45.6	%	45.2	%	Salaries, wages, and benefits	$	533,237		$	549,956		$	1,069,979		$	1,086,012		(3.0	%)	(1.5	%)
% of total revenue	% of total revenue	28.0		%	28.7		%	28.7		%	29.5		%	(70	bps)	(80	bps)	% of total revenue	34.3		%	28.0		%	33.5		%	28.7		%	630	bps	480	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	32.5		%	31.1		%	32.5		%	31.9		%	140	bps	60	bps	% of revenue, excluding truckload and LTL fuel surcharge	38.4		%	32.5		%	37.7		%	32.5		%	590	bps	520	bps

Salaries, wages, and benefits expense is primarily affected by the total number of miles driven by 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 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 our 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 June 30, ~~2022~~2023 and ~~2021~~2022 — Consolidated salaries, wages, and benefits ~~increased~~decreased by ~~$172.3~~$16.7 million for the second quarter of ~~2022,~~2023, as compared to the second quarter of ~~2021.~~2022. This ~~increase includes $140.3 million from the second quarter 2022 results of ACT and MME. The remaining increase~~decrease primarily pertained to ~~driving associate pay rates and non-driver salaries and wages, and~~ a ~~6.0% increase~~4.2% decrease in miles driven by company driving associates ~~excluding ACT~~as well as a decrease in non-driver salaries and ~~MME.~~wages.

•Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — Consolidated salaries, wages, and benefits ~~increased~~decreased by ~~$338.0~~$16.0 million for the first half of ~~2022,~~2023, as compared to the first half of ~~2021.~~2022. This ~~increase includes $275.6 million from the first half of 2022 results of ACT and MME. The remaining increase~~decrease primarily pertained to ~~driving associate pay rates, non-driver salaries and wages, higher benefit costs, and~~ a ~~4.5% increase~~3.3% decrease in miles driven by company driving associates ~~excluding ACT~~as well as a decrease in non-driver salaries and ~~MME.~~wages.

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		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Fuel	Fuel	$	257,146		$	126,055		$	447,635		$	244,291		104.0	%	83.2	%	Fuel	$	168,300		$	257,146		$	356,059		$	447,635		(34.6	%)	(20.5	%)
% of total revenue	% of total revenue	13.1		%	9.6		%	11.8		%	9.6		%	350	bps	220	bps	% of total revenue	10.8		%	13.1		%	11.2		%	11.8		%	(230	bps)	(60	bps)
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	15.2		%	10.4		%	13.4		%	10.4		%	480	bps	300	bps	% of revenue, excluding truckload and LTL fuel surcharge	12.1		%	15.2		%	12.5		%	13.4		%	(310	bps)	(90	bps)

Fuel expense consists primarily of diesel fuel expense for our company-owned ~~tractors and fuel taxes.~~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 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 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 June 30, ~~2022~~2023 and ~~2021~~2022 — — The ~~$131.1~~$88.8 million ~~increase~~decrease in consolidated fuel expense for the second quarter ~~includes $36.0 million of fuel expense from ACT's and MME's second quarter 2022 results. The remaining year-over-year increase~~ is ~~attributable~~due to ~~higher average DOE fuel prices and an increase~~a decrease in total miles driven by company driving associates ~~excluding ACT and MME.~~as well as lower average DOE fuel prices for the second quarter of 2023 as compared to the second quarter of 2022. Average DOE fuel prices were $3.94 per gallon for the second quarter of 2023 and $5.53 per gallon for the second quarter of ~~2022 and $3.21 per gallon for the second quarter of 2021.~~2022.

•Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — The ~~$203.3~~$91.6 million ~~increase~~decrease in consolidated fuel expense for the first half ~~of 2022, includes $63.0 million of fuel expense from ACT's and MME's first half 2022 results. The remaining year-over-year increase~~ is ~~attributable~~due to ~~higher average DOE fuel prices and the increase~~a decrease in total miles driven by company driving associates ~~excluding ACT and MME, discussed above.~~as well as lower average DOE fuel prices for the first half of 2023 as compared to the second quarter of 2022. Average DOE fuel prices were $4.16 per gallon for the first half of 2023 and $4.95 per gallon for the first half of ~~2022 and $3.06 per gallon for the first half of 2021.~~2022.

~~Table of ContentsGlossary of Terms~~

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


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Operations and maintenance	Operations and maintenance	$	106,724		$	71,313		$	202,607		$	139,383		49.7	%	45.4	%	Operations and maintenance	$	101,380		$	106,724		$	200,691		$	202,607		(5.0	%)	(0.9	%)
% of total revenue	% of total revenue	5.4		%	5.4		%	5.3		%	5.5		%	—	bps	(20	bps)	% of total revenue	6.5		%	5.4		%	6.3		%	5.3		%	110	bps	100	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	6.3		%	5.9		%	6.1		%	5.9		%	40	bps	20	bps	% of revenue, excluding truckload and LTL fuel surcharge	7.3		%	6.3		%	7.1		%	6.1		%	100	bps	100	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~~typically 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,~~2023, 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 June 30, 2022 and 2021~~Table of Contents Glossary of Terms

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~~The increase of $35.4~~

Operations and maintenance expense decreased $5.3 million for the second quarter of ~~2022 includes $13.4 million in operations~~2023 and maintenance expense from ACT's and MME's second 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, and increased hiring expenses as we work to improve our seated truck count.

•~~Comparison Between Year-to-Date June 30, 2022 and 2021~~ — ~~The increase of $63.2~~$1.9 million for the first half of ~~2022 includes $25.7 million in operations and maintenance expense from ACT's and MME's first half 2022 results.~~2023 as compared to the same periods last year. The ~~remaining increase~~decrease was attributed to lower hiring and labor expense as well as lower road expense due to the ~~factors listed~~decrease in total company miles discussed above. This was partially offset by higher maintenance expenses due to the reintegration of leased assets into our fleet.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Insurance and claims	Insurance and claims	$	102,084		$	58,776		$	200,276		$	114,419		73.7	%	75.0	%	Insurance and claims	$	137,306		$	102,084		$	275,345		$	200,276		34.5	%	37.5	%
% of total revenue	% of total revenue	5.2		%	4.5		%	5.3		%	4.5		%	70	bps	80	bps	% of total revenue	8.8		%	5.2		%	8.6		%	5.3		%	360	bps	330	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	6.0		%	4.8		%	6.0		%	4.9		%	120	bps	110	bps	% of revenue, excluding truckload and LTL fuel surcharge	9.9		%	6.0		%	9.7		%	6.0		%	390	bps	370	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~~addition, our Iron Insurance line of business offers insurance ~~offerings~~products to third-party carriers, earning additional premium revenues, which ~~were~~are partially offset by increased insurance ~~reserves.~~reserves, but does increase our exposure to claims and inability to collect premiums. 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, and exposure through Iron Insurance may cause increased volatility in our consolidated insurance and claims expense.

•~~Comparison Between the Quarters Ended June 30, 2022 and 2021~~— Consolidated insurance and claims expense increased by ~~$43.3~~$35.2 million for the second quarter of 2022, as compared to the second 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 $7.5 million of insurance2023 and ~~claims expense from ACT's and MME's second quarter 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~~

•~~Comparison Between Year-to-Date June 30, 2022 and 2021~~— ~~Consolidated insurance and claims expense increased by $85.9~~$75.1 million for the first half of ~~2022,~~2023, as compared to the ~~first half of 2021.~~same periods last year. The increase was ~~primarily~~predominately due to ~~an increase~~increased frequency and unfavorable claim development during the periods within our Iron Insurance line of ~~insurance reserves incurred through~~business as well as negative developments within our ~~third-party carrier insurance program. The remaining increase is primarily due to the inclusion of $16.6 million of insurance and claims expense from ACT's and MME's first half 2022 results.~~self-insured retention limits.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Operating taxes and licenses	Operating taxes and licenses	$	30,204		$	21,717		$	59,241		$	43,765		39.1	%	35.4	%	Operating taxes and licenses	$	28,332		$	30,204		$	54,222		$	59,241		(6.2	%)	(8.5	%)
% of total revenue	% of total revenue	1.5		%	1.7		%	1.6		%	1.7		%	(20	bps)	(10	bps)	% of total revenue	1.8		%	1.5		%	1.7		%	1.6		%	30	bps	10	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	1.8		%	1.8		%	1.8		%	1.9		%	—	bps	(10	bps)	% of revenue, excluding truckload and LTL fuel surcharge	2.0		%	1.8		%	1.9		%	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.

~~The year-over-year increases in operating~~Operating taxes and licenses expenses ~~of $8.5~~decreased by $1.9 million for the second quarter of ~~2022~~2023 and ~~$15.5~~$5.0 million for the first half of ~~2022 were primarily composed~~2023 but remained relatively flat as a percentage of ~~ACT's~~revenue, excluding truckload and ~~MME's 2022 results.~~LTL fuel surcharge, as compared to the same periods last year.

Quarter-to-Date June 30, Year-to-Date June 30, QTD 2022 vs. YTD 2022 vs.
2022 2021 2022 2021 QTD 2021 YTD 2021
(Dollars in thousands) Increase (Decrease)
Communications $ 5,744 $ 4,635 $ 11,614 $ 9,672 23.9 % 20.1 %
% 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)

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 June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
	2023			2022			2023			2022			QTD 2022		YTD 2022
	(Dollars in thousands)												Increase (Decrease)



Communications	$	6,184		$	5,744		$	11,933		$	11,614		7.7	%	2.7	%
% of total revenue	0.4		%	0.3		%	0.4		%	0.3		%	10	bps	10	bps
% of revenue, excluding truckload and LTL fuel surcharge	0.4		%	0.3		%	0.4		%	0.3		%	10	bps	10	bps

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

~~The year-over-year increases in communications~~Communications expense ~~of $1.1~~increased $0.4 million for the second quarter of ~~2022~~2023 and ~~$1.9~~$0.3 million ~~for~~or the first half of ~~2022 were primarily composed~~2023 but remained relatively flat as a percentage of ~~ACT's~~revenue, excluding truckload and ~~MME's 2022 results.~~LTL fuel surcharge, as compared to the same periods last year.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Depreciation and amortization of property and equipment	Depreciation and amortization of property and equipment	$	147,482		$	123,606		$	292,526		$	243,521		19.3	%	20.1	%	Depreciation and amortization of property and equipment	$	156,381		$	147,482		$	312,347		$	292,526		6.0	%	6.8	%
% of total revenue	% of total revenue	7.5		%	9.4		%	7.7		%	9.6		%	(190	bps)	(190	bps)	% of total revenue	10.1		%	7.5		%	9.8		%	7.7		%	260	bps	210	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	8.7		%	10.2		%	8.8		%	10.4		%	(150	bps)	(160	bps)	% of revenue, excluding truckload and LTL fuel surcharge	11.2		%	8.7		%	11.0		%	8.8		%	250	bps	220	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. 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 practices.

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

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

Consolidated depreciation and amortization of property and equipment increased by ~~$23.9~~$8.9 million for the second quarter of ~~2022~~2023 and ~~$49.0~~$19.8 million for the first half of ~~2022,~~2023, as compared to the same periods last year. ~~These increases include ACT's and MME's results of $15.3 million from the second quarter of 2022 and $30.6 million from the first half of 2022. The remaining~~This increase was ~~primarily~~ related to an increase in owned versus leased ~~equipment.~~equipment and higher depreciation for capital improvements made to our terminals.

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 in the remainder of 2022.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Amortization of intangibles	Amortization of intangibles	$	16,215		$	11,984		$	32,381		$	23,733		35.3	%	36.4	%	Amortization of intangibles	$	16,505		$	16,215		$	32,688		$	32,381		1.8	%	0.9	%
% of total revenue	% of total revenue	0.8		%	0.9		%	0.9		%	0.9		%	(10	bps)	—	bps	% of total revenue	1.1		%	0.8		%	1.0		%	0.9		%	30	bps	10	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	1.0		%	1.0		%	1.0		%	1.0		%	—	bps	—	bps	% of revenue, excluding truckload and LTL fuel surcharge	1.2		%	1.0		%	1.2		%	1.0		%	20	bps	20	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 increases of $4.2 million for the second quarter 2022 and $8.6 million for the first half of 2022, as compared to the same periods last year, were attributed to the ACT, MME, UTXL, and Eleos acquisitions during 2021.

Quarter-to-Date June 30, Year-to-Date June 30, QTD 2022 vs. YTD 2022 vs.
2022 2021 2022 2021 QTD 2021 YTD 2021
(Dollars in thousands) Increase (Decrease)
Rental expense $ 13,492 $ 13,399 $ 26,893 $ 30,263 0.7 % (11.1 %)
% of total revenue 0.7 % 1.0 % 0.7 % 1.2 % (30 bps) (50 bps)
% of revenue, excluding truckload and LTL fuel surcharge 0.8 % 1.1 % 0.8 % 1.3 % (30 bps) (50 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 June 30, 2022 and 2021~~— The quarter over quarter increase of $0.1 million includes $1.7 million of additional expense in 2022 from ACT's and MME's operating results. This was partially offset by a decrease in the number of leased units, excluding ACT's and MME's 2022 results.

•~~Comparison Between Year-to-Date June 30, 2022 and 2021~~— The $3.4 million decrease in consolidated rental expenses for the first half of 2022, compared to the first half of 2021, is primarily due to an increase in our owned versus leased equipment. This was partially offset by $3.4 million of additional expense from ACT's and MME's operating results included during the first half of 2022.

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 for the remainder of 2022.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
		2022			2021			2022			2021			QTD 2021		YTD 2021			2023			2022			2023			2022			QTD 2022		YTD 2022
		(Dollars in thousands)												Increase (Decrease)					(Dollars in thousands)												Increase (Decrease)

Purchased transportation		$	384,910		$	304,157		$	771,356		$	562,387		26.5	%	37.2	%
Rental expense																		Rental expense	$	16,073		$	13,492		$	31,141		$	26,893		19.1	%	15.8	%
% of total revenue	% of total revenue	19.6		%	23.1		%	20.4		%	22.2		%	(350	bps)	(180	bps)	% of total revenue	1.0		%	0.7		%	1.0		%	0.7		%	30	bps	30	bps
% of revenue, excluding truckload and LTL fuel surcharge	% of revenue, excluding truckload and LTL fuel surcharge	22.7		%	25.1		%	23.1		%	24.0		%	(240	bps)	(90	bps)	% of revenue, excluding truckload and LTL fuel surcharge	1.2		%	0.8		%	1.1		%	0.8		%	40	bps	30	bps

Rental expense consists primarily of payments for our terminals and other real estate leases and, to a lesser extent, payments for revenue equipment from operating leases. The primary factors affecting the expense are the size and location of our leased properties.

Consolidated rental expense increased $2.6 million for the second quarter of 2023 and $4.2 million for the first half of 2023, as compared to the same periods last year. The increase is primarily related to the incorporation of new facilities as we expand our network and was partially offset by a decrease in the rental expense for revenue equipment. We anticipate that rent expense as a percentage of revenue, excluding truckload and LTL fuel surcharge, will increase over the remainder of 2023 as we incorporate equipment from U.S. Xpress's lease portfolio into our fleet.


	Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2023 vs.		YTD 2023 vs.
	2023			2022			2023			2022			QTD 2022		YTD 2022
	(Dollars in thousands)												Increase (Decrease)



Purchased transportation	$	258,259		$	384,910		$	538,988		$	771,356		(32.9	%)	(30.1	%)
% of total revenue	16.6		%	19.6		%	16.9		%	20.4		%	(300	bps)	(350	bps)
% of revenue, excluding truckload and LTL fuel surcharge	18.6		%	22.7		%	19.0		%	23.1		%	(410	bps)	(410	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.

Consolidated purchased transportation expense ~~increased~~decreased by ~~$80.8~~$126.7 million for the second quarter of ~~2022~~2023 and ~~$209.0~~$232.4 million for the first half of ~~2022,~~2023, as compared to the same periods last year, primarily due to ~~increased~~decreased load ~~volumes~~volume within our logistics ~~business. Purchased transportation expense also includes ACT's~~business and ~~MME's results of $2.1 million for the second quarter of 2022 and $6.8 million for the first half of 2022.~~lower miles driven by independent contractors, partially offset by increased intermodal load volume.

We expect that consolidated 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-to-Date June 30, Year-to-Date June 30, QTD 2022 vs. YTD 2022 vs.
2022 2021 2022 2021 QTD 2021 YTD 2021
(Dollars in thousands) Increase (Decrease)
Impairments $ — $ — $ 810 $ — — % 100.0 %


	Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2023 vs.		YTD 2023 vs.
	2023		2022		2023		2022		QTD 2022		YTD 2022
	(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 June 30, Year-to-Date June 30, QTD 2022 vs. YTD 2022 vs.
2022 2021 2022 2021 QTD 2021 YTD 2021
(Dollars in thousands) Increase (Decrease)
Miscellaneous operating expenses $ 21,396 $ 11,331 $ 32,905 $ 25,924 88.8 % 26.9 %

~~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 June 30, 2022 and 2021~~— ~~The $10.1 million increase in net consolidated miscellaneous operating expenses is comprised of additional expense in the second quarter of 2022 from ACT's and MME's operating results.~~

•~~Comparison Between Year-to-Date June 30, 2022 and 2021~~— The $7.0 million increase in net consolidated miscellaneous operating expenses includes $20.7 million of additional expense from ACT's and MME's operating results in the first half of 2022, a net increase in legal settlements expense of $3.1 million, and higher operating expenses associated with increased travel time and return to work programs. This was offset by a $30.8 million increase in gain on sales of equipment, excluding ACT and MME.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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


	Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2023 vs.		YTD 2023 vs.
	2023		2022		2023		2022		QTD 2022		YTD 2022
	(Dollars in thousands)								Increase (Decrease)



Miscellaneous operating expenses	$	36,992	$	21,396	$	67,701	$	32,905	72.9	%	105.7	%

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 June 30, 2023 and 2022 — The $15.6 million increase in net consolidated miscellaneous operating expenses is primarily due to a $8.7 million decrease in gain on sales of equipment and $5.3 million in transaction fees related to the acquisition of U.S. Xpress.

Comparison Between Year-to-Date June 30, 2023 and 2022 — The $34.8 million increase in net consolidated miscellaneous operating expenses is primarily due to a $22.6 million decrease in gain on sales of equipment and $6.9 million in transaction fees related to the acquisition of U.S. Xpress.

Consolidated Other Expenses (Income)


		Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2022 vs.		YTD 2022 vs.			Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2023 vs.		YTD 2023 vs.
		2022		2021		2022		2021		QTD 2021		YTD 2021			2023		2022		2023		2022		QTD 2022		YTD 2022
		(Dollars in thousands)								Increase (Decrease)					(Dollars in thousands)								Increase (Decrease)

Interest expense	Interest expense	$	9,345	$	3,307	$	16,025	$	6,793	182.6	%	135.9	%	Interest expense	$	24,354	$	9,345	$	47,445	$	16,025	160.6	%	196.1	%
Other expenses (income), net		25,576		(16,840)		39,981		(32,945)		(251.9	%)	(221.4	%)
Other (income) expenses, net														Other (income) expenses, net	(9,679)		25,576		(19,382)		39,981		(137.8	%)	(148.5	%)
Income tax expense	Income tax expense	72,090		51,783		141,264		97,112		39.2	%	45.5	%	Income tax expense	21,959		72,090		54,694		141,264		(69.5	%)	(61.3	%)

Interest expense — Interest expense is comprised of debt and finance lease interest expense as well as amortization of deferred loan costs. ~~Interest~~The increase in interest expense ~~increased~~ during the second quarter and the first half of ~~2022~~2023 was primarily due to higher ~~overall~~interest rates. We expect interest expense to increase by approximately $20.0 million in the second half of 2023 as compared to the first half, reflecting approximately $800.0 million of additional debt ~~balances from~~for the ~~2021 Debt Agreement which was entered into on September 3, 2021~~U.S. Xpress acquisition and ~~replaced~~assuming the ~~July 2021 Term Loan and 2017 Debt Agreement.~~Federal Reserve rate hiking cycle is nearly completed. Additional details regarding our debt are discussed in Note 6 in Part I, Item 1 of this Quarterly Report.

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

•Comparison Between the Quarters Ended June 30, ~~2022~~2023 and ~~2021~~2022 — — The ~~$42.4~~$35.3 million ~~unfavorable change~~increase in other (income) expenses, ~~(income)~~ net is primarily driven by an unrealized ~~losses from the mark-to-market adjustment of~~loss on our investment in Embark recorded in the second quarter of 2022 ~~compared to gains in~~and a net gain recorded within our portfolio of investments during the second quarter of ~~2021.~~2023.

•Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — The ~~$72.9~~$59.4 million ~~unfavorable change~~increase in other (income) expenses, ~~(income),~~ net is primarily driven by an unrealized ~~losses from the mark-to-market adjustment of~~loss on our investment in Embark recorded in the first half of 2022 ~~compared to gains in~~and a net gain recorded within our portfolio of investments during the first half of ~~2021.~~2023.

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 June 30, ~~2022~~2023 and ~~2021~~2022 — The ~~$20.3~~$50.1 million ~~increase~~decrease in consolidated income tax expense was primarily due to a reduction of pre-tax income. This resulted in an ~~increase~~effective tax rate of 25.9% for the second quarter of 2023, and 24.7% for the second quarter of 2022.

Comparison Between Year-to-Date June 30, 2023 and 2022 — The $86.6 million decrease in consolidated income ~~before income taxes.~~tax expense was primarily due to a reduction of pre-tax income. This resulted in an effective tax rate of 24.7% for the ~~second quarter~~first half of ~~2022 compared to 25.3% for the second quarter of 2021.~~

•~~Comparison Between Year-to-Date June 30, 2022~~2023, and ~~2021~~— ~~The $44.2 million increase in consolidated income tax expense was primarily due to an increase in income before income taxes. This resulted in an effective tax rate of~~ 24.8% for the first half of ~~2022 compared to 25.5% for the first half of 2021.~~2022.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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


Non-GAAP Financial Measures

The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted EPS," "Adjusted Operating Income," "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, 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, GAAP reportable segment operating ratio to non-GAAP reportable segment Adjusted Operating Ratio, and GAAP cash flow from operations to non-GAAP Free Cash Flow.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

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


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter-to-Date June 30,				Year-to-Date June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
		(In thousands)									(In thousands)
GAAP: Net income attributable to Knight-Swift	GAAP: Net income attributable to Knight-Swift	$	219,492	$	152,804	$	427,829	$	282,594	GAAP: Net income attributable to Knight-Swift	$	63,326	$	219,492	$	167,610	$	427,829
Adjusted for:	Adjusted for:									Adjusted for:
Income tax expense attributable to Knight-Swift	Income tax expense attributable to Knight-Swift	72,090		51,783		141,264		97,112		Income tax expense attributable to Knight-Swift	21,959		72,090		54,694		141,264
Income before income taxes attributable to Knight-Swift	Income before income taxes attributable to Knight-Swift	291,582		204,587		569,093		379,706		Income before income taxes attributable to Knight-Swift	85,285		291,582		222,304		569,093
Amortization of intangibles 1	Amortization of intangibles 1	16,215		11,984		32,381		23,733		Amortization of intangibles 1	16,505		16,215		32,688		32,381

Impairments 2	Impairments 2	—		—		810		—		Impairments 2	—		—		—		810
Legal accruals 3	Legal accruals 3	(2,000)		879		3,055		2,121		Legal accruals 3	1,300		(2,000)		1,000		3,055

Transaction fees 4	Transaction fees 4	—		659		—		659		Transaction fees 4	5,332		—		6,868		—
Severance expense 5										Severance expense 5	—		—		1,452		—
Change in fair value of deferred earnout 6										Change in fair value of deferred earnout 6	(2,500)		—		(2,500)		—

Adjusted income before income taxes	Adjusted income before income taxes	305,797		218,109		605,339		406,219		Adjusted income before income taxes	105,922		305,797		261,812		605,339
Provision for income tax expense at effective rate	Provision for income tax expense at effective rate	(75,608)		(55,111)		(150,287)		(103,788)		Provision for income tax expense at effective rate	(27,304)		(75,608)		(64,703)		(150,287)
Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	$	230,189	$	162,998	$	455,052	$	302,431	Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	$	78,618	$	230,189	$	197,109	$	455,052

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


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter-to-Date June 30,				Year-to-Date June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
GAAP: Earnings per diluted share	GAAP: Earnings per diluted share	$	1.35	$	0.92	$	2.60	$	1.69	GAAP: Earnings per diluted share	$	0.39	$	1.35	$	1.04	$	2.60
Adjusted for:	Adjusted for:									Adjusted for:
Income tax expense attributable to Knight-Swift	Income tax expense attributable to Knight-Swift	0.44		0.31		0.86		0.58		Income tax expense attributable to Knight-Swift	0.14		0.44		0.34		0.86
Income before income taxes attributable to Knight-Swift	Income before income taxes attributable to Knight-Swift	1.79		1.23		3.45		2.28		Income before income taxes attributable to Knight-Swift	0.53		1.79		1.37		3.45
Amortization of intangibles 1	Amortization of intangibles 1	0.10		0.07		0.20		0.14		Amortization of intangibles 1	0.10		0.10		0.20		0.20

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

Transaction fees 4	Transaction fees 4	—		—		—		—		Transaction fees 4	0.03		—		0.04		—
Severance expense 5										Severance expense 5	—		—		0.01		—
Change in fair value of deferred earnout 6										Change in fair value of deferred earnout 6	(0.02)		—		(0.02)		—

Adjusted income before income taxes	Adjusted income before income taxes	1.87		1.31		3.67		2.44		Adjusted income before income taxes	0.65		1.87		1.62		3.67
Provision for income tax expense at effective rate	Provision for income tax expense at effective rate	(0.46)		(0.33)		(0.91)		(0.62)		Provision for income tax expense at effective rate	(0.17)		(0.46)		(0.40)		(0.91)
Non-GAAP: Adjusted EPS	Non-GAAP: Adjusted EPS	$	1.41	$	0.98	$	2.76	$	1.81	Non-GAAP: Adjusted EPS	$	0.49	$	1.41	$	1.22	$	2.76

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:

•~~During~~Second quarter 2023 legal accrual reflects the ~~second~~increased estimated exposure for an accrued legal matter based on a recent settlement agreement. First quarter ~~of 2022, the Company decreased~~2023 legal accrual reflects a decrease in the estimated exposure related to an accrued legal matter previously identified as probable and estimable in prior periods based on a recent settlement agreement.

•~~2021 legal expense reflects costs~~During the second quarter of 2022, the company decreased the estimated exposure related to ~~certain class action lawsuits arising from employee~~an accrued legal matter previously identified as probable and ~~contract related matters.~~

~~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"~~estimable in ~~the condensed consolidated statements of comprehensive income.~~prior periods based on a recent settlement agreement.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

4 "Transaction fees" consists of legal and professional fees associated with the July 1, 2023 acquisition of U.S. Xpress. The transaction fees are included within "Miscellaneous operating expenses" in the condensed statements of comprehensive income.

5 "Severance expense" is included within "Salaries, wages, and benefits" in the condensed statements of comprehensive income.

6 "Change in fair value of deferred earnout" reflects the expense for the change in fair value of a deferred earnout related to the acquisition of UTXL, which is recorded in "Miscellaneous operating expenses."

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


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter-to-Date June 30,						Year-to-Date June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue	$	1,961,131		$	1,315,701		$	3,788,120		$	2,538,715		Total revenue	$	1,552,979		$	1,961,131		$	3,189,911		$	3,788,120
Total operating expenses	Total operating expenses	(1,635,353)			(1,124,586)			(3,164,256)			(2,185,341)			Total operating expenses	(1,458,949)			(1,635,353)			(2,951,094)			(3,164,256)
Operating income	Operating income	$	325,778		$	191,115		$	623,864		$	353,374		Operating income	$	94,030		$	325,778		$	238,817		$	623,864
Operating ratio	Operating ratio	83.4		%	85.5		%	83.5		%	86.1		%	Operating ratio	93.9		%	83.4		%	92.5		%	83.5		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	1,961,131		$	1,315,701		$	3,788,120		$	2,538,715		Total revenue	$	1,552,979		$	1,961,131		$	3,189,911		$	3,788,120
Truckload and LTL fuel surcharge	Truckload and LTL fuel surcharge	(266,600)			(102,829)			(445,711)			(192,738)			Truckload and LTL fuel surcharge	(162,531)			(266,600)			(349,170)			(445,711)
Revenue, excluding truckload and LTL fuel surcharge	Revenue, excluding truckload and LTL fuel surcharge	1,694,531			1,212,872			3,342,409			2,345,977			Revenue, excluding truckload and LTL fuel surcharge	1,390,448			1,694,531			2,840,741			3,342,409

Total operating expenses	Total operating expenses	1,635,353			1,124,586			3,164,256			2,185,341			Total operating expenses	1,458,949			1,635,353			2,951,094			3,164,256
Adjusted for:	Adjusted for:													Adjusted for:
Truckload and LTL fuel surcharge	Truckload and LTL fuel surcharge	(266,600)			(102,829)			(445,711)			(192,738)			Truckload and LTL fuel surcharge	(162,531)			(266,600)			(349,170)			(445,711)
Amortization of intangibles 1	Amortization of intangibles 1	(16,215)			(11,984)			(32,381)			(23,733)			Amortization of intangibles 1	(16,505)			(16,215)			(32,688)			(32,381)

Impairments 2	Impairments 2	—			—			(810)			—			Impairments 2	—			—			—			(810)
Legal accruals 3	Legal accruals 3	2,000			(879)			(3,055)			(2,121)			Legal accruals 3	(1,300)			2,000			(1,000)			(3,055)

Transaction fees 4	Transaction fees 4	—			(659)			—			(659)			Transaction fees 4	(5,332)			—			(6,868)			—
Severance expense 5														Severance expense 5	—			—			(1,452)			—
Change in fair value of deferred earnout 6														Change in fair value of deferred earnout 6	2,500						2,500
Adjusted Operating Expenses	Adjusted Operating Expenses	1,354,538			1,008,235			2,682,299			1,966,090			Adjusted Operating Expenses	1,275,781			1,354,538			2,562,416			2,682,299
Adjusted Operating Income	Adjusted Operating Income	$	339,993		$	204,637		$	660,110		$	379,887		Adjusted Operating Income	$	114,667		$	339,993		$	278,325		$	660,110
Adjusted Operating Ratio	Adjusted Operating Ratio	79.9		%	83.1		%	80.3		%	83.8		%	Adjusted Operating Ratio	91.8		%	79.9		%	90.2		%	80.3		%

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.

5 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

6 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 6.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

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

Truckload Segment


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter-to-Date June 30,						Year-to-Date June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue	$	1,188,809		$	985,858		$	2,269,340		$	1,948,805		Total revenue	$	953,659		$	1,188,809		$	1,965,904		$	2,269,340
Total operating expenses	Total operating expenses	(982,513)			(817,401)			(1,857,927)			(1,621,865)			Total operating expenses	(885,748)			(982,513)			(1,782,094)			(1,857,927)
Operating income	Operating income	$	206,296		$	168,457		$	411,413		$	326,940		Operating income	$	67,911		$	206,296		$	183,810		$	411,413
Operating ratio	Operating ratio	82.6		%	82.9		%	81.9		%	83.2		%	Operating ratio	92.9		%	82.6		%	90.7		%	81.9		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	1,188,809		$	985,858		$	2,269,340		$	1,948,805		Total revenue	$	953,659		$	1,188,809		$	1,965,904		$	2,269,340
Fuel surcharge	Fuel surcharge	(206,931)			(102,829)			(345,592)			(192,738)			Fuel surcharge	(124,004)			(206,931)			(269,268)			(345,592)
Intersegment transactions	Intersegment transactions	(399)			(469)			(735)			(693)			Intersegment transactions	(282)			(399)			(1,283)			(735)
Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions	981,479			882,560			1,923,013			1,755,374			Revenue, excluding fuel surcharge and intersegment transactions	829,373			981,479			1,695,353			1,923,013

Total operating expenses	Total operating expenses	982,513			817,401			1,857,927			1,621,865			Total operating expenses	885,748			982,513			1,782,094			1,857,927
Adjusted for:	Adjusted for:													Adjusted for:
Fuel surcharge	Fuel surcharge	(206,931)			(102,829)			(345,592)			(192,738)			Fuel surcharge	(124,004)			(206,931)			(269,268)			(345,592)
Intersegment transactions	Intersegment transactions	(399)			(469)			(735)			(693)			Intersegment transactions	(282)			(399)			(1,283)			(735)
Amortization of intangibles 1	Amortization of intangibles 1	(323)			(324)			(647)			(648)			Amortization of intangibles 1	(299)			(323)			(642)			(647)

Adjusted Operating Expenses	Adjusted Operating Expenses	774,860			713,779			1,510,953			1,427,786			Adjusted Operating Expenses	761,163			774,860			1,510,901			1,510,953
Adjusted Operating Income	Adjusted Operating Income	$	206,619		$	168,781		$	412,060		$	327,588		Adjusted Operating Income	$	68,210		$	206,619		$	184,452		$	412,060
Adjusted Operating Ratio	Adjusted Operating Ratio	78.9		%	80.9		%	78.6		%	81.3		%	Adjusted Operating Ratio	91.8		%	78.9		%	89.1		%	78.6		%

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

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

LTL Segment


											Quarter-to-Date June 30,						Year-to-Date June 30,
		Quarter-to-Date June 30, 2022			Year-to-Date June 30, 2022						2023			2022			2023			2022
GAAP Presentation	GAAP Presentation	(Dollars in thousands)						GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue	$	283,847		$	538,972				Total revenue	$	267,105		$	283,847		$	522,409		$	538,972
Total operating expenses	Total operating expenses	(240,080)			(468,828)					Total operating expenses	(236,867)			(240,080)			(465,589)			(468,828)
Operating income	Operating income	$	43,767		$	70,144				Operating income	$	30,238		$	43,767		$	56,820		$	70,144
Operating ratio	Operating ratio	84.6		%	87.0		%			Operating ratio	88.7		%	84.6		%	89.1		%	87.0		%

Non-GAAP Presentation	Non-GAAP Presentation									Non-GAAP Presentation
Total revenue	Total revenue	$	283,847		$	538,972				Total revenue	$	267,105		$	283,847		$	522,409		$	538,972
Fuel surcharge	Fuel surcharge	(59,669)			(100,119)					Fuel surcharge	(38,527)			(59,669)			(79,902)			(100,119)

Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions	224,178			438,853					Revenue, excluding fuel surcharge and intersegment transactions	228,578			224,178			442,507			438,853

Total operating expenses	Total operating expenses	240,080			468,828					Total operating expenses	236,867			240,080			465,589			468,828
Adjusted for:	Adjusted for:									Adjusted for:
Fuel surcharge	Fuel surcharge	(59,669)			(100,119)					Fuel surcharge	(38,527)			(59,669)			(79,902)			(100,119)

Amortization of intangibles 1	Amortization of intangibles 1	(3,995)			(7,940)					Amortization of intangibles 1	(3,920)			(3,995)			(7,840)			(7,940)

Adjusted Operating Expenses	Adjusted Operating Expenses	176,416			360,769					Adjusted Operating Expenses	194,420			176,416			377,847			360,769
Adjusted Operating Income	Adjusted Operating Income	$	47,762		$	78,084				Adjusted Operating Income	$	34,158		$	47,762		$	64,660		$	78,084
Adjusted Operating Ratio	Adjusted Operating Ratio	78.7		%	82.2		%			Adjusted Operating Ratio	85.1		%	78.7		%	85.4		%	82.2		%

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 June 30,						Year-to-Date June 30,							Quarter-to-Date June 30,						Year-to-Date June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue	$	248,662		$	166,737		$	530,701		$	285,624		Total revenue	$	119,943		$	248,662		$	258,226		$	530,701
Total operating expenses	Total operating expenses	(204,913)			(152,381)			(447,351)			(263,691)			Total operating expenses	(110,377)			(204,913)			(235,840)			(447,351)
Operating income	Operating income	$	43,749		$	14,356		$	83,350		$	21,933		Operating income	$	9,566		$	43,749		$	22,386		$	83,350
Operating ratio	Operating ratio	82.4		%	91.4		%	84.3		%	92.3		%	Operating ratio	92.0		%	82.4		%	91.3		%	84.3		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	248,662		$	166,737		$	530,701		$	285,624		Total revenue	$	119,943		$	248,662		$	258,226		$	530,701

Intersegment transactions	Intersegment transactions	(1,343)			(4,570)			(3,211)			(7,735)			Intersegment transactions	(2,161)			(1,343)			(3,667)			(3,211)
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions	247,319			162,167			527,490			277,889			Revenue, excluding intersegment transactions	117,782			247,319			254,559			527,490

Total operating expenses	Total operating expenses	204,913			152,381			447,351			263,691			Total operating expenses	110,377			204,913			235,840			447,351
Adjusted for:	Adjusted for:													Adjusted for:

Intersegment transactions	Intersegment transactions	(1,343)			(4,570)			(3,211)			(7,735)			Intersegment transactions	(2,161)			(1,343)			(3,667)			(3,211)
Amortization of intangibles 1	Amortization of intangibles 1	(334)			(97)			(668)			(97)			Amortization of intangibles 1	(334)			(334)			(668)			(668)

Adjusted Operating Expenses	Adjusted Operating Expenses	203,236			147,714			443,472			255,859			Adjusted Operating Expenses	107,882			203,236			231,505			443,472
Adjusted Operating Income	Adjusted Operating Income	$	44,083		$	14,453		$	84,018		$	22,030		Adjusted Operating Income	$	9,900		$	44,083		$	23,054		$	84,018
Adjusted Operating Ratio	Adjusted Operating Ratio	82.2		%	91.1		%	84.1		%	92.1		%	Adjusted Operating Ratio	91.6		%	82.2		%	90.9		%	84.1		%

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

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

Intermodal Segment


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter-to-Date June 30,						Year-to-Date June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation	(Dollars in thousands)
Total revenue	Total revenue	$	132,871		$	115,378		$	242,093		$	222,444		Total revenue	$	104,327		$	132,871		$	214,899		$	242,093
Total operating expenses	Total operating expenses	(118,699)			(109,566)			(212,751)			(213,175)			Total operating expenses	(110,959)			(118,699)			(216,429)			(212,751)
Operating income	Operating income	$	14,172		$	5,812		$	29,342		$	9,269		Operating income	$	(6,632)		$	14,172		$	(1,530)		$	29,342
Operating ratio	Operating ratio	89.3		%	95.0		%	87.9		%	95.8		%	Operating ratio	106.4		%	89.3		%	100.7		%	87.9		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	132,871		$	115,378		$	242,093		$	222,444		Total revenue	$	104,327		$	132,871		$	214,899		$	242,093

Intersegment transactions	Intersegment transactions	(17)			(84)			(47)			(179)			Intersegment transactions	—			(17)			—			(47)
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions	132,854			115,294			242,046			222,265			Revenue, excluding intersegment transactions	104,327			132,854			214,899			242,046

Total operating expenses	Total operating expenses	118,699			109,566			212,751			213,175			Total operating expenses	110,959			118,699			216,429			212,751
Adjusted for:	Adjusted for:													Adjusted for:

Intersegment transactions	Intersegment transactions	(17)			(84)			(47)			(179)			Intersegment transactions	—			(17)			—			(47)

Adjusted Operating Expenses	Adjusted Operating Expenses	118,682			109,482			212,704			212,996			Adjusted Operating Expenses	110,959			118,682			216,429			212,704
Adjusted Operating Income	Adjusted Operating Income	$	14,172		$	5,812		$	29,342		$	9,269		Adjusted Operating Income	$	(6,632)		$	14,172		$	(1,530)		$	29,342
Adjusted Operating Ratio	Adjusted Operating Ratio	89.3		%	95.0		%	87.9		%	95.8		%	Adjusted Operating Ratio	106.4		%	89.3		%	100.7		%	87.9		%

Non-GAAP Reconciliation: Free Cash Flow


	Year-to-Date June 30, ~~2022~~2023

GAAP: Cash flows from operations	$	~~719,984~~722,190
Adjusted for:
Proceeds from sale of property and equipment, including assets held for sale	~~104,239~~98,755
Purchases of property and equipment	~~(295,522)~~(517,856)
Non-GAAP: Free Cash Flow	$	~~528,701~~303,089

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


Liquidity and Capital Resources

Sources of Liquidity

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


Source	June 30, ~~2022~~2023
	(In thousands)
Cash and cash equivalents, excluding restricted cash	$	~~198,021~~228,957
Availability under 2021 Revolver, due September 2026 1	~~871,985~~878,760
Availability under ~~2021~~2022 RSA, due April 2024 2	~~55,700~~42,000
~~Availability under 2021 Prudential Notes, issuance ending October 2023~~ 3	~~87,857~~
Total unrestricted liquidity	$	~~1,213,563~~1,149,717
Cash and cash equivalents – restricted 43	~~115,319~~699,212
Restricted investments, held-to-maturity, amortized cost 43	~~7,856~~3,082
Total liquidity, including restricted cash and restricted investments	$	~~1,336,738~~1,852,011

1 As of June 30, ~~2022,~~2023, we had ~~$129.0~~$210.0 million in borrowings under our $1.1 billion 2021 Revolver. We additionally had ~~$99.0~~$11.2 million in outstanding letters of credit (discussed below), issued under the 2021 Revolver, leaving ~~$872.0~~$878.8 million available under the ~~Revolver.~~2021Revolver.

2 Based on eligible receivables at June 30, ~~2022,~~2023, our borrowing base for the ~~2021~~2022 RSA was ~~$400.0~~$381.0 million, while outstanding borrowings were ~~$279.0 million. We additionally had $65.3~~$339.0 million, ~~in outstanding letters of credit (discussed below),~~ leaving ~~$55.7~~$42.0 million available under the ~~2021~~2022 RSA. Refer to Note 5 in Part I, Item 1 of this Quarterly Report for more information regarding the ~~2021~~2022 RSA.

3 As of June 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~~includes $444.7 million restricted for our acquisition of U.S. Xpress with the remaining amount primarily held by our captive insurance companies for claims payments. "Cash and cash equivalents – restricted" consists of ~~$111.4~~$444.7 million included in "Acquisition escrow" on the condensed consolidated balance sheet held for the U.S. Xpress acquisition and $251.4 million included in "Cash and cash equivalents – restricted" on the condensed consolidated balance sheet ~~and~~ held by Mohave and Red Rock for claims payments. The remaining ~~$3.9~~$3.1 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, will be in the range of ~~$550.0~~$700.0 – ~~$600.0~~$750.0 million for full-year ~~2022.~~2023, which has been updated from $640.0 million to $690.0 million to include anticipated expenditures for U.S. Xpress. 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.

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

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 June 30, ~~2022,~~2023, we had debt, accounts receivable securitization, and finance lease obligations of ~~$2.0~~$2.2 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~~2022 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~~2022 RSA is reduced accordingly. As of June 30, 2023, we also had outstanding letters of credit of $245.8 million pursuant to a bilateral agreement which do not impact the availability of the 2021 Revolver and 2022 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 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 June 30, ~~2022,~~2023, the Company had $200.0 million remaining under the 2022 Knight-Swift Share Repurchase Plan. 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 ~~$369.6~~$939.7 million as of June 30, ~~2022~~2023 and ~~$339.5~~$599.6 million as of December 31, ~~2021.~~2022. The increase in our working capital surplus is primarily due to the $444.7 million acquisition escrow related to the U.S. Xpress acquisition.

Material Debt Agreements

As of June 30, 2023, we had $2.2 billion in material debt obligations at the following carrying values:

•$199.8 million: 2021 Term Loan A-2, due September 2024, net of $0.2 million in deferred loan costs

•$798.9 million: 2021 Term Loan A-3, due September 2026, net of $1.1 million in deferred loan costs

•$249.0 million: 2023 Term Loan, due September 2026, net of $1.0 million in deferred loan costs

•$338.6 million: 2022 RSA outstanding borrowings, net of $0.4 million in deferred loan costs

•$393.6 million: Finance lease obligations

•$210.0 million: 2021 Revolver, due September 2026

•$30.2 million: Other, net of approximately $36,000 in deferred loan costs

As of December 31, 2022, we had $1.9 billion in material debt obligations at the following carrying values:

•$199.8 million: 2021 Term Loan A-2, due September 2024, net of $0.2 million in deferred loan costs

•$798.7 million: 2021 Term Loan A-3, due September 2026, net of $1.3 million in deferred loan costs

•$418.6 million: 2022 RSA outstanding borrowings, net of $0.4 million in deferred loan costs

•$403.0 million: Finance lease obligations

•$43.0 million: 2021 Revolver, due September 2026

•$39.0 million: Other, net of $0.1 million in deferred loan costs

________

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 June 30, 2022, we had $2.0 billion in material debt obligations at the following carrying values:~~

•~~$169.9 million: 2021 Term Loan A-1,~~ ~~due~~ ~~December 2022, net of $0.1 million in deferred loan costs~~

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

•~~$798.5 million: 2021 Term Loan A-3,~~ ~~due~~ ~~September 2026, net of $1.5 million in deferred loan costs~~

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

•~~$380.5 million: Finance lease obligations~~

•~~$129.0 million: 2021 Revolver, due September 2026~~

•~~$43.2 million: Other, net of $0.1 million in deferred loan costs~~

~~As of December 31, 2021, we had $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: 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


		Year-to-Date June 30,				Change			Year-to-Date June 30,				Change
		2022		2021					2023		2022
		(In thousands)							(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	719,984	$	459,504	$	260,480	Net cash provided by operating activities	$	722,190	$	719,984	$	2,206
Net cash used in investing activities	Net cash used in investing activities	(204,306)		(196,916)		(7,390)		Net cash used in investing activities	(415,990)		(204,306)		(211,684)
Net cash used in financing activities		(552,361)		(227,798)		(324,563)
Net cash provided by (used in) financing activities								Net cash provided by (used in) financing activities	236,624		(552,361)		788,985

Net Cash Provided by Operating Activities

Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — The ~~$260.5~~$2.2 million increase in net cash provided by operating activities ~~was primarily due to~~included a ~~$270.5~~$385.0 million decrease in operating income for year-to-date June 30, 2023, and a $31.8 million increase in ~~operating income, including the operating results of ACT~~cash paid for interest and ~~MME for the first half of 2022. This~~ was partially offset by a ~~$21.5~~$137.9 million ~~increase~~decrease in ~~income tax payments. The remaining difference is attributed to various changes~~cash paid for taxes and a $230.2 million decrease in ~~working capital.~~our trade receivables balances resulting in higher cash receipts. Note: Factors affecting the increase in operating income are discussed in "Results of Operations — Consolidated Operating and Other Expenses."

Net Cash Used in Investing Activities

Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — The ~~$7.4~~$211.7 million increase in net cash used in investing activities was primarily due to a ~~$70.8~~$227.8 million increase in net cash capital ~~expenditures, including the first half 2022 investing activities of ACT and MME, and was partially offset by a $62.0 million decrease in net cash invested in acquisitions.~~expenditures.

Net Cash Used in Financing Activities

Comparison Between Year-to-Date June 30, ~~2022~~2023 and ~~2021~~2022 — Net cash ~~used in~~provided by (used in) financing activities increased by ~~$324.6~~$789.0 million, primarily due to $250.0 million in proceeds from the 2023 Term Loan, $298.0 million in net proceeds from our 2021 Revolver, and a ~~$246.3~~$299.9 million ~~increase~~decrease in repurchases of our common ~~stock and a $65.0~~stock. This was partially offset by in $80.0 million ~~decrease in~~ net ~~borrowings under~~repayments on our ~~accounts receivable securitization.~~2021 RSA.

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


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 ~~have~~has 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 have recently and could continue to 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.

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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, 2023 Term Loan, and ~~2021~~2022 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 ~~2.6%~~6.2% as of June 30, ~~2022)~~2023) and fixed rate equipment lease financing. Assuming the level of borrowings as of June 30, ~~2022,~~2023, a hypothetical one percentage point increase in interest rates would increase our annual interest expense by ~~$16.2~~$18.3 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 diesel price per gallon in the US ~~increased~~decreased to ~~$5.53~~$3.94 for the second quarter of ~~2022~~2023 from an average of ~~$3.21~~$5.53 in the second quarter of ~~2021.~~2022. The weekly average diesel price per gallon ~~in the US increased~~decreased to ~~$4.95~~$4.16 for year-to-date June 30, ~~2022~~2023 from an average price of ~~$3.06~~$4.95 for year-to-date June 30, 2022. 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 June 30, ~~2022,~~2023, 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.

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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 June 30, ~~2022,~~2023, 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~~2022 Annual Report and our Quarterly Report for the quarter period ended March 31, 2023 in the ~~section~~sections entitled "Item 1A. Risk Factors," ~~describes~~describe 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
(in thousands, except per share data)
April 1, 2022 to April 30, 2022 202 $ 50.09 202 $ 345,001
May 1, 2022 to May 31, 2022 2,083 $ 47.12 2,083 $ 246,867
June 1, 2022 to June 30, 2022 993 $ 47.16 993 $ 200,041
Total 3,278 $ 47.31 3,278 $ 200,041


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)




April 1, 2023 to April 30, 2023	—	$	—	—	$	200,041
May 1, 2023 to May 31, 2023	—	$	—	—	$	200,041
June 1, 2023 to June 30, 2023	—	$	—	—	$	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 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.~~During the quarter ended June 30, 2023, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.

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ITEM 6.			EXHIBITS

Exhibit
Number

Description

Page or Method of Filing

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

Credit Agreement, dated as of June 22, 2023, by and among Knight-Swift Transportation Holdings Inc., the Lender referred to therein, Bank of America, N.A., as Administrative Agent, and PNC Bank National Association and Wells Fargo Bank, National Association as Lenders and Co-Syndication Agents

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

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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:

August ~~3, 2022~~2, 2023

/s/ David A. Jackson

David A. Jackson

Chief Executive Officer and President, in his capacity as

such and on behalf of the registrant

Date:

August ~~3, 2022~~2, 2023

/s/ Adam W. Miller

Adam W. Miller

Chief Financial Officer, in his capacity as such and on

behalf of the registrant

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