July 20, 2022
Phoenix, Arizona
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| Knight-Swift Transportation Holdings Inc. Reports Second Quarter 2022 Revenue and Earnings |
Knight-Swift Transportation Holdings Inc. (NYSE: KNX) ("Knight-Swift" or "the Company"), one of the largest and most diversified freight transportation companies, operating the largest full truckload fleet in North America, today reported second quarter 2022 net income attributable to Knight-Swift of $219.5 million and Adjusted Net Income Attributable 1 to Knight-Swift of $230.2 million. GAAP earnings per diluted share for the second quarter of 2022 were $1.35, compared to $0.92 for the second quarter of 2021. The Adjusted EPS was $1.41 for the second quarter of 2022, compared to $0.98 for the second quarter of 2021.
Each reportable segment achieved double-digit revenue growth while improving margins, leading to consolidated revenue growth of 39.7%, excluding truckload and less-than-truckload ("LTL") fuel surcharge. Consolidated operating income improved 70.5% to $325.8 million in the second quarter of 2022, as compared to the same quarter last year. Net Income Attributable to Knight-Swift increased by 43.6% to $219.5 million.
•Truckload — 78.9% Adjusted Operating Ratio, a 200 basis point improvement, supported by an 11.2% year-over-year increase in revenue, excluding fuel surcharge and intersegment transactions.
•LTL — 78.7% Adjusted Operating Ratio, a 720 basis point sequential improvement, as yield remains strong and we continue to capture both revenue and cost synergies.
•Logistics — 82.2% Adjusted Operating Ratio, year-over-year operating income improvement of 204.7%. Load count grew by 48.2%, leading to a 52.5% increase in revenue, excluding intersegment transactions.
•Intermodal — 89.3% operating ratio, a 570 basis point improvement year-over-year, leading to a 143.8% increase in operating income with year-over-year revenue growth of 15.2%.
•Non-reportable Segments — Operating income improvement of 614.6%, supported by revenue growth of 91.8%, from the activities within our operating segments of insurance, equipment maintenance, equipment leasing, and warehousing.
•Free Cash Flow 1 — $528.7 million of free cash flow during the first half of 2022.
•Return on Net Tangible Assets 1 — Return on net tangible assets of 24.8% during the last 12 months, generated through internal growth, acquisitions, and investments.
•Embark Technology Inc. ("Embark") — 2021 initial investment in Embark declined, resulting in an unrealized loss that negatively impacted earnings per diluted share and Adjusted EPS by $0.16 during the second quarter of 2022.
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| Quarter Ended June 30, 2 |
| 2022 | | 2021 | | Change |
| (Dollars in thousands, except per share data) |
| Total revenue | $ | 1,961,131 | | | $ | 1,315,701 | | | 49.1 | % |
| Revenue, excluding truckload and LTL fuel surcharge | $ | 1,694,531 | | | $ | 1,212,872 | | | 39.7 | % |
| Operating income | $ | 325,778 | | | $ | 191,115 | | | 70.5 | % |
Adjusted Operating Income 1 | $ | 339,993 | | | $ | 204,637 | | | 66.1 | % |
| Net income attributable to Knight-Swift | $ | 219,492 | | | $ | 152,804 | | | 43.6 | % |
Adjusted Net Income Attributable to Knight-Swift 1 | $ | 230,189 | | | $ | 162,998 | | | 41.2 | % |
| Earnings per diluted share | $ | 1.35 | | | $ | 0.92 | | | 46.7 | % |
Adjusted EPS 1 | $ | 1.41 | | | $ | 0.98 | | | 43.9 | % |
1See GAAP to non-GAAP reconciliation in the schedules following this release.
2For information regarding comparability of the reported results due to acquisitions, refer to footnote 1 of the Condensed Consolidated Statements of Comprehensive Income in the schedules following this release.
David Jackson, CEO of Knight-Swift, commented, "We achieved double-digit revenue growth and expanded margins in each of our reportable segments during the quarter. Although the spot market softened during the quarter, the Truckload segment operated with a sub-80% Adjusted Operating Ratio, while our Logistics segment grew load count 48.2% and continues to provide significant value to our customers through our power-only and traditional brokerage service offerings. The LTL segment produced a 78.7% Adjusted Operating Ratio during the quarter, as the ACT and MME teams work together to build out a connected super-regional network that will provide additional yield and revenue opportunities. We are encouraged by the LTL yield improvement, the magnitude of the synergies being realized, and the market share growth opportunities. The Intermodal segment continues to build out a freight network that aligns with our new rail partners, while continuing to operate with double-digit margins. Demand continues to strengthen for our non-truckload services, and we believe will lead to further revenue and earnings growth. We believe that our ability to pivot to more contract opportunities, provide scale and flexibility to shippers with excess trailers, along with our diverse customer base and expanding geographical footprint, positions us well to navigate a changing environment in the near term."
Other (Expense) Income, net — We incurred $25.6 million of expense within "Other (expense) income, net" in the condensed consolidated statement of comprehensive income in the second quarter of 2022, primarily due to unrealized losses on our investment in Embark. The unrealized losses on our investment in Embark negatively impacted earnings per diluted share and Adjusted EPS by $0.16 for the second quarter of 2022.
Income Taxes — The effective tax rate was 24.7% for the second quarter of 2022, compared to 25.3% for the second quarter of 2021. We expect the full-year 2022 effective tax rate to be approximately 25%.
Dividend and Share Repurchases — On April 19, 2022, our board of directors declared a quarterly cash dividend of $0.12 per share of common stock. The dividend was payable to the Company's stockholders of record as of June 10, 2022 and was paid on June 27, 2022. During the second quarter of 2022, we spent $150 million on share repurchases, bringing the year-to-date total repurchases to approximately $300 million.
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| Segment Financial Performance |
Truckload Segment
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| Quarter Ended June 30, |
| 2022 | | 2021 | | Change |
| (Dollars in thousands) |
| Revenue, excluding fuel surcharge and intersegment transactions | $ | 981,479 | | | $ | 882,560 | | | 11.2 | % |
| Operating income | $ | 206,296 | | | $ | 168,457 | | | 22.5 | % |
Adjusted Operating Income 1 | $ | 206,619 | | | $ | 168,781 | | | 22.4 | % |
| Operating ratio | 82.6 | % | | 82.9 | % | | (30 | bps) |
Adjusted Operating Ratio 1 | 78.9 | % | | 80.9 | % | | (200 | bps) |
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1See GAAP to non-GAAP reconciliation in the schedules following this release.
Our Truckload segment includes our irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border operations across our brands with 13,342 irregular route tractors and 4,713 dedicated tractors. Our Truckload segment operated at a 78.9% Adjusted Operating Ratio, which improved by 200 basis points year-over-year. This, along with 11.2% growth in revenue, excluding fuel surcharge and intersegment transactions, led to a 22.4% improvement in Adjusted Operating Income.
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 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 continue to add scale by increasing our trailer count which has grown to approximately 73,000 trailers as of the second quarter of 2022.
LTL Segment 1
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| Quarter Ended June 30, |
| 2022 | | | | |
| (Dollars in thousands) |
| Revenue, excluding fuel surcharge | $ | 224,178 | | | | | |
| Operating income | $ | 43,767 | | | | | |
Adjusted Operating Income 2 | $ | 47,762 | | | | | |
| Operating ratio | 84.6 | % | | | | |
Adjusted Operating Ratio 2 | 78.7 | % | | | | |
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1For information regarding comparability of the reported results due to acquisitions, refer to footnote 1 of the Condensed Consolidated Statements of Comprehensive Income in the schedules following this release.
2See GAAP to non-GAAP reconciliation in the schedules following this release.
Our LTL segment made significant strides in improving margins, operating at a 78.7% Adjusted Operating Ratio during the second quarter of 2022. Revenue, excluding fuel surcharge, per hundredweight was $14.20, while revenue per shipment, excluding fuel surcharge was $151.64. The ACT and MME teams continue to achieve both customer and cost synergies as they connect their network of approximately 100 facilities and door count of 4,300, leading to more freight opportunities and a longer length of haul. During the back half of this year we expect door capacity will grow by 300 doors across 9 new or expanded locations. We continue to look for both organic and inorganic opportunities to geographically expand our footprint within the LTL market.
Logistics Segment | | | | | | | | | | | | | | | | | |
| Quarter Ended June 30, |
| 2022 | | 2021 | | Change |
| (Dollars in thousands) |
| Revenue, excluding intersegment transactions | $ | 247,319 | | | $ | 162,167 | | | 52.5 | % |
| Operating income | $ | 43,749 | | | $ | 14,356 | | | 204.7 | % |
Adjusted Operating Income 1 | $ | 44,083 | | | $ | 14,453 | | | 205.0 | % |
| Operating ratio | 82.4 | % | | 91.4 | % | | (900 | bps) |
Adjusted Operating Ratio 1 | 82.2 | % | | 91.1 | % | | (890 | bps) |
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1See GAAP to non-GAAP reconciliation in the schedules following this release.
Demand for our logistics service offering remains strong. We continue to leverage our consolidated fleet of approximately 73,000 trailers to support our power-only service offering. 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 Adjusted Operating Ratio improved to 82.2%, resulting in a 205.0% increase in Adjusted Operating Income. Logistics gross margin was 24.4% in the second quarter of 2022, compared to 15.7% in the second quarter of 2021.
Intermodal Segment
| | | | | | | | | | | | | | | | | |
| Quarter Ended June 30, |
| 2022 | | 2021 | | Change |
| (Dollars in thousands) |
| Revenue, excluding intersegment transactions | $ | 132,854 | | | $ | 115,294 | | | 15.2 | % |
| Operating income | $ | 14,172 | | | $ | 5,812 | | | 143.8 | % |
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| Operating ratio | 89.3 | % | | 95.0 | % | | (570 | bps) |
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Operating income increased by 143.8%, as operating ratio improved from 95.0% 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 by longer container and chassis dwell times, as well as inconsistent rail network speeds. These factors contributed to a 39.2% increase in 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 a result of our new network and improved service offering, we expect load volumes to inflect positive year-over-year beginning in the third quarter as we grow with new customers and expand with existing customers. To position Intermodal for continued growth, we increased our container count by over 600 during the first half of the year and we anticipate further growth during the second half. Intermodal continues to provide value to our customers and is complementary to the many services we offer.
Non-reportable Segments
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| Quarter Ended June 30, |
| 2022 | | 2021 | | Change |
| (Dollars in thousands) |
| Total revenue | $ | 128,112 | | | $ | 66,795 | | | 91.8 | % |
| | | | | |
| Operating income | $ | 17,794 | | | $ | 2,490 | | | 614.6 | % |
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The 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, as well as $11.6 million in quarterly amortization of intangibles related to the 2017 merger between Knight and Swift and certain acquisitions). Strong demand for our insurance, equipment maintenance, equipment leasing, and warehousing services led to a 614.6% improvement in operating income, supported by 91.8% revenue growth within our non-reportable segments. We expect continued growth and income improvement from these segments moving forward.
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| Consolidated Liquidity, Capital Resources, and Earnings Guidance |
Cash Flow Sources (Uses) 1
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| | Year-to-Date June 30, |
| | 2022 | | 2021 | | Change |
| (In thousands) |
| Net cash provided by operating activities | $ | 719,984 | | | $ | 459,504 | | | $ | 260,480 | |
| Net cash used in investing activities | (204,306) | | | (196,916) | | | (7,390) | |
| Net cash used in financing activities | (552,361) | | | (227,798) | | | (324,563) | |
Net (decrease) increase in cash, restricted cash, and equivalents 2 | $ | (36,683) | | | $ | 34,790 | | | $ | (71,473) | |
| Net capital expenditures | $ | (191,283) | | | $ | (120,481) | | | $ | (70,802) | |
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1For information regarding comparability of the reported results due to acquisitions, refer to footnote 1 of the Condensed Consolidated Statements of Comprehensive Income in the schedules following this release.
2"Net (decrease) increase in cash, restricted cash, and equivalents" is derived from changes within "Cash and cash equivalents," "Cash and cash equivalents – restricted," and the long-term portion of restricted cash included in "Other long-term assets" in the condensed consolidated balance sheets.
Liquidity and Capitalization — As of June 30, 2022, we had a balance of $1.2 billion of unrestricted cash and available liquidity and $6.6 billion of stockholders' equity. The face value of our debt, net of unrestricted cash ("Net Debt") was $1.8 billion as of June 30, 2022. Free Cash Flow1 for the first half of 2022 was $528.7 million. During the first half of 2022, we generated $720.0 million in operating cash flows and paid down $38.8 million in long-term debt, $27.6 million in finance lease liabilities, and $19.8 million on our operating lease liabilities. We also repurchased approximately $300 million worth of our shares, and issued $39.7 million in dividends to our stockholders.
Equipment and Capital Expenditures — Gain on sale of revenue equipment increased to $23.0 million in the second quarter of 2022, compared to $15.1 million in the same quarter of 2021. The average age of the tractor fleet within our Truckload segment was 2.7 years in the second quarter of 2022, compared to 2.4 years in the same quarter of 2021. The average age of the tractor fleet within our LTL segment was 4.6 years in the second quarter of 2022. Cash capital expenditures, net of disposal proceeds, were $191.3 million in the first half of 2022. We expect net cash capital expenditures will be in the range of $550 – $600 million for full-year 2022. Our net cash capital expenditures primarily represent replacements of existing tractors and trailers, as well as investments in our terminal network, driver amenities, and technology.
Guidance — We expect that Adjusted EPS1 for full-year 2022 will range from $5.30 to $5.45, which is an update from our previous expectation of $5.20 to $5.40. Our expected Adjusted EPS1 range is based on the current truckload, LTL, and general market conditions, recent trends, and the current beliefs, assumptions, and expectations of management, as follows:
•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
•Stable truck count with a modest sequential improvement in miles per tractor
•Year-over-year increases in LTL revenue with improved margins
•Increased Logistics load volumes offset by a reduced revenue per load with an operation ratio in the high 80s
•Intermodal margins to remain in the double digits with volumes improving year-over-year
•Continued growth in revenue and operating income in non-reportable
•Inflationary pressure in most cost areas including, maintenance, equipment, and non-driving labor
•Equipment gains to be approximately $20 - $25 million in total for the rest of the year
•Increased interest rates expected to negatively impact second half 2022 EPS by $0.05 - $0.07 from our previous forecast
•Net cash capital expenditures expected range of $550 - $600 million for the full year 2022
•Approximate tax rate of 25% for the full year 2022
The factors described under "Forward-Looking Statements," among others, could cause actual results to materially vary from this guidance. Further, we cannot estimate on a forward-looking basis, the impact of certain income and expense items on our earnings per share, because these items, which could be significant, may be infrequent, are difficult to predict, and may be highly variable. As a result, we do not provide a corresponding GAAP measure for, or reconciliation to, our Adjusted EPS1 guidance.
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1See GAAP to non-GAAP reconciliations in the schedules following this release.
2Our calculation of Adjusted EPS starts with GAAP diluted earnings per share and adds back the after-tax impact of intangible asset amortization (which is expected to be approximately $0.30 for full-year 2022), as well as noncash impairments and certain other unusual items, if any.
Knight-Swift will host a live conference call with analysts and investors to discuss the earnings release, the results of operations, and other matters following its earnings press release on Wednesday, July 20, 2022, at 4:30 p.m. EDT. The conference dial in information is +1 (888) 886-7786 (Conference ID: 46652829). Please note that since the call is expected to begin promptly as scheduled, you will need to join a few minutes before that time. Slides to accompany this call will be posted on the Company’s website and will be available to download just before the scheduled conference call. To view the presentation, please visit https://investor.knight-swift.com/, "Second Quarter 2022 Conference Call Presentation."
Knight-Swift Transportation Holdings Inc. is one of North America's largest and most diversified freight transportation companies, providing multiple full truckload, LTL, intermodal, and logistics services. Knight-Swift uses a nationwide network of business units and terminals in the United States and Mexico to serve customers throughout North America. In addition to operating one of the country's largest tractor 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.
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| Investor Relations Contact Information |
David A. Jackson, President and Chief Executive Officer, or Adam W. Miller, Chief Financial Officer: (602) 606-6349
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| Forward-Looking Statements |
This press release contains statements that may constitute forward-looking statements, which are based on information currently available, usually identified by words such as "anticipates," "believes," "estimates," "plans,'' "projects," "expects," "hopes," "intends," "strategy," ''focus," "outlook," "foresee," "will," "could," "should," "may," "feel", "goal," "continue," or similar expressions, which speak only as of the date the statement was made. Such statements are forward-looking statements and are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995. 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, share repurchases, leverage ratio, 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, industry, or Company conditions or performance, including, without limitation, expectations regarding future supply or demand, volume, or truckload capacity, and any statements of belief and any statement of assumptions underlying any of the foregoing. In this press release, such statements include, but are not limited to, statements concerning:
•any projections of or guidance regarding earnings, earnings per share, Adjusted EPS, revenues, cash flows, dividends, share repurchases, capital expenditures, or other financial items,
•future dividends,
•future effective tax rates,
•future performance of our reportable segments, including network design, cost structure, container count, margin, and volumes within our Intermodal segment, and the expected network, margin, and volumes within our LTL segment,
•future capital structure, capital allocation, growth strategies and opportunities, and liquidity, and
•future capital expenditures, including nature and funding of capital expenditures.
Such forward-looking statements are inherently uncertain, and are based upon the current beliefs, assumptions, and expectations of management and current market conditions, which are subject to significant risks and uncertainties as set forth in the Risk Factors section of Knight-Swift's Annual Report on Form 10-K for the year ended December 31, 2021, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.
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Condensed Consolidated Statements of Comprehensive Income (Unaudited) 1 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Quarter Ended June 30, | | Year-to-Date June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| (In thousands, except per share data) |
| Revenue: | | | | | | | |
| Revenue, excluding truckload and LTL fuel surcharge | $ | 1,694,531 | | | $ | 1,212,872 | | | $ | 3,342,409 | | | $ | 2,345,977 | |
| Truckload and LTL fuel surcharge | 266,600 | | | 102,829 | | | 445,711 | | | 192,738 | |
| Total revenue | 1,961,131 | | | 1,315,701 | | | 3,788,120 | | | 2,538,715 | |
| Operating expenses: | | | | | | | |
| Salaries, wages, and benefits | 549,956 | | | 377,613 | | | 1,086,012 | | | 747,983 | |
| Fuel | 257,146 | | | 126,055 | | | 447,635 | | | 244,291 | |
| Operations and maintenance | 106,724 | | | 71,313 | | | 202,607 | | | 139,383 | |
| Insurance and claims | 102,084 | | | 58,776 | | | 200,276 | | | 114,419 | |
| Operating taxes and licenses | 30,204 | | | 21,717 | | | 59,241 | | | 43,765 | |
| Communications | 5,744 | | | 4,635 | | | 11,614 | | | 9,672 | |
| Depreciation and amortization of property and equipment | 147,482 | | | 123,606 | | | 292,526 | | | 243,521 | |
| Amortization of intangibles | 16,215 | | | 11,984 | | | 32,381 | | | 23,733 | |
| Rental expense | 13,492 | | | 13,399 | | | 26,893 | | | 30,263 | |
| Purchased transportation | 384,910 | | | 304,157 | | | 771,356 | | | 562,387 | |
| Impairments | — | | | — | | | 810 | | | — | |
| Miscellaneous operating expenses | 21,396 | | | 11,331 | | | 32,905 | | | 25,924 | |
| | | | | | | |
| Total operating expenses | 1,635,353 | | | 1,124,586 | | | 3,164,256 | | | 2,185,341 | |
| Operating income | 325,778 | | | 191,115 | | | 623,864 | | | 353,374 | |
| Other (expenses) income: | | | | | | | |
| Interest income | 675 | | | 270 | | | 1,136 | | | 564 | |
| Interest expense | (9,345) | | | (3,307) | | | (16,025) | | | (6,793) | |
| Other (expense) income, net | (25,576) | | | 16,840 | | | (39,981) | | | 32,945 | |
| Total other (expenses) income, net | (34,246) | | | 13,803 | | | (54,870) | | | 26,716 | |
| Income before income taxes | 291,532 | | | 204,918 | | | 568,994 | | | 380,090 | |
| Income tax expense | 72,090 | | | 51,783 | | | 141,264 | | | 97,112 | |
| Net income | 219,442 | | | 153,135 | | | 427,730 | | | 282,978 | |
| Net (income) loss attributable to noncontrolling interest | 50 | | | (331) | | | 99 | | | (384) | |
| Net income attributable to Knight-Swift | $ | 219,492 | | | $ | 152,804 | | | $ | 427,829 | | | $ | 282,594 | |
| Other comprehensive loss | (1,862) | | | — | | | (2,234) | | | — | |
| Comprehensive income | $ | 217,630 | | | $ | 152,804 | | | $ | 425,595 | | | $ | 282,594 | |
| | | | | | | |
| Earnings per share: | | | | | | | |
| Basic | $ | 1.35 | | | $ | 0.92 | | | $ | 2.61 | | | $ | 1.70 | |
| Diluted | $ | 1.35 | | | $ | 0.92 | | | $ | 2.60 | | | $ | 1.69 | |
| | | | | | | |
| Dividends declared per share: | $ | 0.12 | | | $ | 0.10 | | | $ | 0.24 | | | $ | 0.18 | |
| | | | | | | |
| Weighted average shares outstanding: | | | | | | | |
| Basic | 162,365 | | | 165,577 | | | 163,863 | | | 165,751 | |
| Diluted | 163,166 | | | 166,585 | | | 164,801 | | | 166,750 | |
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1The reported results do not include the results of operations of ACT and its subsidiary prior to its acquisition by Knight-Swift on July 5, 2021 in accordance with the accounting treatment applicable to the transaction. The reported results do not include the results of operations of MME and its subsidiaries prior to its acquisition by Knight-Swift on December 6, 2021 in accordance with the accounting treatment applicable to the transaction.
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| Condensed Consolidated Balance Sheets (Unaudited) |
| | | | | | | | | | | |
| June 30, 2022 | | December 31, 2021 |
| (In thousands) |
| ASSETS | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 198,021 | | | $ | 261,001 | |
| Cash and cash equivalents – restricted | 111,449 | | | 87,241 | |
| Restricted investments, held-to-maturity, amortized cost | 7,856 | | | 5,866 | |
| Trade receivables, net of allowance for doubtful accounts of $22,124 and $21,663, respectively | 1,010,768 | | | 911,336 | |
| Contract balance – revenue in transit | 20,422 | | | 22,936 | |
| | | |
| | | |
| Prepaid expenses | 79,405 | | | 90,507 | |
| Assets held for sale | 11,195 | | | 8,166 | |
| Income tax receivable | 6,880 | | | 909 | |
| Other current assets | 27,421 | | | 26,318 | |
| Total current assets | 1,473,417 | | | 1,414,280 | |
| Property and equipment, net | 3,601,189 | | | 3,555,364 | |
| | | |
| Operating lease right-of-use assets | 165,643 | | | 147,540 | |
| Goodwill | 3,518,589 | | | 3,515,135 | |
| Intangible assets, net | 1,798,668 | | | 1,831,049 | |
| | | |
| Other long-term assets | 157,372 | | | 192,132 | |
| Total assets | $ | 10,714,878 | | | $ | 10,655,500 | |
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| LIABILITIES AND STOCKHOLDERS' EQUITY | | | |
| Current liabilities: | | | |
| Accounts payable | $ | 220,469 | | | $ | 224,844 | |
| Accrued payroll and purchased transportation | 245,679 | | | 217,084 | |
| Accrued liabilities | 124,072 | | | 128,536 | |
| Claims accruals – current portion | 240,021 | | | 206,607 | |
| | | |
| Finance lease liabilities and long-term debt – current portion | 235,775 | | | 262,423 | |
| Operating lease liabilities – current portion | 37,787 | | | 35,322 | |
| | | |
| | | |
| Total current liabilities | 1,103,803 | | | 1,074,816 | |
| Revolving line of credit | 129,000 | | | 260,000 | |
| Long-term debt – less current portion | 1,028,617 | | | 1,037,552 | |
| Finance lease liabilities – less current portion | 327,320 | | | 256,166 | |
| Operating lease liabilities – less current portion | 123,274 | | | 107,614 | |
| Accounts receivable securitization | 278,594 | | | 278,483 | |
| Claims accruals – less current portion | 206,418 | | | 210,714 | |
| Deferred tax liabilities | 874,601 | | | 874,877 | |
| Other long-term liabilities | 11,994 | | | 11,828 | |
| Total liabilities | 4,083,621 | | | 4,112,050 | |
| Stockholders’ equity: | | | |
| Common stock | 1,606 | | | 1,660 | |
| Additional paid-in capital | 4,372,916 | | | 4,350,913 | |
| Accumulated other comprehensive loss | (2,797) | | | (563) | |
| Retained earnings | 2,249,333 | | | 2,181,142 | |
| Total Knight-Swift stockholders' equity | 6,621,058 | | | 6,533,152 | |
| Noncontrolling interest | 10,199 | | | 10,298 | |
| Total stockholders’ equity | 6,631,257 | | | 6,543,450 | |
| Total liabilities and stockholders’ equity | $ | 10,714,878 | | | $ | 10,655,500 | |
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| Segment Operating Statistics (Unaudited) |
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| 2022 | | 2021 | | Change | | 2022 | | 2021 | | Change |
| Truckload | | | | | | | | | | | |
Average revenue per tractor 1 | $ | 54,361 | | | $ | 48,939 | | | 11.1 | % | | $ | 106,775 | | | $ | 96,827 | | | 10.3 | % |
| Non-paid empty miles percentage | 14.6 | % | | 13.0 | % | | 160 | bps | | 14.4 | % | | 12.9 | % | | 150 | bps |
| Average length of haul (miles) | 392 | | | 408 | | | (3.9 | %) | | 393 | | | 410 | | | (4.1 | %) |
| Miles per tractor | 19,542 | | | 20,913 | | | (6.6 | %) | | 38,460 | | | 41,841 | | | (8.1 | %) |
| Average tractors | 18,055 | | | 18,034 | | | 0.1 | % | | 18,010 | | | 18,129 | | | (0.7 | %) |
Average trailers 2 | 73,010 | | | 60,858 | | | 20.0 | % | | 72,111 | | | 60,382 | | | 19.4 | % |
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LTL 3 4 | | | | | | | | | | | |
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| Shipments per day | 19,657 | | | N/A | | N/A | | 19,220 | | | N/A | | N/A |
| Weight per shipment (pounds) | 1,068 | | | N/A | | N/A | | 1,083 | | | N/A | | N/A |
| Average length of haul (miles) | 522 | | | N/A | | N/A | | 522 | | | N/A | | N/A |
| Revenue per shipment | $ | 191.30 | | | N/A | | N/A | | $ | 185.01 | | | N/A | | N/A |
| Revenue xFSR per shipment | $ | 151.64 | | | N/A | | N/A | | $ | 151.18 | | | N/A | | N/A |
| Revenue per hundredweight | $ 17.91 | | | N/A | | N/A | | $ 17.09 | | | N/A | | N/A |
| Revenue xFSR per hundredweight | $ 14.20 | | | N/A | | N/A | | $ 13.97 | | | N/A | | N/A |
Average tractors 5 | 3,129 | | | N/A | | N/A | | 3,110 | | | N/A | | N/A |
Average trailers 6 | 8,402 | | | N/A | | N/A | | 8,352 | | | N/A | | N/A |
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| Logistics | | | | | | | | | | | |
Revenue per load 7 | $ | 2,257 | | | $ | 2,193 | | | 2.9 | % | | $ | 2,471 | | | $ | 2,094 | | | 18.0 | % |
| Gross margin | 24.4 | % | | 15.7 | % | | 870 | bps | | 22.2 | % | | 15.2 | % | | 700 | bps |
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| Intermodal | | | | | | | | | | | |
Average revenue per load 7 | $ | 3,642 | | | $ | 2,616 | | | 39.2 | % | | $ | 3,560 | | | $ | 2,583 | | | 37.8 | % |
| Load count | 36,474 | | | 44,073 | | | (17.2 | %) | | 67,989 | | | 86,041 | | | (21.0 | %) |
| Average tractors | 623 | | | 611 | | | 2.0 | % | | 603 | | | 605 | | | (0.3 | %) |
| Average containers | 11,491 | | | 10,842 | | | 6.0 | % | | 11,259 | | | 10,844 | | | 3.8 | % |
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1Computed with revenue, excluding fuel surcharge and intersegment transactions
2Second quarter 2022 includes 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.
The year-to-date period ending June 30, 2022 includes 6,783 trailers related to leasing activities recorded within our non-reportable operating segments. 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.
3Operating statistics within the LTL segment exclude dedicated and other businesses.
4Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
5Includes 700 and 698 tractors from ACT's and MME's dedicated and other businesses for quarter and year-to-date periods ended June 30, 2022.
6Includes 962 and 935 trailers from ACT's and MME's dedicated and other businesses for quarter and year-to-date periods ended June 30, 2022.
7Computed with revenue, excluding intersegment transactions.
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| Non-GAAP Financial Measures and Reconciliations |
The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted Operating Income," "Adjusted EPS," "Adjusted Operating Ratio," "Free Cash Flow," and "Return on Net Tangible Assets," 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 of directors focus on Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, Adjusted Operating Ratio, and Return on Net Tangible Assets 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 of directors 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 Operating Income, Adjusted EPS, Adjusted Operating Ratio, Free Cash Flow, and Return on Net Tangible Assets, are not substitutes for their comparable GAAP financial measures, such as net income, cash flows from operating activities, operating margin, 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.
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| Non-GAAP Reconciliation (Unaudited): |
Adjusted Operating Income and Adjusted Operating Ratio 1 2 |
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| GAAP Presentation | (Dollars in thousands) |
| Total revenue | $ | 1,961,131 | | | $ | 1,315,701 | | | $ | 3,788,120 | | | $ | 2,538,715 | |
| Total operating expenses | (1,635,353) | | | (1,124,586) | | | (3,164,256) | | | (2,185,341) | |
| Operating income | $ | 325,778 | | | $ | 191,115 | | | $ | 623,864 | | | $ | 353,374 | |
| Operating ratio | 83.4 | % | | 85.5 | % | | 83.5 | % | | 86.1 | % |
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| Non-GAAP Presentation | | | | | | | |
| Total revenue | $ | 1,961,131 | | | $ | 1,315,701 | | | $ | 3,788,120 | | | $ | 2,538,715 | |
| Truckload and LTL fuel surcharge | (266,600) | | | (102,829) | | | (445,711) | | | (192,738) | |
| Revenue, excluding truckload and LTL fuel surcharge | 1,694,531 | | | 1,212,872 | | | 3,342,409 | | | 2,345,977 | |
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| Total operating expenses | 1,635,353 | | | 1,124,586 | | | 3,164,256 | | | 2,185,341 | |
| Adjusted for: | | | | | | | |
| Truckload and LTL fuel surcharge | (266,600) | | | (102,829) | | | (445,711) | | | (192,738) | |
Amortization of intangibles 3 | (16,215) | | | (11,984) | | | (32,381) | | | (23,733) | |
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Impairments 4 | — | | | — | | | (810) | | | — | |
Legal accruals 5 | 2,000 | | | (879) | | | (3,055) | | | (2,121) | |
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Transaction fees 6 | — | | | (659) | | | — | | | (659) | |
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| Adjusted Operating Expenses | 1,354,538 | | | 1,008,235 | | | 2,682,299 | | | 1,966,090 | |
| Adjusted Operating Income | $ | 339,993 | | | $ | 204,637 | | | $ | 660,110 | | | $ | 379,887 | |
| Adjusted Operating Ratio | 79.9 | % | | 83.1 | % | | 80.3 | % | | 83.8 | % |
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1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio.
2 Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
3 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the July 5, 2021 ACT acquisition and other acquisitions.
4 "Impairments" reflects the non-cash impairment of building improvements (within our non-reportable segments).
5 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following:
•During the second quarter of 2022, the Company decreased 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 related to certain class action lawsuits arising from employee and contract related matters.
6 "Transaction Fees" consisted of legal and professional fees associated with the acquisitions of UTXL and ACT. The transaction fees are included within "Miscellaneous operating expenses" in the condensed statements of comprehensive income.
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| Non-GAAP Reconciliation (Unaudited): |
Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 2 |
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| (Dollars in thousands, except per share data) |
| GAAP: Net income attributable to Knight-Swift | $ | 219,492 | | | $ | 152,804 | | | $ | 427,829 | | | $ | 282,594 | |
| Adjusted for: | | | | | | | |
| Income tax expense attributable to Knight-Swift | 72,090 | | | 51,783 | | | 141,264 | | | 97,112 | |
| Income before income taxes attributable to Knight-Swift | 291,582 | | | 204,587 | | | 569,093 | | | 379,706 | |
Amortization of intangibles 3 | 16,215 | | | 11,984 | | | 32,381 | | | 23,733 | |
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Impairments 4 | — | | | — | | | 810 | | | — | |
Legal accruals 5 | (2,000) | | | 879 | | | 3,055 | | | 2,121 | |
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Transaction fees 6 | — | | | 659 | | | — | | | 659 | |
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| Adjusted income before income taxes | 305,797 | | | 218,109 | | | 605,339 | | | 406,219 | |
| Provision for income tax expense at effective rate | (75,608) | | | (55,111) | | | (150,287) | | | (103,788) | |
| Non-GAAP: Adjusted Net Income Attributable to Knight-Swift | $ | 230,189 | | | $ | 162,998 | | | $ | 455,052 | | | $ | 302,431 | |
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Note: Because the numbers reflected in the table below are calculated on a per share basis, they may not foot due to rounding.
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| GAAP: Earnings per diluted share | $ | 1.35 | | | $ | 0.92 | | | $ | 2.60 | | | $ | 1.69 | |
| Adjusted for: | | | | | | | |
| Income tax expense attributable to Knight-Swift | 0.44 | | | 0.31 | | | 0.86 | | | 0.58 | |
| Income before income taxes attributable to Knight-Swift | 1.79 | | | 1.23 | | | 3.45 | | | 2.28 | |
Amortization of intangibles 3 | 0.10 | | | 0.07 | | | 0.20 | | | 0.14 | |
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Impairments 4 | — | | | — | | | — | | | — | |
Legal accruals 5 | (0.01) | | | 0.01 | | | 0.02 | | | 0.01 | |
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Transaction fees 6 | — | | | — | | | — | | | — | |
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| Adjusted income before income taxes | 1.87 | | | 1.31 | | | 3.67 | | | 2.44 | |
| Provision for income tax expense at effective rate | (0.46) | | | (0.33) | | | (0.91) | | | (0.62) | |
| Non-GAAP: Adjusted EPS | $ | 1.41 | | | $ | 0.98 | | | $ | 2.76 | | | $ | 1.81 | |
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1Pursuant to the requirements of Regulation G, these tables reconcile consolidated GAAP net income attributable to Knight-Swift to non-GAAP consolidated Adjusted Net Income Attributable to Knight-Swift and consolidated GAAP diluted earnings per share to non-GAAP consolidated Adjusted EPS.
2Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
3Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 3.
4Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 4.
5Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
6Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 6.
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| Non-GAAP Reconciliation (Unaudited): |
Segment Adjusted Operating Income and Adjusted Operating Ratio 1 |
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| Truckload Segment | 2022 | | 2021 | | 2022 | | 2021 |
| GAAP Presentation | (Dollars in thousands) |
| Total revenue | $ | 1,188,809 | | | $ | 985,858 | | | $ | 2,269,340 | | | $ | 1,948,805 | |
| Total operating expenses | (982,513) | | | (817,401) | | | (1,857,927) | | | (1,621,865) | |
| Operating income | $ | 206,296 | | | $ | 168,457 | | | $ | 411,413 | | | $ | 326,940 | |
| Operating ratio | 82.6 | % | | 82.9 | % | | 81.9 | % | | 83.2 | % |
| Non-GAAP Presentation | | | | | | | |
| Total revenue | $ | 1,188,809 | | | $ | 985,858 | | | $ | 2,269,340 | | | $ | 1,948,805 | |
| Fuel surcharge | (206,931) | | | (102,829) | | | (345,592) | | | (192,738) | |
| Intersegment transactions | (399) | | | (469) | | | (735) | | | (693) | |
| Revenue, excluding fuel surcharge and intersegment transactions | 981,479 | | | 882,560 | | | 1,923,013 | | | 1,755,374 | |
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| Total operating expenses | 982,513 | | | 817,401 | | | 1,857,927 | | | 1,621,865 | |
| Adjusted for: | | | | | | | |
| Fuel surcharge | (206,931) | | | (102,829) | | | (345,592) | | | (192,738) | |
| Intersegment transactions | (399) | | | (469) | | | (735) | | | (693) | |
Amortization of intangibles 2 | (323) | | | (324) | | | (647) | | | (648) | |
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| Adjusted Operating Expenses | 774,860 | | | 713,779 | | | 1,510,953 | | | 1,427,786 | |
| Adjusted Operating Income | $ | 206,619 | | | $ | 168,781 | | | $ | 412,060 | | | $ | 327,588 | |
| Adjusted Operating Ratio | 78.9 | % | | 80.9 | % | | 78.6 | % | | 81.3 | % |
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1 Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
2"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in historical Knight acquisitions.
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| Non-GAAP Reconciliation (Unaudited): |
Segment Adjusted Operating Income and Adjusted Operating Ratio 1 — (Continued) |
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| Quarter Ended June 30, | | Year-to-Date June 30, | | |
LTL Segment 2 | 2022 | | | | 2022 | | |
| GAAP Presentation | (Dollars in thousands) | | |
| Total revenue | $ | 283,847 | | | | | $ | 538,972 | | | |
| Total operating expenses | (240,080) | | | | | (468,828) | | | |
| Operating income | $ | 43,767 | | | | | $ | 70,144 | | | |
| Operating ratio | 84.6 | % | | | | 87.0 | % | | |
| Non-GAAP Presentation | | | | | | | |
| Total revenue | $ | 283,847 | | | | | $ | 538,972 | | | |
| Fuel surcharge | (59,669) | | | | | (100,119) | | | |
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| Revenue, excluding fuel surcharge | 224,178 | | | | | 438,853 | | | |
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| Total operating expenses | 240,080 | | | | | 468,828 | | | |
| Adjusted for: | | | | | | | |
| Fuel surcharge | (59,669) | | | | | (100,119) | | | |
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Amortization of intangibles 3 | (3,995) | | | | | (7,940) | | | |
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| Adjusted Operating Expenses | 176,416 | | | | | 360,769 | | | |
| Adjusted Operating Income | $ | 47,762 | | | | | $ | 78,084 | | | |
| Adjusted Operating Ratio | 78.7 | % | | | | 82.2 | % | | |
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1Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
2Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
3"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the ACT and MME acquisitions.
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| Non-GAAP Reconciliation (Unaudited): |
Segment Adjusted Operating Income and Adjusted Operating Ratio 1 — (Continued) |
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| Logistics Segment | 2022 | | 2021 | | 2022 | | 2021 |
| GAAP Presentation | (Dollars in thousands) |
| Total revenue | $ | 248,662 | | | $ | 166,737 | | | $ | 530,701 | | | $ | 285,624 | |
| Total operating expenses | (204,913) | | | (152,381) | | | (447,351) | | | (263,691) | |
| Operating income | $ | 43,749 | | | $ | 14,356 | | | $ | 83,350 | | | $ | 21,933 | |
| Operating ratio | 82.4 | % | | 91.4 | % | | 84.3 | % | | 92.3 | % |
| Non-GAAP Presentation | |
| Total revenue | $ | 248,662 | | | $ | 166,737 | | | $ | 530,701 | | | $ | 285,624 | |
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| Intersegment transactions | (1,343) | | | (4,570) | | | (3,211) | | | (7,735) | |
| Revenue, excluding intersegment transactions | 247,319 | | | 162,167 | | | 527,490 | | | 277,889 | |
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| Total operating expenses | 204,913 | | | 152,381 | | | 447,351 | | | 263,691 | |
| Adjusted for: | | | | | | | |
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| Intersegment transactions | (1,343) | | | (4,570) | | | (3,211) | | | (7,735) | |
Amortization of intangibles 2 | (334) | | | (97) | | | (668) | | | (97) | |
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| Adjusted Operating Expenses | 203,236 | | | 147,714 | | | 443,472 | | | 255,859 | |
| Adjusted Operating Income | $ | 44,083 | | | $ | 14,453 | | | $ | 84,018 | | | $ | 22,030 | |
| Adjusted Operating Ratio | 82.2 | % | | 91.1 | % | | 84.1 | % | | 92.1 | % |
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| Quarter Ended June 30, | | Year-to-Date June 30, |
| Intermodal Segment | 2022 | | 2021 | | 2022 | | 2021 |
| GAAP Presentation | (Dollars in thousands) |
| Total revenue | $ | 132,871 | | | $ | 115,378 | | | $ | 242,093 | | | $ | 222,444 | |
| Total operating expenses | (118,699) | | | (109,566) | | | (212,751) | | | (213,175) | |
| Operating income | $ | 14,172 | | | $ | 5,812 | | | $ | 29,342 | | | $ | 9,269 | |
| Operating ratio | 89.3 | % | | 95.0 | % | | 87.9 | % | | 95.8 | % |
| Non-GAAP Presentation | |
| Total revenue | $ | 132,871 | | | $ | 115,378 | | | $ | 242,093 | | | $ | 222,444 | |
| Intersegment transactions | (17) | | | (84) | | | (47) | | | (179) | |
| Revenue, excluding intersegment transactions | 132,854 | | | 115,294 | | | 242,046 | | | 222,265 | |
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| Total operating expenses | 118,699 | | | 109,566 | | | 212,751 | | | 213,175 | |
| Adjusted for: | | | | | | | |
| Intersegment transactions | (17) | | | (84) | | | (47) | | | (179) | |
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| Adjusted Operating Expenses | 118,682 | | | 109,482 | | | 212,704 | | | 212,996 | |
| Adjusted Operating Income | $ | 14,172 | | | $ | 5,812 | | | $ | 29,342 | | | $ | 9,269 | |
| Adjusted Operating Ratio | 89.3 | % | | 95.0 | % | | 87.9 | % | | 95.8 | % |
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1Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
2"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.
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| Non-GAAP Reconciliation (Unaudited): |
Free Cash Flow 1 |
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| Year-to-Date June 30, 2022 |
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| GAAP: Cash flows from operations | $ | 719,984 | |
| Adjusted for: | |
| Proceeds from sale of property and equipment, including assets held for sale | 104,239 | |
| Purchases of property and equipment | (295,522) | |
| Non-GAAP: Free cash flow | $ | 528,701 | |
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| Non-GAAP Reconciliation (Unaudited): |
Return on Net Tangible Assets 2 |
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| June 30, |
| 2022 | | 2021 | | | | | | | | | | |
| (Dollars in thousands) |
| Total Assets | $ | 10,714,878 | | | $ | 8,682,459 | | | | | | | | | | | |
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| Adjusted for: | | | | | | | | | | | | | |
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| Intangible assets, net | (1,798,668) | | | (1,403,483) | | | | | | | | | | | |
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| Goodwill | (3,518,589) | | | (2,971,023) | | | | | | | | | | | |
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| Tangible Assets | $ | 5,397,621 | | | $ | 4,307,953 | | | | | | | | | | | |
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| Total Liabilities | $ | 4,083,621 | | | $ | 2,584,406 | | | | | | | | | | | |
| | | | | | | | | | | | | |
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| Adjusted for: | | | | | | | | | | | | | |
| Revolving line of credit, finance lease obligations, and long-term debt | (1,720,712) | | | (592,286) | | | | | | | | | | | |
| | | | | | | | | | | | | |
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| | | | | | | | | | | | | |
| Accounts receivable securitization | (278,594) | | | (278,372) | | | | | | | | | | | |
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| | | | | | | | | | | | | |
| Deferred income tax liabilities | (874,601) | | | (806,398) | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Non-Interest Bearing Liabilities, excluding deferred income tax liabilities | $ | 1,209,714 | | | $ | 907,350 | | | | | | | | | | | |
| | | | | | | | | | | | | |
| Net Tangible Assets | $ | 4,187,907 | | | $ | 3,400,603 | | | | | | | | | | | |
| Average Net Tangible Assets | $ | 3,794,255 | | | | | | | | | | | | | |
| Adjusted Net Income - TTM June 30, 2022 | $ | 940,802 | | | | | | | | | | | | | |
| Return on Net Tangible Assets | 24.8 | % | | | | | | | | | | | | |
| | | | | | | | | | | | | |
1Pursuant to the requirements of Regulation G, this table reconciles GAAP cash flows from operations to non-GAAP Free Cash Flow.
2Pursuant to the requirements of Regulation G, this table reconciles Total Assets and Total Liabilities to Average Net Tangible Assets.
| | |
| Non-GAAP Reconciliation (Unaudited): |
Adjusted Net Income - Trailing Twelve Months 1 2 |
| | | | | | | | | | | | | | | | | | | | | | | |
| Year-to-Date
June 30, 2022 | | Year-to-Date December 31, 2021 | | Year-to-Date
June 30, 2021 | | TTM
June 30, 2022 |
| (Dollars in thousands) |
| GAAP: Net income attributable to Knight-Swift | $ | 427,829 | | | 743,388 | | | 282,594 | | | 888,623 | |
| Adjusted for: | | | | | | | |
| Income tax expense attributable to Knight-Swift | 141,264 | | | 230,887 | | | 97,112 | | | 275,039 | |
| Income before income taxes attributable to Knight-Swift | 569,093 | | | 974,275 | | | 379,706 | | | 1,163,662 | |
Amortization of intangibles 3 | 32,381 | | | 55,299 | | | 23,733 | | | 63,947 | |
| | | | | | | |
Impairments 4 | 810 | | | 299 | | | — | | | 1,109 | |
Legal accruals 5 | 3,055 | | | (2,481) | | | 2,121 | | | (1,547) | |
| | | | | | | |
Transaction fees 6 | — | | | 4,445 | | | 659 | | | 3,786 | |
Write-off of deferred debt issuance costs 7 | — | | | 1,024 | | | — | | | 1,024 | |
| Adjusted income before income taxes | 605,339 | | | 1,032,861 | | | 406,219 | | | 1,231,981 | |
| Provision for income tax expense at effective rate | (150,287) | | | (244,680) | | | (103,788) | | | (291,179) | |
| Non-GAAP Adjusted Net Income Attributable to Knight Swift | $ | 455,052 | | | $ | 788,181 | | | $ | 302,431 | | | $ | 940,802 | |
| | | | | | | |
1Pursuant to the requirements of Regulation G, this table reconciles Knight-Swift's GAAP Income before income taxes to Knight-Swift's non-GAAP Adjusted Income before Income Taxes and Adjusted Net Income.
2Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
3"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the July 5, 2021 ACT acquisition, and other acquisitions.
4"Impairments" reflects the following non-cash impairments:
•First quarter 2022 impairment reflects the non-cash impairment of building improvements (within our non-reportable segments).
•2021 impairments related to certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment).
5"Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following:
•During the second quarter of 2022, the Company decreased the estimated exposure related to an accrued legal matter previously identified as probable and estimable in prior periods based on a recent settlement agreement.
•Third quarter 2021 reversal related to an accrued legal matter previously identified as probable in 2019. This was based on the recent decision of the appellate court, resulting in a change to a remote likelihood that a loss was incurred. Additional 2021 legal costs relate to certain class action lawsuits arising from employee and contract related matters.
6"Transaction fees consist of legal and professional fees associated with the acquisitions of UTXL, ACT, and MME. The transaction fees are included within "Miscellaneous operating expense" in the condensed consolidated statements of comprehensive income.
7"Write-off of deferred debt issuance costs" is included within "Other income, net" in the condensed consolidated statements of comprehensive income for 2021. The loss was incurred as a result of replacing the 2017 Debt Agreement with the 2021 Debt Agreement in September.
