Knight-Swift Transportation Holdings Inc 10-Q for FY2024 Q1

Knight-Swift Transportation Holdings Inc. (KNX)

10-Q 2024-05-01 For: 2024-03-31

Added on April 08, 2026

About this 10-Q

Knight-Swift Transportation Holdings Inc filed this 10-Q on May 1, 2024, covering the quarter ended March 31, 2024 (FY2024 Q1).

Headline figures

Quarter ended March 31, 2024, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $1.82B; up 11.3% from $1.64B a year earlier
Net loss: $2.64M; compared with net income of $104.28M a year earlier
Diluted EPS: -$0.02; compared with $0.64 a year earlier

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


QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION			PAGE
Item 1. Financial Statements			4

Condensed Consolidated Balance Sheets (Unaudited) — March 31, 2024 and December 31, 2023			4

Condensed Consolidated Statements of Comprehensive Income (Unaudited) — Quarter ended March 31, 202 4 and 2023			5

Condensed Consolidated Statements of Cash Flows (Unaudited) — Quarter ended March 31 , 202 4 and 202 3			6

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — Quarter ended March 31, 202 4 and 202 3			8

Note 1 — Introduction and Basis of Presentation			9



Note 2 — Recently Issued Accounting Pronouncements			10

Note 3 — Acquisitions			10







Note 4 — Income Taxes			12



Note 5 — Accounts Receivable Securitization			13

Note 6 — Debt and Financing			14

Note 7 — Defined Benefit Pension Plan			16

Note 8 — Purchase Commitments			16

Note 9 — Contingencies and Legal Proceedings			17

Note 10 — Share Repurchase Plans			17

Note 11 — Weighted Average Shares Outstanding			18

Note 12 — Fair Value Measurement			18

Note 13 — Related Party Transactions			20

Note 14 — Financial Information by Segment and Geography			21

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			22

Item 3. Quantitative and Qualitative Disclosures About Market Risk			51

Item 4. Controls and Procedures			52
PART II OTHER INFORMATION
Item 1. Legal Proceedings			53

Item 1A. Risk Factors			53

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			53

Item 3. Defaults Upon Senior Securities			53

Item 4. Mine Safety Disclosures			53

Item 5. Other Information			53

Item 6. Exhibits			54

Signatures			55




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.




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, 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

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
2023 RSA			Seventh Amendment to the Amended and Restated Receivables Sales Agreement, entered into on October 23, 2023 by Swift Receivables Company II, LLC with unrelated financial entities


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

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




NYSE			New York Stock Exchange
LTL			Less-than-truckload
MME			MME, Inc. and its subsidiary, Midwest Motor 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. and its subsidiaries
U.S. Xpress Acquisition			The Company's acquisition of 100% of the securities of U.S. Xpress on July 1, 2023
UTXL			UTXL Enterprises, Inc.


	March 31, 2024		December 31, 2023
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	204,762	$	168,545
Cash and cash equivalents – restricted	136,174		297,275
Restricted investments, held-to-maturity, amortized cost	—		530
Trade receivables, net of allowance for doubtful accounts of $40,739 and $39,458, respectively	867,610		888,603
Contract balance – revenue in transit	13,622		12,246
Prepaid expenses	137,105		148,696
Assets held for sale	78,918		83,366
Income tax receivable	58,273		65,815

Other current assets	35,707		43,939
Total current assets	1,532,171		1,709,015
Gross property and equipment	6,782,857		6,720,610
Less: accumulated depreciation and amortization	(2,205,709)		(2,104,211)
Property and equipment, net	4,577,148		4,616,399
Operating lease right-of-use-assets	443,002		484,821
Goodwill	3,873,131		3,848,798
Intangible assets, net	2,040,339		2,058,882
Other long-term assets	163,079		152,850
Total assets	$	12,628,870	$	12,870,765
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	283,837	$	355,173
Accrued payroll and purchased transportation	153,996		164,884
Accrued liabilities	224,749		220,350
Claims accruals – current portion	350,030		480,200
Finance lease liabilities and long-term debt – current portion	505,841		459,759
Operating lease liabilities – current portion	124,840		144,921

Total current liabilities	1,643,293		1,825,287
Revolving line of credit	202,000		67,000
Long-term debt – less current portion	1,193,602		1,223,021
Finance lease liabilities – less current portion	375,666		407,150
Operating lease liabilities – less current portion	342,320		371,407
Accounts receivable securitization	453,567		526,508
Claims accruals – less current portion	303,743		315,476
Deferred tax liabilities	930,629		951,749
Other long-term liabilities	111,828		79,086
Total liabilities	5,556,648		5,766,684
Commitments and contingencies (Notes 7, 8, and 9)
Stockholders’ equity:
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; 161,593 and 161,385 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively.	1,616		1,613
Additional paid-in capital	4,430,736		4,426,852
Accumulated other comprehensive loss	(868)		(830)
Retained earnings	2,624,666		2,659,755
Total Knight-Swift stockholders' equity	7,056,150		7,087,390
Noncontrolling interest	16,072		16,691
Total stockholders’ equity	7,072,222		7,104,081
Total liabilities and stockholders’ equity	$	12,628,870	$	12,870,765


	Quarter Ended March 31,
		2024		2023
		(In thousands, except per share data)
Revenue:
Revenue, excluding truckload and LTL fuel surcharge		$	1,612,814	$	1,450,293
Truckload and LTL fuel surcharge		209,653		186,639
Total revenue		1,822,467		1,636,932
Operating expenses:
Salaries, wages, and benefits		692,907		536,742
Fuel		234,589		187,759
Operations and maintenance		134,633		99,311
Insurance and claims		122,446		138,039
Operating taxes and licenses		31,329		25,890
Communications		7,533		5,749
Depreciation and amortization of property and equipment		181,865		155,966
Amortization of intangibles		18,543		16,183
Rental expense		42,996		15,068
Purchased transportation		277,257		280,729
Impairments		3,982		—
Miscellaneous operating expenses		53,832		30,709
Total operating expenses		1,801,912		1,492,145
Operating income		20,555		144,787
Other (expenses) income:
Interest income		5,022		5,049
Interest expense		(41,236)		(23,091)
Other income, net		8,992		9,703
Total other (expenses) income, net		(27,222)		(8,339)
(Loss) Income before income taxes		(6,667)		136,448
Income tax (benefit) expense		(3,674)		32,735
Net (loss) income		(2,993)		103,713
Net loss attributable to noncontrolling interest		358		571
Net (loss) income attributable to Knight-Swift		(2,635)		104,284
Other comprehensive (loss) income		(38)		1,090
Comprehensive (loss) income		$	(2,673)	$	105,374

(Loss) Earnings per share:
Basic		$	(0.02)	$	0.65
Diluted		$	(0.02)	$	0.64

Dividends declared per share:		$	0.16	$	0.14

Weighted average shares outstanding:
Basic		161,511		160,915
Diluted		162,086		161,900


Reconciliation of Cash, Restricted Cash, and Equivalents:	March 31, 2024		December 31, 2023		March 31, 2023		December 31, 2022
	(In thousands)
Consolidated Balance Sheets
Cash and cash equivalents	$	204,762	$	168,545	$	191,245	$	196,770
Cash and cash equivalents – restricted 1	136,174		297,275		204,348		185,792

Other long-term assets 1	4,055		3,866		3,015		2,783
Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents	$	344,991	$	469,686	$	398,608	$	385,345


	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, 2023	161,385	$	1,613	$	4,426,852	$	2,659,755	$	(830)	$	7,087,390	$	16,691	$	7,104,081

Common stock issued to employees	191	2		(2)						—				—


Common stock issued under ESPP	17	1		952						953				953

Shares withheld – RSU settlement						(6,435)				(6,435)				(6,435)
Employee stock-based compensation expense				3,981						3,981				3,981
Cash dividends paid and dividends accrued ($0.16 per share)						(26,019)				(26,019)				(26,019)
Net loss						(2,635)				(2,635)		(358)		(2,993)
Other comprehensive loss								(38)		(38)				(38)
Investment in noncontrolling interest												730		730
Distribution to noncontrolling interest				(1,047)						(1,047)		(991)		(2,038)


Balances – March 31, 2024	161,593	$	1,616	$	4,430,736	$	2,624,666	$	(868)	$	7,056,150	$	16,072	$	7,072,222


Notes to Condensed Consolidated Financial Statements (Unaudited)



	July 1, 2023 Opening Balance Sheet as Reported at December 31, 2023		Adjustments		July 1, 2023 Opening Balance Sheet as Reported at March 31, 2024

Fair value of the consideration transferred	$	632,109	$	—	$	632,109

Cash and cash equivalents	3,321		—		3,321

Receivables	216,659		345		217,004
Prepaid expenses	21,347		—		21,347
Other current assets	47,317		—		47,317
Property and equipment	433,210		—		433,210
Operating lease right-of-use assets	337,055		—		337,055
Identifiable intangible assets 1	348,000		—		348,000

Other noncurrent assets	28,457		—		28,457
Total assets	1,435,366		345		1,435,711

Accounts payable	(115,494)		—		(115,494)
Accrued payroll and payroll-related expenses	(27,485)		—		(27,485)
Accrued liabilities	(19,966)		1,722		(18,244)
Claims accruals – current and noncurrent portions	(180,251)		—		(180,251)
Operating lease liabilities – current and noncurrent portions	(376,763)		—		(376,763)
Long-term debt and finance leases – current and noncurrent portions	(337,949)		—		(337,949)
Deferred tax liabilities	(33,072)		7,448		(25,624)
Other long-term liabilities	(34,230)		(33,846)		(68,076)
Total liabilities	(1,125,210)		(24,676)		(1,149,886)

Noncontrolling interest	(391)		—		(391)
Total stockholders' equity	(391)		—		(391)

Goodwill	$	322,344	$	24,331	$	346,675


			2023 RSA
			(Dollars in thousands)
Effective date			October 23, 2023
Final maturity date			October 1, 2025
Borrowing capacity			$575,000
Accordion option 1			$100,000
Unused commitment fee rate 2			20 to 40 basis points
Program fees on outstanding balances 3			one month SOFR + credit adjustment spread 10 basis points + 82.5 basis points


		March 31, 2024				December 31, 2023
	Condensed Consolidated Balance Sheets Caption	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
		(In thousands)
Financial Assets:

Equity method investments	Other long-term assets	$	110,973	$	110,973	$	102,252	$	102,252



Financial Liabilities:
2021 Term Loan A-2, due September 2024 1	Finance lease liabilities and long-term debt – current portion	199,939		200,000		199,902		200,000
2021 Term Loan A-3, due September 2026 1	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	799,147		800,000		799,058		800,000
2023 Term Loan, due September 2026 2	Long-term debt – less current portion	249,216		250,000		249,135		250,000
2021 Revolver, due September 2026	Revolving line of credit	202,000		202,000		67,000		67,000
Revenue equipment installment notes 3	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	269,303		269,303		279,339		279,339
2021 Prudential Notes 4	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	17,035		17,054		25,078		25,100

2023 RSA, due October 2025 5	Accounts receivable securitization -less current portion	453,567		454,000		526,508		527,000
Mandatorily redeemable contingent consideration 6	Accrued liabilities	134,107		134,107		134,107		134,107
Contingent consideration 6	Accrued liabilities, Other long-term liabilities	40,859		40,859		40,859		40,859


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Gain (Loss)
	(In thousands)
As of March 31, 2024
Mandatorily redeemable contingent consideration 1	$	134,107	$	—	$	—	$	134,107	$	—
Contingent consideration 1	$	40,859	$	—	$	—	$	40,859	$	—
As of December 31, 2023
Mandatorily redeemable contingent consideration 1	$	134,107	$	—	$	—	$	134,107	$	—
Contingent consideration 1	$	40,859	$	—	$	—	$	40,859	$	3,359


	March 31, 2024				December 31, 2023
	Receivable		Payable		Receivable		Payable
	(In thousands)



Certain affiliates 1	$	—	$	186	$	23	$	37


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


	Quarter Ended March 31,							Increase (Decrease)
		2024			2023
		(Dollars in thousands, except per tractor data)



Total revenue		$	1,263,015		$	1,012,245			24.8	%
Revenue, excluding fuel surcharge and intersegment transactions		$	1,094,051		$	865,980			26.3	%
GAAP: Operating income		$	23,147		$	115,899			(80.0	%)
Non-GAAP: Adjusted Operating Income 1		$	29,114		$	116,242			(75.0	%)
Average revenue per tractor 2		$	46,927		$	47,707			(1.6	%)
GAAP: Operating ratio 2		98.2		%	88.6		%		960	bps
Non-GAAP: Adjusted Operating Ratio 1 2		97.3		%	86.6		%		1,070	bps
Non-paid empty miles percentage 2		14.1		%	15.0		%		(90	bps)
Average length of haul (miles) 2		395			391				1.0	%
Total miles per tractor 2		19,894			18,405				8.1	%
Average tractors 2 3		23,314			18,152				28.4	%
Average trailers 2 4		94,410			79,490				18.8	%


Results of Operations — Consolidated Operating and Other Expenses


	Quarter Ended March 31, 2024

GAAP: Cash flows from operations	$	37,275
Adjusted for:
Proceeds from sale of property and equipment, including assets held for sale	50,605
Purchases of property and equipment	(191,905)
Non-GAAP: Free Cash Flow	$	(104,025)


Source	March 31, 2024
	(In thousands)
Cash and cash equivalents, excluding restricted cash	$	204,762
Availability under 2021 Revolver, due September 2026 1	880,007
Availability under 2023 RSA, due October 2025 2	3,875

Total unrestricted liquidity	$	1,088,644
Cash and cash equivalents – restricted 3	140,229
Restricted investments, held-to-maturity, amortized cost 3	—
Total liquidity, including restricted cash and restricted investments	$	1,228,873


	Quarter Ended March 31,				Change
	2024		2023
	(In thousands)
Net cash provided by operating activities	$	37,275	$	345,159	$	(307,884)
Net cash used in investing activities	(139,747)		(197,305)		57,558
Net cash used in financing activities	(22,223)		(134,591)		112,368


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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)
January 1, 2024 to January 31, 2024	—	$	—	—	$	200,041
February 1, 2024 to February 29, 2024	—	$	—	—	$	200,041
March 1, 2024 to March 31, 2024	—	$	—	—	$	200,041
Total	—	$	—	—	$	200,041