Knight-Swift Transportation Holdings Inc 8-K, filed Apr 21, 2021
Knight-Swift Transportation Holdings Inc. (KNX)
8-K
2021-04-21
For: 2021-04-21
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April 08, 2026
About this 8-K
Knight-Swift Transportation Holdings Inc filed this 8-K on April 21, 2021.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________________________________________________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 21, 2021
___________________________________________________________________________________________________________________________________
___________________________________________________________________________________________________________________________________
(Exact name of registrant as specified in its charter)
___________________________________________________________________________________________________________________________________
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | |||||||||||||||
(Address of principal executive offices and zip code)
(602 ) 269-2000
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | |||||||||||||||||
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||||||||||||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||||||||||||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||||||||||||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||||||||||||||
| Securities registered pursuant to Section 12(b) of the Act: | |||||||||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |||||||||||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
| ITEM 2.02 | RESULTS OF OPERATIONS AND FINANCIAL CONDITION | ||||
On April 21, 2021 , Knight-Swift Transportation Holdings Inc. (the "Company") issued a press release (the "Press Release") announcing its financial results for the quarter ended March 31, 2021. A copy of the Press Release is attached to this Current Report on Form 8-K ("Current Report") as Exhibit 99.1 and is incorporated herein by reference.
The information in this Current Report that is furnished under Item 2.02, including the exhibits hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, or incorporated by reference in any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
| ITEM 9.01 | FINANCIAL STATEMENTS AND EXHIBITS | ||||
(d) Exhibits
| Exhibit | Description | |||||||
Exhibit 104 | Cover Page Interactive Data File | |||||||
The information in Items 2.02 and 9.01 of this report and the exhibits hereto may contain "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995, as amended. Such statements are made based on the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results or events may differ from those anticipated by the forward-looking statements. Please refer to the paragraphs at the end of the attached press release and at the beginning of the attached earnings presentation, as well as various disclosures by the Company in its press releases, stockholder reports, and filings with the Securities and Exchange Commission for information concerning risks, uncertainties, and other factors that may affect future results.
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. | |||||||||||||||||
| (Registrant) | |||||||||||||||||
| Date: | /s/ Adam W. Miller | ||||||||||||||||
| Adam W. Miller | |||||||||||||||||
| Chief Financial Officer | |||||||||||||||||
| Exhibit 99.1 | ||||||||
April 21, 2021
Phoenix, Arizona
Knight-Swift Transportation Holdings Inc. Reports First Quarter 2021 Revenue and Earnings | ||
Knight-Swift Transportation Holdings Inc. (NYSE: KNX) ("Knight-Swift" or "the Company"), North America's largest truckload transportation company, today reported first quarter 2021 net income attributable to Knight-Swift of $129.8 million and Adjusted Net Income Attributable to Knight-Swift of $139.4 million. We reported GAAP earnings per diluted share of $0.77 for the first quarter of 2021, compared to $0.38 for the first quarter of 2020. Our Adjusted EPS was $0.83 for the first quarter of 2021, compared to $0.44 for the first quarter of 2020.
| Key Financial Highlights | ||
Our consolidated revenue, excluding trucking fuel surcharge, grew by 10.3% during the first quarter of 2021, as a result of revenue growth across all of our reportable segments. We generated consolidated Adjusted Net Income Attributable to Knight-Swift of $139.4 million, which represents an 83.0% increase from $76.2 million during the first quarter of 2020. Our Trucking segment overcame inclement weather conditions and driver sourcing challenges during the quarter and improved average revenue per tractor by 7.7%, which resulted in a 470 basis point improvement in the Adjusted Operating Ratio to 81.8% in the first quarter of 2021 from 86.5% in the first quarter of 2020. Our Logistics segment grew revenue by more than 50% and more than doubled operating income year-over-year. Despite weather and service disruptions during the first quarter of 2021, our Intermodal segment achieved year-over-year improvements in operating results, and we anticipate ongoing improvement in the coming quarters.
Knight-Swift Consolidated Results
| Quarter Ended March 31, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||
| Total revenue | $ | 1,223,014 | $ | 1,124,798 | 8.7 | % | |||||||||||
| Revenue, excluding trucking fuel surcharge | $ | 1,133,105 | $ | 1,027,095 | 10.3 | % | |||||||||||
| Operating income | $ | 162,259 | $ | 102,119 | 58.9 | % | |||||||||||
Adjusted Operating Income 1 | $ | 175,250 | $ | 116,788 | 50.1 | % | |||||||||||
| Net income attributable to Knight-Swift | $ | 129,790 | $ | 65,426 | 98.4 | % | |||||||||||
Adjusted Net Income Attributable to Knight-Swift 1 | $ | 139,433 | $ | 76,205 | 83.0 | % | |||||||||||
| Earnings per diluted share | $ | 0.77 | $ | 0.38 | 102.6 | % | |||||||||||
Adjusted EPS 1 | $ | 0.83 | $ | 0.44 | 88.6 | % | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Other Income (Expenses), net — During the first quarter of 2021, we recognized $16.1 million in income within "Other income (expenses), net" in the condensed consolidated statements of comprehensive income, compared to $6.5 million of expense for the same quarter of last year. The year-over-year improvement was primarily driven by gains recognized within our portfolio of investments in the first quarter of 2021.
Income Taxes — The effective tax rate was 25.9% for the first quarter of 2021, compared to 27.2% for the first quarter of 2020. We expect the 2021 effective tax rate to be in the range of 25.5% to 27.0% before discrete items.
Dividend — The Company previously announced a quarterly cash dividend of $0.08 per share to stockholders of record on March 5, 2021, which was paid on March 26, 2021. On April 19, 2021, we announced a quarterly cash dividend of $0.10 per share to stockholders of record on June 4, 2021, which is a 25.0% (or $0.02) increase from our existing quarterly dividend, and is expected to be paid on June 28, 2021.
Share Repurchases — We repurchased $53.7 million worth of our common stock at an average price of $41.17 per share during the first quarter of 2021.
| Segment Financial Performance | ||
Trucking Segment
| Quarter Ended March 31, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenue, excluding fuel surcharge and intersegment transactions | $ | 872,814 | $ | 821,084 | 6.3 | % | |||||||||||
| Operating income | $ | 158,483 | $ | 107,334 | 47.7 | % | |||||||||||
Adjusted Operating Income 1 | $ | 158,807 | $ | 110,805 | 43.3 | % | |||||||||||
| Operating ratio | 83.5 | % | 88.3 | % | (480 | bps) | |||||||||||
Adjusted Operating Ratio 1 | 81.8 | % | 86.5 | % | (470 | bps) | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Our Trucking segment includes our irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border operations across our brands with 13,130 irregular route tractors and 5,094 dedicated route tractors. We grew revenue, excluding fuel surcharge and intersegment transactions, by 6.3% within the Trucking segment. Average revenue per tractor increased by 7.7%, driven by a 16.1% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions. The rate improvement was partially offset by an increase in driver-related sourcing and other expenses during the quarter and a 7.3% decline in miles per tractor due to inclement weather and an increase in unseated tractors. In the first quarter of 2021, the Swift truckload operating segment generated an Adjusted Operating Ratio of 78.5%, while the Knight trucking operating segment generated an Adjusted Operating Ratio of 79.0%.
Logistics Segment
| Quarter Ended March 31, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenue, excluding intersegment transactions | $ | 115,722 | $ | 76,757 | 50.8 | % | |||||||||||
| Operating income | $ | 7,577 | $ | 3,719 | 103.7 | % | |||||||||||
Adjusted Operating Income 1 | $ | 7,577 | $ | 3,719 | 103.7 | % | |||||||||||
| Operating ratio | 93.6 | % | 95.3 | % | (170 | bps) | |||||||||||
Adjusted Operating Ratio 1 | 93.5 | % | 95.2 | % | (170 | bps) | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
| 2 | |||||||
Revenue, excluding intersegment transactions, increased by 50.8% within our Logistics segment (which consists of our Knight and Swift brokerage services), as brokerage revenue per load increased by 43.0% and load volumes grew by 5.4%. Brokerage gross margin was 14.4% in the first quarter of 2021 and 14.7% in the first quarter of 2020, while Adjusted Operating Ratio improved by 170 basis points to 93.5% in the first quarter of 2021 from 95.2% in the first quarter of 2020. Within our power-only service offering, load volumes grew 56.2%, contributing to 161.6% revenue growth and representing over 25% of our total first quarter 2021 brokerage load volumes. During 2020, we introduced our Select platform, which digitally matches shippers with available capacity across our brands through frictionless transactions. During the first quarter of 2021, approximately 4,500 carriers were digitally matched with loads through our Select platform, representing approximately 20% of our brokerage load volume.
Intermodal Segment
| Quarter Ended March 31, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenue, excluding intersegment transactions | $ | 106,971 | $ | 94,622 | 13.1 | % | |||||||||||
| Operating income (loss) | $ | 3,457 | $ | (2,737) | 226.3 | % | |||||||||||
Adjusted Operating Income (Loss) 1 | $ | 3,457 | $ | (2,689) | 228.6 | % | |||||||||||
| Operating ratio | 96.8 | % | 102.9 | % | (610 | bps) | |||||||||||
Adjusted Operating Ratio 1 | 96.8 | % | 102.8 | % | (600 | bps) | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Revenue, excluding intersegment transactions within our Intermodal segment increased 13.1%, as revenue per load increased 10.2% and load counts increased 2.6%. We improved Adjusted Operating Ratio within the Intermodal segment to 96.8% in the first quarter of 2021, from 102.8% in the first quarter of 2020. Despite weather and service disruptions, year-over-year operating results within the Intermodal segment improved toward the end of the quarter. We anticipate sequential improvements in operating results in the coming quarters, as we focus on growing load counts and improving revenue per load.
Non-reportable Segments
| Quarter Ended March 31, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Total revenue | $ | 50,669 | $ | 46,242 | 9.6 | % | |||||||||||
| Operating loss | $ | (7,258) | $ | (6,197) | 17.1 | % | |||||||||||
The non-reportable segments include support services provided to our customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, certain warehousing activities, as well as certain corporate expenses (such as legal settlements and accruals and $10.3 million in quarterly amortization of intangibles related to the 2017 merger). A $1.2 million increase in legal expenses resulted in a year-over-year increase in operating loss within the non-reportable segments.
| 3 | |||||||
| Consolidated Liquidity, Capital Resources, and Earnings Guidance | ||
Cash Flow Sources (Uses)
| Quarter Ended March 31, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Net cash provided by operating activities | $ | 306,113 | $ | 155,343 | $ | 150,770 | |||||||||||
| Net cash used in investing activities | (74,141) | (125,582) | 51,441 | ||||||||||||||
| Net cash used in financing activities | (185,366) | (71,885) | (113,481) | ||||||||||||||
Net increase (decrease) in cash, restricted cash, and equivalents 1 | $ | 46,606 | $ | (42,124) | $ | 88,730 | |||||||||||
| Net capital expenditures | $ | (43,845) | $ | (75,675) | $ | 31,830 | |||||||||||
1"Net increase (decrease) 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 March 31, 2021, we had a balance of $853.2 million of unrestricted cash and available liquidity and $5.9 billion of stockholders' equity. The face value of our debt, net of unrestricted cash ("Net Debt") was $631.7 million as of March 31, 2021, which is a $126.4 million decrease from December 31, 2020. Free cash flow2 for the first quarter of 2021 was $262.3 million (computed as net cash provided by operating activities, less net capital expenditures). During the first quarter of 2021, we generated $306.1 million in operating cash flows, reduced our operating lease liabilities by $15.2 million, spent $39.3 million on acquisitions, and returned $67.3 million to our stockholders in the form of quarterly dividends and share repurchases. We continue to manage our leverage ratio relative to our targeted range and remain committed to a strong capital structure, which we believe will position us for long-term success and enable us to pursue further opportunities for organic growth, growth through acquisitions, and other capital allocation opportunities.
Equipment and Capital Expenditures — Gain on sale of revenue equipment increased to $10.5 million in the first quarter of 2021, compared to $3.0 million in the same quarter of 2020. The average age of our tractor fleet was 2.3 years in the first quarter of 2021, compared to 2.0 years in the same quarter of 2020. Capital expenditures, net of disposal proceeds, were $43.8 million for the first quarter of 2021. We expect net cash capital expenditures will be in the range of $450.0 million – $500.0 million for full-year 2021. Our net cash capital expenditures primarily represent replacements of existing tractors and trailers, as well as investment in our terminal network and driver amenities. From time-to-time, our capital expenditures may include acquisitions.
Guidance — We expect that Adjusted EPS3 for full-year 2021 will range from $3.45 to $3.60, which is an update from our previously-disclosed range of $3.20 to $3.40. Our expected Adjusted EPS3 range is based on the current truckload market, recent trends, and the current beliefs, assumptions, and expectations of management (including those referenced in the first quarter 2021 earnings presentation posted on our website).
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 EPS2 guidance.
________
2Free cash flow is a non-GAAP measure.
3Our 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 $0.20 for full-year 2021), as well as noncash impairments and certain other unusual noncash items, if any.
| 4 | |||||||
| Other Information | ||
| About Knight-Swift | ||
Knight-Swift Transportation Holdings Inc. is a provider of multiple truckload transportation and logistics services using a nationwide network of business units and terminals in the United States and Mexico to serve customers throughout North America. In addition to operating the country's largest tractor fleet, Knight-Swift also contracts with third-party equipment providers to provide a broad range of truckload services to our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors.
| Investor Relations Contact Information | ||
David A. Jackson, President and Chief Executive Officer, or Adam W. Miller, Chief Financial Officer: (602) 606-6349
| 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," "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, or any impacts of the COVID-19 global pandemic or other similar outbreaks; 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, capital expenditures, or other financial items,
•future dividends,
•intentions regarding refinancing the Company's accounts receivable securitization, including the timing thereof,
•future effective tax rates,
•future performance of our reportable segments, including load volumes within our Intermodal segment,
•future capital structure, capital allocation, growth strategies and opportunities, and liquidity, and
•future capital expenditures, including 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, 2020, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.
| 5 | |||||||
| Financial Statements | ||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||
| Quarter Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Revenue, excluding trucking fuel surcharge | $ | 1,133,105 | $ | 1,027,095 | |||||||||||||||||||
| Trucking fuel surcharge | 89,909 | 97,703 | |||||||||||||||||||||
| Total revenue | 1,223,014 | 1,124,798 | |||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Salaries, wages, and benefits | 370,370 | 354,833 | |||||||||||||||||||||
| Fuel | 118,236 | 121,855 | |||||||||||||||||||||
| Operations and maintenance | 68,070 | 68,404 | |||||||||||||||||||||
| Insurance and claims | 55,643 | 54,280 | |||||||||||||||||||||
| Operating taxes and licenses | 22,048 | 22,169 | |||||||||||||||||||||
| Communications | 5,037 | 4,874 | |||||||||||||||||||||
| Depreciation and amortization of property and equipment | 119,915 | 110,221 | |||||||||||||||||||||
| Amortization of intangibles | 11,749 | 11,474 | |||||||||||||||||||||
| Rental expense | 16,864 | 25,375 | |||||||||||||||||||||
| Purchased transportation | 258,230 | 225,276 | |||||||||||||||||||||
| Impairments | — | 902 | |||||||||||||||||||||
| Miscellaneous operating expenses | 14,593 | 23,016 | |||||||||||||||||||||
| Total operating expenses | 1,060,755 | 1,022,679 | |||||||||||||||||||||
| Operating income | 162,259 | 102,119 | |||||||||||||||||||||
| Other (expenses) income: | |||||||||||||||||||||||
| Interest income | 294 | 832 | |||||||||||||||||||||
| Interest expense | (3,486) | (6,107) | |||||||||||||||||||||
| Other income (expenses), net | 16,105 | (6,507) | |||||||||||||||||||||
| Total other (expenses) income, net | 12,913 | (11,782) | |||||||||||||||||||||
| Income before income taxes | 175,172 | 90,337 | |||||||||||||||||||||
| Income tax expense | 45,329 | 24,554 | |||||||||||||||||||||
| Net income | 129,843 | 65,783 | |||||||||||||||||||||
| Net income attributable to noncontrolling interest | (53) | (357) | |||||||||||||||||||||
| Net income attributable to Knight-Swift | $ | 129,790 | $ | 65,426 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.77 | $ | 0.38 | |||||||||||||||||||
| Diluted | $ | 0.77 | $ | 0.38 | |||||||||||||||||||
| Dividends declared per share: | $ | 0.08 | $ | 0.08 | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 167,478 | 170,617 | |||||||||||||||||||||
| Diluted | 168,374 | 171,282 | |||||||||||||||||||||
| 6 | |||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||
| March 31, 2021 | December 31, 2020 | ||||||||||
| (In thousands) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 194,650 | $ | 156,699 | |||||||
| Cash and cash equivalents – restricted | 47,867 | 39,328 | |||||||||
| Restricted investments, held-to-maturity, amortized cost | 8,954 | 9,001 | |||||||||
Trade receivables, net of allowance for doubtful accounts of $21,797 and $22,093, respectively | 584,011 | 578,479 | |||||||||
| Contract balance – revenue in transit | 20,104 | 14,560 | |||||||||
| Prepaid expenses | 66,278 | 71,649 | |||||||||
| Assets held for sale | 20,835 | 29,756 | |||||||||
| Income tax receivable | 31 | 2,903 | |||||||||
| Other current assets | 21,015 | 20,988 | |||||||||
| Total current assets | 963,745 | 923,363 | |||||||||
| Property and equipment, net | 2,975,644 | 2,992,652 | |||||||||
| Operating lease right-of-use assets | 95,658 | 113,296 | |||||||||
| Goodwill | 2,958,709 | 2,922,964 | |||||||||
| Intangible assets, net | 1,393,346 | 1,389,245 | |||||||||
| Other long-term assets | 132,373 | 126,482 | |||||||||
| Total assets | $ | 8,519,475 | $ | 8,468,002 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 126,918 | $ | 101,001 | |||||||
| Accrued payroll and purchased transportation | 182,106 | 160,888 | |||||||||
| Accrued liabilities | 143,168 | 88,894 | |||||||||
| Claims accruals – current portion | 174,678 | 174,928 | |||||||||
Finance lease liabilities – current portion | 85,035 | 52,583 | |||||||||
| Operating lease liabilities – current portion | 37,577 | 47,496 | |||||||||
Accounts receivable securitization – current portion 1 | 198,957 | 213,918 | |||||||||
| Total current liabilities | 948,439 | 839,708 | |||||||||
| Revolving line of credit | 115,000 | 210,000 | |||||||||
Long-term debt – less current portion | 299,063 | 298,907 | |||||||||
| Finance lease liabilities – less current portion | 127,341 | 138,243 | |||||||||
| Operating lease liabilities – less current portion | 62,549 | 69,852 | |||||||||
| Claims accruals – less current portion | 174,766 | 174,814 | |||||||||
| Deferred tax liabilities | 797,019 | 815,941 | |||||||||
| Other long-term liabilities | 45,960 | 48,497 | |||||||||
| Total liabilities | 2,570,137 | 2,595,962 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 1,655 | 1,665 | |||||||||
| Additional paid-in capital | 4,309,792 | 4,301,424 | |||||||||
| Retained earnings | 1,625,397 | 1,566,759 | |||||||||
| Total Knight-Swift stockholders' equity | 5,936,844 | 5,869,848 | |||||||||
| Noncontrolling interest | 12,494 | 2,192 | |||||||||
| Total stockholders’ equity | 5,949,338 | 5,872,040 | |||||||||
| Total liabilities and stockholders’ equity | $ | 8,519,475 | $ | 8,468,002 | |||||||
1 As of December 31, 2020 and March 31, 2021, the $199.0 million and the $213.9 million, respectively, outstanding balance of the accounts receivable securitization, gross of deferred loan costs, is due within twelve months, and is included in "Accounts receivable securitization – current portion." The Company intends to refinance prior to the July 9, 2021 due date.
| 7 | |||||||
| Segment Operating Statistics (Unaudited) | ||
| Quarter Ended March 31, | |||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||||||||||||||||||||
| Trucking | |||||||||||||||||||||||||||||||||||
Average revenue per tractor 1 | $ | 47,894 | $ | 44,474 | 7.7 | % | |||||||||||||||||||||||||||||
| Non-paid empty miles percentage | 12.8 | % | 12.8 | % | — | bps | |||||||||||||||||||||||||||||
| Average length of haul (miles) | 412 | 428 | (3.7 | %) | |||||||||||||||||||||||||||||||
| Miles per tractor | 20,928 | 22,568 | (7.3 | %) | |||||||||||||||||||||||||||||||
| Average tractors | 18,224 | 18,462 | (1.3 | %) | |||||||||||||||||||||||||||||||
| Average trailers | 59,797 | 57,716 | 3.6 | % | |||||||||||||||||||||||||||||||
| Logistics | |||||||||||||||||||||||||||||||||||
Revenue per load – Brokerage only 2 | $ | 1,971 | $ | 1,378 | 43.0 | % | |||||||||||||||||||||||||||||
| Gross margin – Brokerage only | 14.4 | % | 14.7 | % | (30) | bps | |||||||||||||||||||||||||||||
| Intermodal | |||||||||||||||||||||||||||||||||||
Average revenue per load 2 | $ | 2,549 | $ | 2,314 | 10.2 | % | |||||||||||||||||||||||||||||
| Load count | 41,968 | 40,889 | 2.6 | % | |||||||||||||||||||||||||||||||
| Average tractors | 597 | 601 | (0.7 | %) | |||||||||||||||||||||||||||||||
| Average containers | 10,846 | 9,856 | 10.0 | % | |||||||||||||||||||||||||||||||
1Computed with revenue, excluding fuel surcharge and intersegment transactions
2Computed with revenue, excluding intersegment transactions
| 8 | |||||||
| Non-GAAP Financial Measures and Reconciliations | ||
The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted Operating Income," "Adjusted EPS," "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 of directors 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 of directors use Free Cash Flow as a key measure of our liquidity, which is defined under "Liquidity and Capitalization" above. 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, and Free Cash Flow 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.
Non-GAAP Reconciliation (Unaudited): | ||
Adjusted Operating Income and Adjusted Operating Ratio 1 | ||
| Quarter Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 1,223,014 | $ | 1,124,798 | |||||||||||||||||||
| Total operating expenses | (1,060,755) | (1,022,679) | |||||||||||||||||||||
| Operating income | $ | 162,259 | $ | 102,119 | |||||||||||||||||||
| Operating ratio | 86.7 | % | 90.9 | % | |||||||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 1,223,014 | $ | 1,124,798 | |||||||||||||||||||
| Trucking fuel surcharge | (89,909) | (97,703) | |||||||||||||||||||||
| Revenue, excluding trucking fuel surcharge | 1,133,105 | 1,027,095 | |||||||||||||||||||||
| Total operating expenses | 1,060,755 | 1,022,679 | |||||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Trucking fuel surcharge | (89,909) | (97,703) | |||||||||||||||||||||
Amortization of intangibles 2 | (11,749) | (11,474) | |||||||||||||||||||||
Impairments 3 | — | (902) | |||||||||||||||||||||
Legal accruals 4 | (1,242) | — | |||||||||||||||||||||
COVID-19 incremental costs 5 | — | (2,293) | |||||||||||||||||||||
| Adjusted Operating Expenses | 957,855 | 910,307 | |||||||||||||||||||||
| Adjusted Operating Income | $ | 175,250 | $ | 116,788 | |||||||||||||||||||
| Adjusted Operating Ratio | 84.5 | % | 88.6 | % | |||||||||||||||||||
| 9 | |||||||
1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio.
2 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger and other acquisitions.
3 "Impairments" for the first quarter of 2020 reflect the impairment of trailer tracking equipment (within the Trucking segment).
4 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect costs related to certain class action lawsuits arising from employee related matters.
5 "COVID-19 incremental costs" reflects costs incurred during the first quarter of 2020 that were directly attributable to the pandemic and were incremental to those incurred prior to the outbreak. These include payroll premiums paid to our drivers and shop mechanics, additional disinfectants and cleaning supplies, and various other pandemic-specific items. The costs are clearly separable from our normal business operations and are not expected to recur once the pandemic subsides.
Non-GAAP Reconciliation (Unaudited): | ||
Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 | ||
| Quarter Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||
| GAAP: Net income attributable to Knight-Swift | $ | 129,790 | $ | 65,426 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Income tax expense attributable to Knight-Swift | 45,329 | 24,554 | |||||||||||||||||||||
| Income before income taxes attributable to Knight-Swift | 175,119 | 89,980 | |||||||||||||||||||||
Amortization of intangibles 2 | 11,749 | 11,474 | |||||||||||||||||||||
Impairments 3 | — | 902 | |||||||||||||||||||||
Legal accruals 4 | 1,242 | — | |||||||||||||||||||||
COVID-19 incremental costs 5 | — | 2,293 | |||||||||||||||||||||
| Adjusted income before income taxes | 188,110 | 104,649 | |||||||||||||||||||||
| Provision for income tax expense at effective rate | (48,677) | (28,444) | |||||||||||||||||||||
| Non-GAAP: Adjusted Net Income Attributable to Knight-Swift | $ | 139,433 | $ | 76,205 | |||||||||||||||||||
Note: Because the numbers reflected in the table below are calculated on a per share basis, they may not foot due to rounding.
| Quarter Ended March 31, | |||||||||||||||||||||||
| 2021 | 2020 | ||||||||||||||||||||||
| GAAP: Earnings per diluted share | $ | 0.77 | $ | 0.38 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Income tax expense attributable to Knight-Swift | 0.27 | 0.14 | |||||||||||||||||||||
| Income before income taxes attributable to Knight-Swift | 1.04 | 0.53 | |||||||||||||||||||||
Amortization of intangibles 2 | 0.07 | 0.07 | |||||||||||||||||||||
Impairments 3 | — | 0.01 | |||||||||||||||||||||
Legal accruals 4 | 0.01 | — | |||||||||||||||||||||
COVID-19 incremental costs 5 | — | 0.01 | |||||||||||||||||||||
| Adjusted income before income taxes | 1.12 | 0.61 | |||||||||||||||||||||
| Provision for income tax expense at effective rate | (0.29) | (0.17) | |||||||||||||||||||||
| Non-GAAP: Adjusted EPS | $ | 0.83 | $ | 0.44 | |||||||||||||||||||
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.
| 10 | |||||||
2Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 2.
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.
| 11 | |||||||
Non-GAAP Reconciliation (Unaudited): | ||
Segment Adjusted Operating Income and Adjusted Operating Ratio 1 | ||
| Quarter Ended March 31, | |||||||||||||||||||||||
| Trucking Segment | 2021 | 2020 | |||||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 962,947 | $ | 919,061 | |||||||||||||||||||
| Total operating expenses | (804,464) | (811,727) | |||||||||||||||||||||
| Operating income | $ | 158,483 | $ | 107,334 | |||||||||||||||||||
| Operating ratio | 83.5 | % | 88.3 | % | |||||||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 962,947 | $ | 919,061 | |||||||||||||||||||
| Fuel surcharge | (89,909) | (97,703) | |||||||||||||||||||||
| Intersegment transactions | (224) | (274) | |||||||||||||||||||||
| Revenue, excluding fuel surcharge and intersegment transactions | 872,814 | 821,084 | |||||||||||||||||||||
| Total operating expenses | 804,464 | 811,727 | |||||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Fuel surcharge | (89,909) | (97,703) | |||||||||||||||||||||
| Intersegment transactions | (224) | (274) | |||||||||||||||||||||
Amortization of intangibles 2 | (324) | (324) | |||||||||||||||||||||
Impairments 3 | — | (902) | |||||||||||||||||||||
COVID-19 incremental costs 4 | — | (2,245) | |||||||||||||||||||||
| Adjusted Operating Expenses | 714,007 | 710,279 | |||||||||||||||||||||
| Adjusted Operating Income | $ | 158,807 | $ | 110,805 | |||||||||||||||||||
| Adjusted Operating Ratio | 81.8 | % | 86.5 | % | |||||||||||||||||||
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.
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 5.
| 12 | |||||||
Non-GAAP Reconciliation (Unaudited): | ||
Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued 1 | ||
| Quarter Ended March 31, | |||||||||||||||||||||||
| Logistics Segment | 2021 | 2020 | |||||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 118,887 | $ | 79,198 | |||||||||||||||||||
| Total operating expenses | (111,310) | (75,479) | |||||||||||||||||||||
| Operating income | $ | 7,577 | $ | 3,719 | |||||||||||||||||||
| Operating ratio | 93.6 | % | 95.3 | % | |||||||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 118,887 | $ | 79,198 | |||||||||||||||||||
| Intersegment transactions | (3,165) | (2,441) | |||||||||||||||||||||
| Revenue, excluding intersegment transactions | 115,722 | 76,757 | |||||||||||||||||||||
| Total operating expenses | 111,310 | 75,479 | |||||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Intersegment transactions | (3,165) | (2,441) | |||||||||||||||||||||
| Adjusted Operating Expenses | 108,145 | 73,038 | |||||||||||||||||||||
| Adjusted Operating Income | $ | 7,577 | $ | 3,719 | |||||||||||||||||||
| Adjusted Operating Ratio | 93.5 | % | 95.2 | % | |||||||||||||||||||
| Quarter Ended March 31, | |||||||||||||||||||||||
| Intermodal Segment | 2021 | 2020 | |||||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 107,066 | $ | 94,731 | |||||||||||||||||||
| Total operating expenses | (103,609) | (97,468) | |||||||||||||||||||||
| Operating income (loss) | $ | 3,457 | $ | (2,737) | |||||||||||||||||||
| Operating ratio | 96.8 | % | 102.9 | % | |||||||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 107,066 | $ | 94,731 | |||||||||||||||||||
| Intersegment transactions | (95) | (109) | |||||||||||||||||||||
| Revenue, excluding intersegment transactions | 106,971 | 94,622 | |||||||||||||||||||||
| Total operating expenses | 103,609 | 97,468 | |||||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Intersegment transactions | (95) | (109) | |||||||||||||||||||||
COVID-19 incremental costs 2 | — | (48) | |||||||||||||||||||||
| Adjusted Operating Expenses | 103,514 | 97,311 | |||||||||||||||||||||
| Adjusted Operating Income (Loss) | $ | 3,457 | $ | (2,689) | |||||||||||||||||||
| Adjusted Operating Ratio | 96.8 | % | 102.8 | % | |||||||||||||||||||
1Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
2Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
| 13 | |||||||
Exhibit 99.2 KNX 1Q21 Earnings Presentation
2 Disclosure This presentation, including documents incorporated herein by reference, will contain forward- looking statements 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. Such forward- looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those contemplated by the forward-looking statements. Please review our disclosures in filings with the United States Securities and Exchange Commission. Non-GAAP Financial Data This presentation includes the use of adjusted operating income, operating ratio, adjusted operating ratio, net income, adjusted earnings per share, adjusted pre-tax income, return on net tangible assets, adjusted leverage ratio, available liquidity, and free cash flow, which are financial measures that are not in accordance with United States generally accepted accounting principles (“GAAP”). Each such measure is a supplemental non-GAAP financial measure that is used by management and external users of our financial statements, such as industry analysts, investors and lenders. While management believes such measures are useful for investors, they should not be used as a replacement for financial measures that are in accordance with GAAP. In addition, our use of these non-GAAP measures should not be interpreted as indicating that these or similar items could not occur in future periods. In addition, adjusted operating ratio excludes trucking segment fuel surcharges from revenue and nets these surcharges against fuel expense.
3 KNX Overview Trucking Q1 '21 TTM Q1 '21 Revenue (ex. fuel surcharge and intersegment transactions) $ 872.8 M $ 3,532.4 M Adjusted Operating Ratio 1 81.8 % 81.9 % • 13,130 irregular route tractors, 5,094 dedicated tractors, and 59,797 combined trailers • Dry Van, Refrigerated, Dedicated, Flatbed, Drayage, and Expedited service offerings Intermodal Q1 '21 TTM Q1 '21 Revenue (ex intersegment transactions) $ 107.0 M $ 403.4 M Adjusted Operating Ratio 1 96.8 % 98.7 % • 597 tractors and 10,846 containers Logistics Q1 '21 TTM Q1 '21 Revenue (ex intersegment transactions) $ 115.7 M $ 404.1 M Adjusted Operating Ratio 1 93.5 % 94.0 % Shareholder Value Q1 '21 • Free Cash Flow of $262M for Q1 and $714M for the TTM 2 • TTM Return on Net Tangible Assets of 16.9% 1 • Leverage Ratio of 0.54 1 • Repurchased $54M of our common stock • $14M paid out in Dividends 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation 2 Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities, less net cash capital expenditures.
4 First Quarter 2021 Comparative Results Adjustments • $11.7M in Q1 2021 and $11.5M in Q1 2020 of amortization expense from mergers and acquisitions • $1.2M in Q1 2021 of legal accruals • $0.9M in Q1 2020 of impairments • $2.3M in Q1 2020 for Covid-19 incremental costs 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation Knight-Swift Consolidated Q1 '21 Q1 '20 Change (Dollars in thousands, except per share data) Total revenue $ 1,223,014 $ 1,124,798 8.7 % Revenue xFSC $ 1,133,105 $ 1,027,095 10.3 % Operating income $ 162,259 $ 102,119 58.9 % Adj. Operating Income 1 $ 175,250 $ 116,788 50.1 % Net income attributable to Knight-Swift $ 129,790 $ 65,426 98.4 % Adj. Net income Attributable to Knight Swift 1 $ 139,433 $ 76,205 83.0 % Earnings per diluted share $ 0.77 $ 0.38 102.6 % Adj. EPS 1 $ 0.83 $ 0.44 88.6 %
5 Operating Performance – Trucking • 6.3% growth in Revenue xFSC • 81.8% Adjusted Operating Ratio in Q1 2021 compared to 86.5% the previous year • 43.3% year-over-year improvement in Adjusted Operating Income • 11.3% Revenue xFSC growth and a 78.5% Adjusted Operating Ratio in Swift Truckload • 10.0% Revenue xFSC growth and a 79.0% Adjusted Operating Ratio in Knight Trucking 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. Trucking Operating Statistics Q1 '21 Q1 '20 Change Average revenue per tractor $47,894 $44,474 7.7 % Average tractors 18,224 18,462 (1.3 %) Average trailers 59,797 57,716 3.6 % Miles per tractor 20,928 22,568 (7.3 %) Trucking Financial Metrics Q1 '21 Q1 '20 Change (Dollars in thousands) Revenue xFSC $872,814 $821,084 6.3 % Operating income $158,483 $107,334 47.7 % Adjusted Operating Income 1 $158,807 $110,805 43.3 % Operating ratio 83.5% 88.3% (480 bps) Adjusted Operating Ratio 1 81.8% 86.5% (470 bps)
6 Operating Performance – Logistics • 50.8% increase in Revenue • 103.7% increase in Operating income • 43.0% increase in Brokerage revenue per load • 5.4% increase in Brokerage load counts • Power only loads increased 56.2% from the prior year and now account for over 25% of total Q1 volume • 4,500 carriers were digitally matched through our Select platform representing 20% of brokerage load volume 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. Brokerage Only Operating Statistics Q1 '21 Q1 '20 Change Revenue per load $1,971 $1,378 43.0 % Gross margin 14.4% 14.7% (30 bps) Logistics Financial Metrics Q1 '21 Q1 '20 Change (Dollars in thousands) Revenue ex intersegment $115,722 $76,757 50.8 % Operating income $7,577 $3,719 103.7 % Operating ratio 93.6% 95.3% (170 bps) Adjusted Operating Ratio 1 93.5% 95.2% (170 bps)
7 Operating Performance – Intermodal • 13.1% increase in Revenue • $6.2M year-over-year improvement in Operating Income • 96.8% Operating Ratio during Q1 2021 compared with 102.9% the prior year • 10.2% year-over-year increase in average revenue per load • 2.6% increase in load counts from Q1 2020 Intermodal Operating Statistics Q1 '21 Q1 '20 Change Average revenue per load $2,549 $2,314 10.2 % Load count 41,968 40,889 2.6 % Average tractors 597 601 (0.7 %) Average containers 10,846 9,856 10.0 % Intermodal Financial Metrics Q1 '21 Q1 '20 Change (Dollars in thousands) Revenue ex intersegment $106,971 $94,622 13.1 % Operating income (loss) $3,457 $(2,737) 226.3 % Adjusted Operating Income (loss) 1 $3,457 $(2,689) 228.6 % Operating ratio 96.8% 102.9% (610 bps) Adjusted Operating Ratio 1 96.8% 102.8% (600 bps) 1. See GAAP to non-GAAP reconciliation in the schedules following this presentation.
8 Focus on Sustainability KNX improved CO2 emissions per mile by 3.6% in 2020, placing us on track to achieve established goals Knight-Swift Zero Emissions Battery Electric Vehicle
9 Market Outlook FY 2021 • Over-the-road truckload demand is at unprecedented levels and expected to continue into 2022 • Capacity expansion will be limited as new tractor builds are constrained by parts availability • Inventory restocking and strong demand will continue to support a favorable rate environment • The challenge of sourcing and retaining drivers will intensify and lead to additional driver wage inflation • Increased demand for power only opportunities • Continuing non-contract freight opportunities with tougher year- over-year comparisons in the back half of the year
10 2021 Guidance Increasing expected Adjusted EPS for the full year 2021 from $3.20 - $3.40 to $3.45 - $3.60 Guidance Assumptions • Over-the-road contract rate increases trending in the mid-teens • Miles per truck will be pressured by the driver shortage • Modest pressure on tractor count as sourcing drivers remains challenging • Continued strength in Logistics revenue growth • Double digit Intermodal revenue and pricing growth • Margin improvement in Intermodal • Inflationary pressure on driver wages, recruiting and hiring expenses • Tax rate of 25.5% - 27.0% before discrete items for 2021 • Net Cash Capex for the full year 2021 expected range of $450M - $500M
11 Appendix
12 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio 1 Quarter Ended March 31, 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 1,223,014 $ 1,124,798 Total operating expenses (1,060,755) (1,022,679) Operating income $ 162,259 $ 102,119 Operating ratio 86.7 % 90.9 % Non-GAAP Presentation Total revenue $ 1,223,014 $ 1,124,798 Trucking fuel surcharge (89,909) (97,703) Revenue, excluding trucking fuel surcharge 1,133,105 1,027,095 Total operating expenses 1,060,755 1,022,679 Adjusted for: Trucking fuel surcharge (89,909) (97,703) Amortization of intangibles 2 (11,749) (11,474) Impairments 3 — (902) Legal accruals 4 (1,242) — COVID-19 incremental costs 5 — (2,293) Adjusted Operating Expenses 957,855 910,307 Adjusted Operating Income $ 175,250 $ 116,788 Adjusted Operating Ratio 84.5 % 88.6 % 1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio. 2 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger and other acquisitions. 3 "Impairments" for the first quarter of 2020 reflect the impairment of trailer tracking equipment (within the Trucking segment). 4 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect costs related to certain class action lawsuits arising from employee related matters. 5 "COVID-19 incremental costs" reflects costs incurred during the first quarter of 2020 that were directly attributable to the pandemic and were incremental to those incurred prior to the outbreak. These include payroll premiums paid to our drivers and shop mechanics, additional disinfectants and cleaning supplies, and various other pandemic-specific items. The costs are clearly separable from our normal business operations and are not expected to recur once the pandemic subsides.
13 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 Quarter Ended March 31, 2021 2020 (Dollars in thousands, except per share data) GAAP: Net income attributable to Knight-Swift $ 129,790 $ 65,426 Adjusted for: Income tax expense attributable to Knight-Swift 45,329 24,554 Income before income taxes attributable to Knight-Swift 175,119 89,980 Amortization of intangibles 2 11,749 11,474 Impairments 3 — 902 Legal accruals 4 1,242 — COVID-19 incremental costs 5 — 2,293 Adjusted income before income taxes 188,110 104,649 Provision for income tax expense at effective rate (48,677) (28,444) Non-GAAP: Adjusted Net Income Attributable to Knight-Swift $ 139,433 $ 76,205 1 Pursuant 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. 2 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 2. 3 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 3. 4 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 4. 5 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
14 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 Quarter Ended March 31, 2021 2020 GAAP: Earnings per diluted share $ 0.77 $ 0.38 Adjusted for: Income tax expense attributable to Knight-Swift 0.27 0.14 Income before income taxes attributable to Knight-Swift 1.04 0.53 Amortization of intangibles 2 0.07 0.07 Impairments 3 — 0.01 Legal accruals 4 0.01 — COVID-19 incremental costs 5 — 0.01 Adjusted income before income taxes 1.12 0.61 Provision for income tax expense at effective rate (0.29) (0.17) Non-GAAP: Adjusted EPS $ 0.83 $ 0.44 Note: Because the numbers reflected in the table above are calculated on a per share basis, they may not foot due to rounding. 1 Pursuant to the requirements of Regulation G, these tables reconcile consolidated GAAP diluted earnings per share to non-GAAP consolidated Adjusted EPS. 2 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 2. 3 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 3. 4 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 4. 5 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
15 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio 1 Quarter Ended March 31, Trucking Segment 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 962,947 $ 919,061 Total operating expenses (804,464) (811,727) Operating income $ 158,483 $ 107,334 Operating ratio 83.5 % 88.3 % Non-GAAP Presentation Total revenue $ 962,947 $ 919,061 Fuel surcharge (89,909) (97,703) Intersegment transactions (224) (274) Revenue, excluding fuel surcharge and intersegment transactions 872,814 821,084 Total operating expenses 804,464 811,727 Adjusted for: Fuel surcharge (89,909) (97,703) Intersegment transactions (224) (274) Amortization of intangibles 2 (324) (324) Impairments 3 — (902) COVID-19 incremental costs 4 — (2,245) Adjusted Operating Expenses 714,007 710,279 Adjusted Operating Income $ 158,807 $ 110,805 Adjusted Operating Ratio 81.8 % 86.5 % 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. 3 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 3. 4 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
16 Non-GAAP Reconciliation Quarter Ended March 31, Logistics Segment 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 118,887 $ 79,198 Total operating expenses (111,310) (75,479) Operating income $ 7,577 $ 3,719 Operating ratio 93.6 % 95.3 % Non-GAAP Presentation Total revenue $ 118,887 $ 79,198 Intersegment transactions (3,165) (2,441) Revenue, excluding intersegment transactions 115,722 76,757 Total operating expenses 111,310 75,479 Adjusted for: Intersegment transactions (3,165) (2,441) Adjusted Operating Expenses 108,145 73,038 Adjusted Operating Income $ 7,577 $ 3,719 Adjusted Operating Ratio 93.5 % 95.2 % Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio 1 1 Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
17 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio 1 Quarter Ended March 31, Intermodal Segment 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 107,066 $ 94,731 Total operating expenses (103,609) (97,468) Operating income (loss) $ 3,457 $ (2,737) Operating ratio 96.8 % 102.9 % Non-GAAP Presentation Total revenue $ 107,066 $ 94,731 Intersegment transactions (95) (109) Revenue, excluding intersegment transactions 106,971 94,622 Total operating expenses 103,609 97,468 Adjusted for: Intersegment transactions (95) (109) COVID-19 incremental costs 2 — (48) Adjusted Operating Expenses 103,514 97,311 Adjusted Operating Income (Loss) $ 3,457 $ (2,689) Adjusted Operating Ratio 96.8 % 102.8 % 1 Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio. 2 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
18 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio — Trailing Twelve Months 1 Trucking Segment Three Months Ended March 31, 2021 Year Ended December 31, 2020 Three Months Ended March 31, 2020 TTM March 31, 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 962,947 $ 3,786,030 $ 919,061 $ 3,829,916 Total operating expenses (804,464) (3,207,518) (811,727) (3,200,255) Operating income $ 158,483 $ 578,512 $ 107,334 $ 629,661 Operating ratio 83.5 % 84.7 % 88.3 % 83.6 % Non-GAAP Presentation Total revenue $ 962,947 $ 3,786,030 $ 919,061 $ 3,829,916 Fuel surcharge (89,909) (304,656) (97,703) (296,862) Intersegment transactions (224) (753) (274) (703) Revenue, excluding fuel surcharge and intersegment transactions 872,814 3,480,621 821,084 3,532,351 Total operating expenses 804,464 3,207,518 811,727 3,200,255 Adjusted for: Fuel surcharge (89,909) (304,656) (97,703) (296,862) Intersegment transactions (224) (753) (274) (703) Amortization of intangibles 2 (324) (1,296) (324) (1,296) Impairments 3 — (1,131) (902) (229) COVID-19 incremental costs 4 — (12,146) (2,245) (9,901) Adjusted Operating Expenses 714,007 2,887,536 710,279 2,891,264 Adjusted Operating Income $ 158,807 $ 593,085 $ 110,805 $ 641,087 Adjusted Operating Ratio 81.8 % 83.0 % 86.5 % 81.9 % 1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio. 2 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in historical Knight acquisitions. 3 "Impairments" reflects the following non-cash impairments: • First quarter 2020 impairments include trailer tracking equipment; • Full-year 2020 also includes impairments of certain tractors and certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market. 4 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
19 Non-GAAP Reconciliation Logistics Segment Three Months Ended March 31, 2021 Year Ended December 31, 2020 Three Months Ended March 31, 2020 TTM March 31, 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 118,887 $ 375,841 $ 79,198 $ 415,530 Total operating expenses (111,310) (355,596) (75,479) (391,427) Operating income $ 7,577 $ 20,245 $ 3,719 $ 24,103 Operating ratio 93.6 % 94.6 % 95.3 % 94.2 % Non-GAAP Presentation Total revenue $ 118,887 $ 375,841 $ 79,198 $ 415,530 Intersegment transactions (3,165) (10,742) (2,441) (11,466) Revenue, excluding intersegment transactions 115,722 365,099 76,757 404,064 Total operating expenses 111,310 355,596 75,479 391,427 Adjusted for: Intersegment transactions (3,165) (10,742) (2,441) (11,466) Adjusted Operating Expenses 108,145 344,854 73,038 379,961 Adjusted Operating Income $ 7,577 $ 20,245 $ 3,719 $ 24,103 Adjusted Operating Ratio 93.5 % 94.5 % 95.2 % 94.0 % Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio — Trailing Twelve Months 1 1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio.
20 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio — Trailing Twelve Months 1 Intermodal Segment Three Months Ended March 31, 2021 Year Ended December 31, 2020 Three Months Ended March 31, 2020 TTM March 31, 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 107,066 $ 391,462 $ 94,731 $ 403,797 Total operating expenses (103,609) (392,405) (97,468) (398,546) Operating income (loss) $ 3,457 $ (943) $ (2,737) $ 5,251 Operating ratio 96.8 % 100.2 % 102.9 % 98.7 % Non-GAAP Presentation Total revenue $ 107,066 $ 391,462 $ 94,731 $ 403,797 Intersegment transactions (95) (364) (109) (350) Revenue, excluding intersegment transactions 106,971 391,098 94,622 403,447 Total operating expenses 103,609 392,405 97,468 398,546 Adjusted for: Intersegment transactions (95) (364) (109) (350) COVID-19 incremental costs 2 — (113) (48) (65) Adjusted Operating Expenses 103,514 391,928 97,311 398,131 Adjusted Operating Income (Loss) $ 3,457 $ (830) $ (2,689) $ 5,316 Adjusted Operating Ratio 96.8 % 100.2 % 102.8 % 98.7 % 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 Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
21 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Return on Net Tangible Assets 1 March 31, 2021 2020 (Dollars in thousands) Total Assets $ 8,519,475 $ 8,288,323 Adjusted for: Intangible assets, net (1,393,346) (1,423,666) Goodwill (2,958,709) (2,923,382) Tangible Assets $ 4,167,420 $ 3,941,275 Total Liabilities $ 2,570,137 $ 2,597,999 Adjusted for: Revolving line of credit, finance lease obligations, and long-term debt (626,439) (726,880) Accounts receivable securitization (198,957) (179,801) Deferred income tax liabilities (797,019) (785,588) Non-Interest Bearing Liabilities, excluding deferred income tax liabilities $ 947,722 $ 905,730 Net Tangible Assets $ 3,219,698 $ 3,035,545 Average Net Tangible Assets $ 3,127,622 Adjusted Net Income $ 529,375 Return on Net Tangible Assets 16.9 % 1 Pursuant to the requirements of Regulation G, this table reconciles Total Assets and Total Liabilities to Average Net Tangible Assets.
22 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Income Before Income Taxes and Adjusted Net Income 1 Year-to-Date March 31, 2021 Year-to-Date December 31, 2020 Year-to-Date March 31, 2020 TTM March 31, 2021 (Dollars in thousands) GAAP: Net income attributable to Knight-Swift $ 129,790 410,002 65,426 474,366 Adjusted for: Income tax expense attributable to Knight-Swift 45,329 149,676 24,554 170,451 Income before income taxes attributable to Knight-Swift 175,119 559,678 89,980 644,817 Amortization of intangibles 2 11,749 45,895 11,474 46,170 Change in fair value of deferred earnout 3 — 6,730 — 6,730 Impairments 4 — 5,335 902 4,433 Legal accruals 5 1,242 6,160 — 7,402 COVID-19 incremental costs 6 — 12,259 2,293 9,966 Adjusted income before income taxes 188,110 636,057 104,649 719,518 Provision for income tax expense at effective rate (48,677) (169,910) (28,444) (190,143) Non-GAAP Adjusted Net Income Attributable to Knight Swift $ 139,433 $ 466,147 $ 76,205 $ 529,375 1 Pursuant 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. 2 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger and other acquisitions. 3 "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 a warehousing company, which is recorded in "Miscellaneous operating expenses." 4 "Impairments" reflects the non-cash impairments: • Year-to-date 2020 includes impairments related to investments in certain alternative fuel technology (within the non-reportable segments), certain tractors (within the Trucking segment), certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market, and trailer tracking equipment (within the Trucking segment). 5 "Legal accruals" reflects costs incurred in the first quarter of 2021 and the third quarter of 2020 related to certain class action lawsuits involving pre-merger employment-related claims that were previously disclosed by Swift.. 6 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
23 Non-GAAP Reconciliation (Unaudited): Net Leverage and Leverage Ratio 1 2 Non-GAAP Reconciliation March 31, 2021 (Dollars in thousands) Term loan $ 300,000 Revolving line of credit 115,000 Accounts receivable securitization 199,000 Other secured debt and finance leases 212,376 Total face value of debt 826,376 Unrestricted cash and cash equivalents (194,650) Non-GAAP: Net Leverage $ 631,726 Non-GAAP: Adjusted EBITDA TTM March 31, 2021 $ 1,179,735 Non-GAAP: Leverage Ratio 0.54 1 Pursuant to the requirements of Regulation G, these tables reconcile consolidated GAAP net income attributable to Knight-Swift to non-GAAP consolidated EBITDA, Adjusted EBITDA, Net Leverage, and Leverage Ratio 2 Leverage Ratio is calculated in accordance with the provisions of Knight-Swift's senior credit facility.
24 1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP net income to consolidated non-GAAP EBITDA and Adjusted EBITDA. 2 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Income Before Income Taxes and Adjusted Net Income – footnote 2. 3 "Other non-cash gains, net" includes unrealized positions on equity securities, and other various items. Non-GAAP Reconciliation (Unaudited): Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA 1 Non-GAAP Reconciliation Year-to-Date March 31, 2021 Year-to-Date December 31, 2020 Year-to-Date March 31, 2020 TTM March 31, 2021 (Dollars in thousands) GAAP: Net income $ 129,843 $ 410,635 $ 65,783 $ 474,695 Adjusted for: Depreciation and amortization of property and equipment 119,915 460,775 110,221 470,469 Amortization of intangibles 11,749 45,895 11,474 46,170 Interest expense 3,486 17,309 6,107 14,688 Interest income (294) (1,928) (832) (1,390) Income tax expense 45,329 149,676 24,554 170,451 Non-GAAP: EBITDA 310,028 1,082,362 217,307 1,175,083 Impairments 2 — 5,335 902 4,433 Stock compensation expense 5,662 19,639 3,536 21,765 Other non-cash gains, net 3 (11,785) (4,083) 5,678 (21,546) Non-GAAP: Adjusted EBITDA $ 303,905 $ 1,103,253 $ 227,423 $ 1,179,735