Knight-Swift Transportation Holdings Inc 8-K, filed Jul 21, 2021
Knight-Swift Transportation Holdings Inc. (KNX)
8-K
2021-07-21
For: 2021-07-21
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April 08, 2026
About this 8-K
Knight-Swift Transportation Holdings Inc filed this 8-K on July 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): July 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 July 21, 2021 , Knight-Swift Transportation Holdings Inc. (the "Company") issued a press release (the "Press Release") announcing its financial results for the quarter ended June 30, 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 | ||||||||
July 21, 2021
Phoenix, Arizona
Knight-Swift Transportation Holdings Inc. Reports Second Quarter 2021 Revenue and Earnings | ||
Knight-Swift Transportation Holdings Inc. (NYSE: KNX) ("Knight-Swift" or "the Company"), one of North America's largest and most diversified freight transportation companies, today reported second quarter 2021 net income attributable to Knight-Swift of $152.8 million and Adjusted Net Income Attributable to Knight-Swift of $163.0 million. We reported GAAP earnings per diluted share of $0.92 for the second quarter of 2021, compared to $0.47 for the second quarter of 2020. Our Adjusted EPS was $0.98 for the second quarter of 2021, compared to $0.57 for the second quarter of 2020.
| Key Financial Highlights | ||
Our consolidated revenue, excluding trucking fuel surcharge, grew by 21.6% during the second quarter of 2021, reflecting meaningful growth across all reportable segments. We generated consolidated Adjusted Net Income Attributable to Knight-Swift of $163.0 million, which represents a 68.9% increase from $96.5 million during the second quarter of 2020. Revenue per tractor was up 10.3% despite lower fleet utilization as a result of the difficult driver sourcing environment. Our Trucking segment increased revenue, excluding fuel surcharge and intersegment transactions, by 8.2%, resulting in a 460 basis point improvement in the Adjusted Operating Ratio to 80.9% in the second quarter of 2021 from 85.5% in the second quarter of 2020. Our Logistics segment more than doubled revenue and increased operating income by 372.5%. Our Intermodal segment grew revenue nearly 40% and improved its Adjusted Operating Ratio by over 1,000 basis points to 95.0% in the second quarter of 2021, compared to the same quarter last year. We anticipate ongoing improvement within the Intermodal segment in the coming quarters.
Dave Jackson, CEO of Knight-Swift, commented, "We believe truckload shippers are recognizing the value of our unique and unmatched terminal network and industry-leading trailer pool capacity. Our strong performance in recent quarters is the result of having invested significant capital and many years in developing a powerful combination of assets, technologies, people, and customer relationships toward producing distinctive value to our customers. We are energized by our recent results, including the growing adoption of our power-only services by small carriers, and even more excited about our plans already underway to drive further growth, meaningful returns, and less cyclicality in the future."
Knight-Swift Consolidated Results
| Quarter Ended June 30, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||
| Total revenue | $ | 1,315,701 | $ | 1,060,698 | 24.0 | % | |||||||||||
| Revenue, excluding trucking fuel surcharge | $ | 1,212,872 | $ | 997,597 | 21.6 | % | |||||||||||
| Operating income | $ | 191,115 | $ | 102,167 | 87.1 | % | |||||||||||
Adjusted Operating Income 1 | $ | 204,637 | $ | 123,960 | 65.1 | % | |||||||||||
| Net income attributable to Knight-Swift | $ | 152,804 | $ | 80,189 | 90.6 | % | |||||||||||
Adjusted Net Income Attributable to Knight-Swift 1 | $ | 162,998 | $ | 96,498 | 68.9 | % | |||||||||||
| Earnings per diluted share | $ | 0.92 | $ | 0.47 | 95.7 | % | |||||||||||
Adjusted EPS 1 | $ | 0.98 | $ | 0.57 | 71.9 | % | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Recent Acquisitions — On June 1, 2021, we acquired Kansas City, Missouri-based UTXL, Inc. ("UTXL"). UTXL is a premier third-party logistics company, specializing in expedited over-the-road full truckload and multi-stop loads throughout the United States, Canada, and Mexico. The June 2021 results of UTXL are included within the Logistics segment and within the consolidated results, below.
On July 5, 2021, we acquired Dothan, Alabama-based AAA Cooper Transportation ("ACT"). ACT is a leading less-than-truckload ("LTL") carrier that also offers dedicated contract carriage and ancillary services. The results of ACT will be included in our consolidated results beginning in the third quarter of 2021.
Other Income (Expenses), net — We earned $16.8 million of income within "Other income (expenses), net" in the condensed consolidated statements of comprehensive income in the second quarter of 2021, representing an $8.3 million improvement, compared to $8.5 million in the second quarter of 2020. The year-over-year improvement was primarily driven by unrealized gains recognized from our investment in Embark Trucks Inc., a tractor technology company.
Income Taxes — The effective tax rate was 25.3% for the second quarter of 2021, compared to 25.0% for the second quarter of 2020. We expect the full-year 2021 effective tax rate to be in the range of 25.0% to 27.0%.
Dividend — On April 16, 2021 our board of directors declared a quarterly cash dividend of $0.10 per share of common stock, which is a $0.02 increase from the Company's previously existing quarterly dividend of $0.08 per share of common stock. The dividend was payable to the Company's stockholders of record as of June 4, 2021 and was paid on June 28, 2021.
| Segment Financial Performance | ||
Trucking Segment
| Quarter Ended June 30, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenue, excluding fuel surcharge and intersegment transactions | $ | 882,560 | $ | 816,033 | 8.2 | % | |||||||||||
| Operating income | $ | 168,457 | $ | 107,788 | 56.3 | % | |||||||||||
Adjusted Operating Income 1 | $ | 168,781 | $ | 118,166 | 42.8 | % | |||||||||||
| Operating ratio | 82.9 | % | 87.7 | % | (480 | bps) | |||||||||||
Adjusted Operating Ratio 1 | 80.9 | % | 85.5 | % | (460 | 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 12,967 irregular route tractors and 5,067 dedicated route tractors. Operating income grew by 56.3% within the Trucking segment, overcoming inflationary pressures related to sourcing and retaining drivers. Year-over-year revenue, excluding fuel surcharge and intersegment transactions, grew by 8.2% in the second quarter. Average revenue per tractor increased by 10.3%, driven by an 18.8% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions. Consumer demand remained strong, while capacity remained constrained across our industry, which is driving up sourcing costs and corresponding rates. Our year-over-year rate improvement was partially offset by driver-related sourcing expenses, as well as an 8.0% decline in miles per tractor due to an increase in unseated tractors. On a sequential basis, miles per tractor remained relatively flat. In the second quarter of 2021, the Swift truckload operating segment generated an Adjusted Operating Ratio of 75.7%, while the Knight trucking operating segment generated an Adjusted Operating Ratio of 78.7%.
| 2 | |||||||
Logistics Segment
| Quarter Ended June 30, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenue, excluding intersegment transactions | $ | 162,167 | $ | 67,066 | 141.8 | % | |||||||||||
| Operating income | $ | 14,356 | $ | 3,038 | 372.5 | % | |||||||||||
Adjusted Operating Income 1 | $ | 14,453 | $ | 3,038 | 375.7 | % | |||||||||||
| Operating ratio | 91.4 | % | 95.7 | % | (430 | bps) | |||||||||||
Adjusted Operating Ratio 1 | 91.1 | % | 95.5 | % | (440 | bps) | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Revenue, excluding intersegment transactions, increased by 141.8% within our Logistics segment, as brokerage load volumes grew by 55.3% and revenue per load increased by 55.8% (including the results of UTXL beginning June 1, 2021). Excluding the results of UTXL, brokerage load volumes grew by 49.6% and revenue per load increased by 47.5%. Brokerage gross margin was 15.7% in the second quarters of 2021 and 2020, while Adjusted Operating Ratio improved by 440 basis points to 91.1% in the second quarter of 2021 from 95.5% in the second quarter of 2020.
Within our power-only service offering, revenue grew by 410.5% as a result of a 141.5% increase in load volumes. Power-only represented 26.9% of brokerage revenue and over 25% of our total second 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 second quarter of 2021, more than 4,500 carriers were digitally matched with loads through our Select platform, achieving an 18.2% sequential increase in Select platform load volumes.
Intermodal Segment
| Quarter Ended June 30, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Revenue, excluding intersegment transactions | $ | 115,294 | $ | 82,699 | 39.4 | % | |||||||||||
| Operating income (loss) | $ | 5,812 | $ | (4,475) | 229.9 | % | |||||||||||
Adjusted Operating Income (Loss) 1 | $ | 5,812 | $ | (4,410) | 231.8 | % | |||||||||||
| Operating ratio | 95.0 | % | 105.4 | % | (1,040 | bps) | |||||||||||
Adjusted Operating Ratio 1 | 95.0 | % | 105.3 | % | (1,030 | bps) | |||||||||||
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Intermodal revenue, excluding intersegment transactions increased 39.4% year-over-year, as load counts increased 19.9% and revenue per load increased 16.3%. The Adjusted Operating Ratio improved to 95.0% in the second quarter of 2021, from 105.3% in the second quarter of 2020. Intermodal is exhibiting solid momentum, and we expect operational improvements in cost structure and network design in the coming quarters to lead to continued improvement.
| 3 | |||||||
Non-reportable Segments
| Quarter Ended June 30, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (Dollars in thousands) | |||||||||||||||||
| Total revenue | $ | 66,795 | $ | 45,289 | 47.5 | % | |||||||||||
| Operating income (loss) | $ | 2,490 | $ | (4,184) | 159.5 | % | |||||||||||
The non-reportable segments include support services provided to our customers, independent contractors, and third party carriers (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). Revenue growth and improved profitability within the non-reportable segments is related to revenue and margin improvement in our warehousing activities, expanded services to third-party carriers, and increased demand for our equipment leasing services.
| Consolidated Liquidity, Capital Resources, and Earnings Guidance | ||
Cash Flow Sources (Uses)
| Year-to-Date June 30, | |||||||||||||||||
| 2021 | 2020 | Change | |||||||||||||||
| (In thousands) | |||||||||||||||||
| Net cash provided by operating activities | $ | 459,504 | $ | 383,360 | $ | 76,144 | |||||||||||
| Net cash used in investing activities | (196,916) | (253,066) | 56,150 | ||||||||||||||
| Net cash used in financing activities | (227,798) | (173,771) | (54,027) | ||||||||||||||
Net increase (decrease) in cash, restricted cash, and equivalents 1 | $ | 34,790 | $ | (43,477) | $ | 78,267 | |||||||||||
| Net capital expenditures | $ | (120,481) | $ | (195,178) | $ | 74,697 | |||||||||||
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 June 30, 2021, we had a balance of $943.2 million of unrestricted cash and available liquidity and $6.1 billion of stockholders' equity. The face value of our debt, net of unrestricted cash ("Net Debt") was $693.0 million as of June 30, 2021, which is a $65.1 million decrease from December 31, 2020. Free cash flow2 for the first half of 2021 was $339.0 million (computed as net cash provided by operating activities, less net capital expenditures). During the first half of 2021, we generated $459.5 million in operating cash flows, reduced our operating lease liabilities by $28.3 million, spent $63.3 million on acquisitions, and returned $53.7 million in share repurchases and $30.3 million in dividends to our stockholders. Subsequent to June 30, 2021, we acquired ACT and borrowed $1.2 billion dollars to finance the transaction.
Equipment and Capital Expenditures — Gain on sale of revenue equipment increased to $15.1 million in the second quarter of 2021, compared to $1.7 million in the same quarter of 2020. The average age of our tractor fleet was 2.4 years in the second quarter of 2021, compared to 2.1 years in the same quarter of 2020. Capital expenditures, net of disposal proceeds, were $120.5 million for the first half of 2021. We expect net cash capital expenditures will be in the range of $500.0 million – $550.0 million for full-year 2021, including anticipated net cash capital expenditures of ACT. 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 net cash outlays for acquisitions. The range provided excludes cash outlays for potential acquisitions.
| 4 | |||||||
Guidance — We expect that Adjusted EPS3 for full-year 2021 will range from $3.90 to $4.05, which is an update from our previously-disclosed range of $3.45 to $3.60. Our revised expected Adjusted EPS3 range considers the expected future earnings of ACT and UTXL and is also based on the current truckload and general market conditions, recent trends, and the current beliefs, assumptions, and expectations of management (including those referenced in the second 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 EPS3 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.
| 5 | |||||||
| Other Information | ||
| About Knight-Swift | ||
Knight-Swift Transportation Holdings Inc. is one of North America's largest and most diversified freight transportation companies, providing multiple truckload transportation and logistics services, as well as LTL services through ACT (beginning in July 2021). 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 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,
•future effective tax rates,
•future performance of our reportable segments, including load volumes, network, and revenue per load within our Intermodal 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, 2020, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.
| 6 | |||||||
| Financial Statements | ||
| Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||
| Quarter Ended June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||||||
| Revenue: | |||||||||||||||||||||||
| Revenue, excluding trucking fuel surcharge | $ | 1,212,872 | $ | 997,597 | $ | 2,345,977 | $ | 2,024,692 | |||||||||||||||
| Trucking fuel surcharge | 102,829 | 63,101 | 192,738 | 160,804 | |||||||||||||||||||
| Total revenue | 1,315,701 | 1,060,698 | 2,538,715 | 2,185,496 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Salaries, wages, and benefits | 377,613 | 365,311 | 747,983 | 720,144 | |||||||||||||||||||
| Fuel | 126,055 | 86,381 | 244,291 | 208,236 | |||||||||||||||||||
| Operations and maintenance | 71,313 | 66,067 | 139,383 | 134,471 | |||||||||||||||||||
| Insurance and claims | 58,776 | 45,302 | 114,419 | 99,582 | |||||||||||||||||||
| Operating taxes and licenses | 21,717 | 20,883 | 43,765 | 43,052 | |||||||||||||||||||
| Communications | 4,635 | 4,902 | 9,672 | 9,776 | |||||||||||||||||||
| Depreciation and amortization of property and equipment | 123,606 | 114,601 | 243,521 | 224,822 | |||||||||||||||||||
| Amortization of intangibles | 11,984 | 11,474 | 23,733 | 22,948 | |||||||||||||||||||
| Rental expense | 13,399 | 22,372 | 30,263 | 47,747 | |||||||||||||||||||
| Purchased transportation | 304,157 | 200,107 | 562,387 | 425,383 | |||||||||||||||||||
| Impairments | — | 353 | — | 1,255 | |||||||||||||||||||
| Miscellaneous operating expenses | 11,331 | 20,778 | 25,924 | 43,794 | |||||||||||||||||||
| Total operating expenses | 1,124,586 | 958,531 | 2,185,341 | 1,981,210 | |||||||||||||||||||
| Operating income | 191,115 | 102,167 | 353,374 | 204,286 | |||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Interest income | 270 | 437 | 564 | 1,269 | |||||||||||||||||||
| Interest expense | (3,307) | (4,021) | (6,793) | (10,128) | |||||||||||||||||||
| Other income, net | 16,840 | 8,499 | 32,945 | 1,992 | |||||||||||||||||||
| Total other income (expenses), net | 13,803 | 4,915 | 26,716 | (6,867) | |||||||||||||||||||
| Income before income taxes | 204,918 | 107,082 | 380,090 | 197,419 | |||||||||||||||||||
| Income tax expense | 51,783 | 26,815 | 97,112 | 51,369 | |||||||||||||||||||
| Net income | 153,135 | 80,267 | 282,978 | 146,050 | |||||||||||||||||||
| Net income attributable to noncontrolling interest | (331) | (78) | (384) | (435) | |||||||||||||||||||
| Net income attributable to Knight-Swift | $ | 152,804 | $ | 80,189 | $ | 282,594 | $ | 145,615 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 0.92 | $ | 0.47 | $ | 1.70 | $ | 0.86 | |||||||||||||||
| Diluted | $ | 0.92 | $ | 0.47 | $ | 1.69 | $ | 0.85 | |||||||||||||||
| Dividends declared per share: | $ | 0.10 | $ | 0.08 | $ | 0.18 | $ | 0.16 | |||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 165,577 | 169,948 | 165,751 | 170,283 | |||||||||||||||||||
| Diluted | 166,585 | 170,624 | 166,750 | 170,958 | |||||||||||||||||||
| 7 | |||||||
| Condensed Consolidated Balance Sheets (Unaudited) | ||
| June 30, 2021 | December 31, 2020 | ||||||||||
| (In thousands) | |||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 179,032 | $ | 156,699 | |||||||
| Cash and cash equivalents – restricted | 51,637 | 39,328 | |||||||||
| Restricted investments, held-to-maturity, amortized cost | 8,589 | 9,001 | |||||||||
Trade receivables, net of allowance for doubtful accounts of $22,157 and $22,093, respectively | 648,435 | 578,479 | |||||||||
| Contract balance – revenue in transit | 20,913 | 14,560 | |||||||||
| Prepaid expenses | 58,722 | 71,649 | |||||||||
| Assets held for sale | 17,599 | 29,756 | |||||||||
| Income tax receivable | 29,369 | 2,903 | |||||||||
| Other current assets | 60,581 | 20,988 | |||||||||
| Total current assets | 1,074,877 | 923,363 | |||||||||
| Property and equipment, net | 3,011,816 | 2,992,652 | |||||||||
| Operating lease right-of-use assets | 91,258 | 113,296 | |||||||||
| Goodwill | 2,971,023 | 2,922,964 | |||||||||
| Intangible assets, net | 1,403,483 | 1,389,245 | |||||||||
| Other long-term assets | 130,002 | 126,482 | |||||||||
| Total assets | $ | 8,682,459 | $ | 8,468,002 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 151,704 | $ | 101,001 | |||||||
| Accrued payroll and purchased transportation | 191,906 | 160,888 | |||||||||
| Accrued liabilities | 87,637 | 88,894 | |||||||||
| Claims accruals – current portion | 169,093 | 174,928 | |||||||||
Finance lease liabilities – current portion | 72,423 | 52,583 | |||||||||
| Operating lease liabilities – current portion | 32,785 | 47,496 | |||||||||
| Accounts receivable securitization – current portion | — | 213,918 | |||||||||
| Total current liabilities | 705,548 | 839,708 | |||||||||
| Revolving line of credit | 55,000 | 210,000 | |||||||||
Long-term debt – less current portion | 299,219 | 298,907 | |||||||||
| Finance lease liabilities – less current portion | 165,644 | 138,243 | |||||||||
| Operating lease liabilities – less current portion | 60,958 | 69,852 | |||||||||
| Accounts receivable securitization – less current portion | 278,372 | — | |||||||||
| Claims accruals – less current portion | 168,152 | 174,814 | |||||||||
| Deferred tax liabilities | 806,398 | 815,941 | |||||||||
| Other long-term liabilities | 45,115 | 48,497 | |||||||||
| Total liabilities | 2,584,406 | 2,595,962 | |||||||||
| Stockholders’ equity: | |||||||||||
| Common stock | 1,657 | 1,665 | |||||||||
| Additional paid-in capital | 4,325,915 | 4,301,424 | |||||||||
| Retained earnings | 1,757,689 | 1,566,759 | |||||||||
| Total Knight-Swift stockholders' equity | 6,085,261 | 5,869,848 | |||||||||
| Noncontrolling interest | 12,792 | 2,192 | |||||||||
| Total stockholders’ equity | 6,098,053 | 5,872,040 | |||||||||
| Total liabilities and stockholders’ equity | $ | 8,682,459 | $ | 8,468,002 | |||||||
| 8 | |||||||
| Segment Operating Statistics (Unaudited) | ||
| Quarter Ended June 30, | Year-to-Date June 30, | ||||||||||||||||||||||||||||||||||
| 2021 | 2020 | Change | 2021 | 2020 | Change | ||||||||||||||||||||||||||||||
| Trucking | |||||||||||||||||||||||||||||||||||
Average revenue per tractor 1 | $ | 48,939 | $ | 44,366 | 10.3 | % | $ | 96,827 | $ | 88,839 | 9.0 | % | |||||||||||||||||||||||
| Non-paid empty miles percentage | 13.0 | % | 13.8 | % | (80 | bps) | 12.9 | % | 13.3 | % | (40 | bps) | |||||||||||||||||||||||
| Average length of haul (miles) | 408 | 420 | (2.9 | %) | 410 | 424 | (3.3 | %) | |||||||||||||||||||||||||||
| Miles per tractor | 20,913 | 22,741 | (8.0 | %) | 41,841 | 45,307 | (7.7 | %) | |||||||||||||||||||||||||||
| Average tractors | 18,034 | 18,393 | (2.0 | %) | 18,129 | 18,428 | (1.6 | %) | |||||||||||||||||||||||||||
| Average trailers | 60,858 | 57,269 | 6.3 | % | 60,382 | 57,456 | 5.1 | % | |||||||||||||||||||||||||||
| Logistics | |||||||||||||||||||||||||||||||||||
Revenue per load – Brokerage only 2 | $ | 2,193 | $ | 1,408 | 55.8 | % | $ | 2,094 | $ | 1,392 | 50.4 | % | |||||||||||||||||||||||
| Gross margin – Brokerage only | 15.7 | % | 15.7 | % | — | bps | 15.2 | % | 15.1 | % | 10 | bps | |||||||||||||||||||||||
| Intermodal | |||||||||||||||||||||||||||||||||||
Average revenue per load 2 | $ | 2,616 | $ | 2,249 | 16.3 | % | $ | 2,583 | $ | 2,283 | 13.1 | % | |||||||||||||||||||||||
| Load count | 44,073 | 36,769 | 19.9 | % | 86,041 | 77,658 | 10.8 | % | |||||||||||||||||||||||||||
| Average tractors | 611 | 571 | 7.0 | % | 605 | 586 | 3.2 | % | |||||||||||||||||||||||||||
| Average containers | 10,842 | 10,853 | (0.1 | %) | 10,844 | 10,355 | 4.7 | % | |||||||||||||||||||||||||||
1Computed with revenue, excluding fuel surcharge and intersegment transactions
2Computed with revenue, excluding intersegment transactions
| 9 | |||||||
| 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 June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 1,315,701 | $ | 1,060,698 | $ | 2,538,715 | $ | 2,185,496 | |||||||||||||||
| Total operating expenses | (1,124,586) | (958,531) | (2,185,341) | (1,981,210) | |||||||||||||||||||
| Operating income | $ | 191,115 | $ | 102,167 | $ | 353,374 | $ | 204,286 | |||||||||||||||
| Operating ratio | 85.5 | % | 90.4 | % | 86.1 | % | 90.7 | % | |||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 1,315,701 | $ | 1,060,698 | $ | 2,538,715 | $ | 2,185,496 | |||||||||||||||
| Trucking fuel surcharge | (102,829) | (63,101) | (192,738) | (160,804) | |||||||||||||||||||
| Revenue, excluding trucking fuel surcharge | 1,212,872 | 997,597 | 2,345,977 | 2,024,692 | |||||||||||||||||||
| Total operating expenses | 1,124,586 | 958,531 | 2,185,341 | 1,981,210 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Trucking fuel surcharge | (102,829) | (63,101) | (192,738) | (160,804) | |||||||||||||||||||
Amortization of intangibles 2 | (11,984) | (11,474) | (23,733) | (22,948) | |||||||||||||||||||
Impairments 3 | — | (353) | — | (1,255) | |||||||||||||||||||
Legal accruals 4 | (879) | — | (2,121) | — | |||||||||||||||||||
COVID-19 incremental costs 5 | — | (9,966) | — | (12,259) | |||||||||||||||||||
Transaction fees 6 | (659) | — | (659) | — | |||||||||||||||||||
| Adjusted Operating Expenses | 1,008,235 | 873,637 | 1,966,090 | 1,783,944 | |||||||||||||||||||
| Adjusted Operating Income | $ | 204,637 | $ | 123,960 | $ | 379,887 | $ | 240,748 | |||||||||||||||
| Adjusted Operating Ratio | 83.1 | % | 87.6 | % | 83.8 | % | 88.1 | % | |||||||||||||||
| 10 | |||||||
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" reflects the non-cash impairment of certain tractors (within the Trucking segment) and certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market during the second quarter of 2020, as well as impairment charges of trailer tracking equipment (within the Trucking segment) during the first quarter of 2020.
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 and contract related matters.
5 "COVID-19 incremental costs" reflects costs incurred during 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.
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 consolidated statements of comprehensive income.
Non-GAAP Reconciliation (Unaudited): | ||
Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 | ||
| Quarter Ended June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| (Dollars in thousands, except per share data) | |||||||||||||||||||||||
| GAAP: Net income attributable to Knight-Swift | $ | 152,804 | $ | 80,189 | $ | 282,594 | $ | 145,615 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Income tax expense attributable to Knight-Swift | 51,783 | 26,815 | 97,112 | 51,369 | |||||||||||||||||||
| Income before income taxes attributable to Knight-Swift | 204,587 | 107,004 | 379,706 | 196,984 | |||||||||||||||||||
Amortization of intangibles 2 | 11,984 | 11,474 | 23,733 | 22,948 | |||||||||||||||||||
Impairments 3 | — | 353 | — | 1,255 | |||||||||||||||||||
Legal accruals 4 | 879 | — | 2,121 | — | |||||||||||||||||||
COVID-19 incremental costs 5 | — | 9,966 | — | 12,259 | |||||||||||||||||||
Transaction fees 6 | 659 | — | 659 | — | |||||||||||||||||||
| Adjusted income before income taxes | 218,109 | 128,797 | 406,219 | 233,446 | |||||||||||||||||||
| Provision for income tax expense at effective rate | (55,111) | (32,299) | (103,788) | (60,743) | |||||||||||||||||||
| Non-GAAP: Adjusted Net Income Attributable to Knight-Swift | $ | 162,998 | $ | 96,498 | $ | 302,431 | $ | 172,703 | |||||||||||||||
| 11 | |||||||
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 June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||||||||||||||||
| GAAP: Earnings per diluted share | $ | 0.92 | $ | 0.47 | $ | 1.69 | $ | 0.85 | |||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Income tax expense attributable to Knight-Swift | 0.31 | 0.16 | 0.58 | 0.30 | |||||||||||||||||||
| Income before income taxes attributable to Knight-Swift | 1.23 | 0.63 | 2.28 | 1.15 | |||||||||||||||||||
Amortization of intangibles 2 | 0.07 | 0.07 | 0.14 | 0.13 | |||||||||||||||||||
Impairments 3 | — | — | — | 0.01 | |||||||||||||||||||
Legal accruals 4 | 0.01 | — | 0.01 | — | |||||||||||||||||||
COVID-19 incremental costs 5 | — | 0.06 | — | 0.07 | |||||||||||||||||||
Transaction fees 6 | — | — | — | — | |||||||||||||||||||
| Adjusted income before income taxes | 1.31 | 0.75 | 2.44 | 1.37 | |||||||||||||||||||
| Provision for income tax expense at effective rate | (0.33) | (0.19) | (0.62) | (0.36) | |||||||||||||||||||
| Non-GAAP: Adjusted EPS | $ | 0.98 | $ | 0.57 | $ | 1.81 | $ | 1.01 | |||||||||||||||
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 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.
6Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 6.
| 12 | |||||||
Non-GAAP Reconciliation (Unaudited): | ||
Segment Adjusted Operating Income and Adjusted Operating Ratio 1 | ||
| Quarter Ended June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| Trucking Segment | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 985,858 | $ | 879,369 | $ | 1,948,805 | $ | 1,798,430 | |||||||||||||||
| Total operating expenses | (817,401) | (771,581) | (1,621,865) | (1,583,308) | |||||||||||||||||||
| Operating income | $ | 168,457 | $ | 107,788 | $ | 326,940 | $ | 215,122 | |||||||||||||||
| Operating ratio | 82.9 | % | 87.7 | % | 83.2 | % | 88.0 | % | |||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 985,858 | $ | 879,369 | $ | 1,948,805 | $ | 1,798,430 | |||||||||||||||
| Fuel surcharge | (102,829) | (63,101) | (192,738) | (160,804) | |||||||||||||||||||
| Intersegment transactions | (469) | (235) | (693) | (509) | |||||||||||||||||||
| Revenue, excluding fuel surcharge and intersegment transactions | 882,560 | 816,033 | 1,755,374 | 1,637,117 | |||||||||||||||||||
| Total operating expenses | 817,401 | 771,581 | 1,621,865 | 1,583,308 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Fuel surcharge | (102,829) | (63,101) | (192,738) | (160,804) | |||||||||||||||||||
| Intersegment transactions | (469) | (235) | (693) | (509) | |||||||||||||||||||
Amortization of intangibles 2 | (324) | (324) | (648) | (648) | |||||||||||||||||||
Impairments 3 | — | (153) | — | (1,055) | |||||||||||||||||||
COVID-19 incremental costs 4 | — | (9,901) | — | (12,146) | |||||||||||||||||||
| Adjusted Operating Expenses | 713,779 | 697,867 | 1,427,786 | 1,408,146 | |||||||||||||||||||
| Adjusted Operating Income | $ | 168,781 | $ | 118,166 | $ | 327,588 | $ | 228,971 | |||||||||||||||
| Adjusted Operating Ratio | 80.9 | % | 85.5 | % | 81.3 | % | 86.0 | % | |||||||||||||||
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.
| 13 | |||||||
Non-GAAP Reconciliation (Unaudited): | ||
Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued 1 | ||
| Quarter Ended June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| Logistics Segment | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 166,737 | $ | 70,104 | $ | 285,624 | $ | 149,302 | |||||||||||||||
| Total operating expenses | (152,381) | (67,066) | (263,691) | (142,545) | |||||||||||||||||||
| Operating income | $ | 14,356 | $ | 3,038 | $ | 21,933 | $ | 6,757 | |||||||||||||||
| Operating ratio | 91.4 | % | 95.7 | % | 92.3 | % | 95.5 | % | |||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 166,737 | $ | 70,104 | $ | 285,624 | $ | 149,302 | |||||||||||||||
| Intersegment transactions | (4,570) | (3,038) | (7,735) | (5,479) | |||||||||||||||||||
| Revenue, excluding intersegment transactions | 162,167 | 67,066 | 277,889 | 143,823 | |||||||||||||||||||
| Total operating expenses | 152,381 | 67,066 | 263,691 | 142,545 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Intersegment transactions | (4,570) | (3,038) | (7,735) | (5,479) | |||||||||||||||||||
Amortization of intangibles 2 | (97) | — | (97) | — | |||||||||||||||||||
| Adjusted Operating Expenses | 147,714 | 64,028 | 255,859 | 137,066 | |||||||||||||||||||
| Adjusted Operating Income | $ | 14,453 | $ | 3,038 | $ | 22,030 | $ | 6,757 | |||||||||||||||
| Adjusted Operating Ratio | 91.1 | % | 95.5 | % | 92.1 | % | 95.3 | % | |||||||||||||||
| Quarter Ended June 30, | Year-to-Date June 30, | ||||||||||||||||||||||
| Intermodal Segment | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||
| GAAP Presentation | (Dollars in thousands) | ||||||||||||||||||||||
| Total revenue | $ | 115,378 | $ | 82,820 | $ | 222,444 | $ | 177,551 | |||||||||||||||
| Total operating expenses | (109,566) | (87,295) | (213,175) | (184,763) | |||||||||||||||||||
| Operating income (loss) | $ | 5,812 | $ | (4,475) | $ | 9,269 | $ | (7,212) | |||||||||||||||
| Operating ratio | 95.0 | % | 105.4 | % | 95.8 | % | 104.1 | % | |||||||||||||||
| Non-GAAP Presentation | |||||||||||||||||||||||
| Total revenue | $ | 115,378 | $ | 82,820 | $ | 222,444 | $ | 177,551 | |||||||||||||||
| Intersegment transactions | (84) | (121) | (179) | (230) | |||||||||||||||||||
| Revenue, excluding intersegment transactions | 115,294 | 82,699 | 222,265 | 177,321 | |||||||||||||||||||
| Total operating expenses | 109,566 | 87,295 | 213,175 | 184,763 | |||||||||||||||||||
| Adjusted for: | |||||||||||||||||||||||
| Intersegment transactions | (84) | (121) | (179) | (230) | |||||||||||||||||||
COVID-19 incremental costs 3 | — | (65) | — | (113) | |||||||||||||||||||
| Adjusted Operating Expenses | 109,482 | 87,109 | 212,996 | 184,420 | |||||||||||||||||||
| Adjusted Operating Income (Loss) | $ | 5,812 | $ | (4,410) | $ | 9,269 | $ | (7,099) | |||||||||||||||
| Adjusted Operating Ratio | 95.0 | % | 105.3 | % | 95.8 | % | 104.0 | % | |||||||||||||||
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.
3Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
| 14 | |||||||
Exhibit 99.2 KNX 2Q21 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, EBITDA, adjusted EBITDA, 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 Q2 '21 YTD 2021 Revenue (ex. fuel surcharge and intersegment transactions) $ 882.6 M $ 1,755.4 M Adjusted Operating Ratio 1 80.9 % 81.3 % • 12,967 irregular route tractors, 5,067 dedicated tractors, and 60,858 combined trailers • Dry Van, Refrigerated, Dedicated, Flatbed, Drayage, and Expedited service offerings Intermodal Q2 '21 YTD 2021 Revenue (ex intersegment transactions) $ 115.3 M $ 222.3 M Adjusted Operating Ratio 1 95.0 % 95.8 % • 611 tractors and 10,842 containers Logistics Q2 '21 YTD 2021 Revenue (ex intersegment transactions) $ 162.2 M $ 277.9 M Adjusted Operating Ratio 1 91.1 % 92.1 % Shareholder Value YTD 2021 • Free Cash Flow of $339M 2 • Return on Net Tangible Assets of 18.4% 1 • Repurchased $54M of our common stock • $30M paid out in dividends • Acquisitions of Eleos in Q1, UTXL in Q2, and AAA Cooper in July 2021 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 Investment in Growth • Abilene - Mar 2018 - Expands full truckload services • NTTS - Jul 2019 - Provides academy accreditation • Hayes - Jan 2020 - Adds footprint into warehousing space • Eleos - Feb 2021 - Provides modern in-cab technology for 3rd party carriers • UTXL - Jun 2021 - Adds expedited brokerage to our suite of services • AAA Cooper Jul 2021 - Provides first significant step into LTL market • Power-Only - Launched 2019 - 3rd party carriers utilize KNX trailers ◦ 2021 expected revenue of $175M • Select platform - Launched 2020 - New 3rd party carrier platform ◦ YTD 25K loads booked using Select • Leasing & Carrier Services - Launched 2020 - Leasing, Insurance, Maintenance ◦ 2021 expected revenue of $96M • Truckmovers - Oct 2020 - 21% ownership, adds truck delivery service offering • Embark - Apr 2021 - Investment with tractor technology company
5 Second Quarter 2021 Comparative Results Adjustments • $12.0M in Q2 2021 and $11.5M in Q2 2020 of amortization expense from mergers and acquisitions • $0.9M in Q2 2021 of legal accruals • $0.7M in Q2 2021 of transaction fees • $0.4M in Q2 2020 of impairments • $10.0M in Q2 2020 for Covid-19 incremental costs 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation Knight-Swift Consolidated Q2 '21 Q2 '20 Change (Dollars in thousands, except per share data) Total revenue $ 1,315,701 $ 1,060,698 24.0 % Revenue xFSC $ 1,212,872 $ 997,597 21.6 % Operating income $ 191,115 $ 102,167 87.1 % Adj. Operating Income 1 $ 204,637 $ 123,960 65.1 % Net income attributable to Knight-Swift $ 152,804 $ 80,189 90.6 % Adj. Net income Attributable to Knight Swift 1 $ 162,998 $ 96,498 68.9 % Earnings per diluted share $ 0.92 $ 0.47 95.7 % Adj. EPS 1 $ 0.98 $ 0.57 71.9 %
6 Operating Performance – Trucking • 42.8% year-over-year improvement in Adjusted Operating Income • 80.9% Adjusted Operating Ratio in Q2 2021 compared to 85.5% the previous year • 15.0% Revenue xFSC growth and a 75.7% Adjusted Operating Ratio in Swift Truckload • 13.7% Revenue xFSC growth and a 78.7% Adjusted Operating Ratio in Knight Trucking 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. Trucking Operating Statistics Q2 '21 Q2 '20 Change Average revenue per tractor $48,939 $44,366 10.3 % Average tractors 18,034 18,393 (2.0 %) Average trailers 60,858 57,269 6.3 % Miles per tractor 20,913 22,741 (8.0 %) Trucking Financial Metrics Q2 '21 Q2 '20 Change (Dollars in thousands) Revenue xFSC $882,560 $816,033 8.2 % Operating income $168,457 $107,788 56.3 % Adjusted Operating Income 1 $168,781 $118,166 42.8 % Operating ratio 82.9% 87.7% (480 bps) Adjusted Operating Ratio 1 80.9% 85.5% (460 bps)
7 Operating Performance – Logistics • 141.8% increase in Revenue (120.6% excluding the UTXL acquisition) • 372.5% increase in Operating income • 55.3% increase in load counts • 55.8% increase in revenue per load • Power-only revenue increased 410.5% from the prior year and now accounts for over 25% of total Q2 2021 volume • Over 4,500 carriers were digitally matched through our Select platform • Loads booked through Select increased 18% from Q1 2021 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. Operating Statistics Q2 '21 Q2 '20 Change Revenue per load $2,193 $1,408 55.8 % Gross margin 15.7% 15.7% — bps Logistics Financial Metrics Q2 '21 Q2 '20 Change (Dollars in thousands) Revenue ex intersegment $162,167 $67,066 141.8 % Operating income $14,356 $3,038 372.5 % Adjusted Operating Income $14,453 $3,038 375.7 % Operating ratio 91.4% 95.7% (430 bps) Adjusted Operating Ratio 1 91.1% 95.5% (440 bps)
8 Operating Performance – Intermodal • 39.4% increase in Revenue • $10.3M year-over-year improvement in Operating Income • 95.0% Operating Ratio during Q2 2021 compared with 105.4% the prior year • 19.9% increase in load counts from Q2 2020 • 16.3% year-over-year increase in average revenue per load Intermodal Operating Statistics Q2 '21 Q2 '20 Change Average revenue per load $2,616 $2,249 16.3 % Load count 44,073 36,769 19.9 % Average tractors 611 571 7.0 % Average containers 10,842 10,853 (0.1 %) Intermodal Financial Metrics Q2 '21 Q2 '20 Change (Dollars in thousands) Revenue ex intersegment $115,294 $82,699 39.4 % Operating income (loss) $5,812 $(4,475) Adjusted Operating Income (Loss) 1 $5,812 $(4,410) Operating ratio 95.0% 105.4% (1,040 bps) Adjusted Operating Ratio 1 95.0% 105.3% (1,030 bps) 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation.
9 Operating Performance – Non-Reportable • 47.5% increase in Revenue driven by additional equipment leasing, warehousing activities, and expanded services provided to 3rd party carriers • $6.7M year-over-year improvement in Operating Income • Expect continued growth in revenue and operating income in the 2nd half of 2021 Non-Reportable Financial Metrics Q2 '21 Q2 '20 Change (Dollars in thousands) Revenue $66,795 $45,289 47.5 % Operating income (loss) $2,490 $(4,184)
10 Acquisition of AAA Cooper (ACT) • ACT acquired on July 5, 2021 • #15 on Transport Topics list of 2021 Top LTL carriers • Operations include less-than-truckload, dedicated, and other services • Approximately 70 Service Centers, with a terminal door count of over 3,400 • Nearly 3,000 Tractors and 7,000 Trailers (1) Net Debt is defined as amounts outstanding on revolvers, loans and notes payable, finance leases, and similar amounts outstanding under debt agreements, less unrestricted cash. (2) EBITDA is a non-GAAP measure. EBITDA is defined as net income (loss) before interest, income taxes, depreciation, and amortization. We cannot estimate on a forward-looking basis, the impact of certain income and expense items on EBITDA, 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 reconciliation to our estimate of EBITDA.
11 Market Outlook 2H21 and Beyond • We expect the unprecedented demand for over-the-road truckload capacity to continue throughout 2022 • Capacity expansion continues to be limited as new tractor builds are constrained by parts availability • Sourcing and retaining drivers will remain challenging and lead to additional driver wage inflation • The above factors should continue to support a favorable rate environment • Demand for power-only opportunities continues
12 2021 Guidance Increasing expected Adjusted EPS for the full year 2021 to $3.90 - $4.05 from $3.45 - $3.60 previously Guidance Assumptions • Over-the-road contract rate increases trending in the mid-teens • Recent acquisitions expected to add $0.16 to EPS in the second half of 2021 • Miles per truck will remain pressured by the driver shortage • Modest pressure on tractor count as sourcing drivers remains challenging • Continued strength in Logistics revenue growth • Intermodal revenue growth with improved margins • Inflationary pressure on driver wages, recruiting and hiring expenses • Tax rate of 25.0% - 27.0% for the full year 2021 • Net Cash Capex for the full year 2021 expected range of $500M - $550M
13 Appendix
14 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio 1 Quarter-to-Date June 30, Year-to-Date June 30, 2021 2020 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 1,315,701 $ 1,060,698 $ 2,538,715 $ 2,185,496 Total operating expenses (1,124,586) (958,531) (2,185,341) (1,981,210) Operating income $ 191,115 $ 102,167 $ 353,374 $ 204,286 Operating ratio 85.5 % 90.4 % 86.1 % 90.7 % Non-GAAP Presentation Total revenue $ 1,315,701 $ 1,060,698 $ 2,538,715 $ 2,185,496 Trucking fuel surcharge (102,829) (63,101) (192,738) (160,804) Revenue, excluding trucking fuel surcharge 1,212,872 997,597 2,345,977 2,024,692 Total operating expenses 1,124,586 958,531 2,185,341 1,981,210 Adjusted for: Trucking fuel surcharge (102,829) (63,101) (192,738) (160,804) Amortization of intangibles 2 (11,984) (11,474) (23,733) (22,948) Impairments 3 — (353) — (1,255) Legal accruals 4 (879) — (2,121) — COVID-19 incremental costs 5 — (9,966) — (12,259) Transaction fees 6 (659) — (659) — Adjusted Operating Expenses 1,008,235 873,637 1,966,090 1,783,944 Adjusted Operating Income $ 204,637 $ 123,960 $ 379,887 $ 240,748 Adjusted Operating Ratio 83.1 % 87.6 % 83.8 % 88.1 % 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" reflects the non-cash impairment of certain tractors (within the Trucking segment) and certain legacy trailers (within the non-reportable segments) as a result of a softer used equipment market during the second quarter of 2020, as well as impairment charges of trailer tracking equipment (within the Trucking segment) during the first quarter of 2020. 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 and contract related matters. 5 "COVID-19 incremental costs" reflects costs incurred during 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. 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 consolidated statements of comprehensive income.
15 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 Quarter-to-Date June 30, Year-to-Date June 30, 2021 2020 2021 2020 (Dollars in thousands, except per share data) GAAP: Net income attributable to Knight-Swift $ 152,804 $ 80,189 $ 282,594 $ 145,615 Adjusted for: Income tax expense attributable to Knight-Swift 51,783 26,815 97,112 51,369 Income before income taxes attributable to Knight-Swift 204,587 107,004 379,706 196,984 Amortization of intangibles 2 11,984 11,474 23,733 22,948 Impairments 3 — 353 — 1,255 Legal accruals 4 879 — 2,121 — COVID-19 incremental costs 5 — 9,966 — 12,259 Transaction fees 6 659 — 659 — Adjusted income before income taxes 218,109 128,797 406,219 233,446 Provision for income tax expense at effective rate (55,111) (32,299) (103,788) (60,743) Non-GAAP: Adjusted Net Income Attributable to Knight-Swift $ 162,998 $ 96,498 $ 302,431 $ 172,703 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. 6 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 6.
16 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 Quarter-to-Date June 30, Year-to-Date June 30, 2021 2020 2021 2020 GAAP: Earnings per diluted share $ 0.92 $ 0.47 $ 1.69 $ 0.85 Adjusted for: Income tax expense attributable to Knight-Swift 0.31 0.16 0.58 0.30 Income before income taxes attributable to Knight-Swift 1.23 0.63 2.28 1.15 Amortization of intangibles 2 0.07 0.07 0.14 0.13 Impairments 3 — — — 0.01 Legal accruals 4 0.01 — 0.01 — COVID-19 incremental costs 5 — 0.06 — 0.07 Transaction fees 6 — — — — Adjusted income before income taxes 1.31 0.75 2.44 1.37 Provision for income tax expense at effective rate (0.33) (0.19) (0.62) (0.36) Non-GAAP: Adjusted EPS $ 0.98 $ 0.57 $ 1.81 $ 1.01 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. 6 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 6.
17 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio 1 Quarter-to-Date June 30, Year-to-Date June 30, Trucking Segment 2021 2020 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 985,858 $ 879,369 $ 1,948,805 $ 1,798,430 Total operating expenses (817,401) (771,581) (1,621,865) (1,583,308) Operating income $ 168,457 $ 107,788 $ 326,940 $ 215,122 Operating ratio 82.9 % 87.7 % 83.2 % 88.0 % Non-GAAP Presentation Total revenue $ 985,858 $ 879,369 $ 1,948,805 $ 1,798,430 Fuel surcharge (102,829) (63,101) (192,738) (160,804) Intersegment transactions (469) (235) (693) (509) Revenue, excluding fuel surcharge and intersegment transactions 882,560 816,033 1,755,374 1,637,117 Total operating expenses 817,401 771,581 1,621,865 1,583,308 Adjusted for: Fuel surcharge (102,829) (63,101) (192,738) (160,804) Intersegment transactions (469) (235) (693) (509) Amortization of intangibles 2 (324) (324) (648) (648) Impairments 3 — (153) — (1,055) COVID-19 incremental costs 4 — (9,901) — (12,146) Adjusted Operating Expenses 713,779 697,867 1,427,786 1,408,146 Adjusted Operating Income $ 168,781 $ 118,166 $ 327,588 $ 228,971 Adjusted Operating Ratio 80.9 % 85.5 % 81.3 % 86.0 % 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.
18 Non-GAAP Reconciliation Quarter-to-Date June 30, Year-to-Date June 30, Logistics Segment 2021 2020 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 166,737 $ 70,104 $ 285,624 $ 149,302 Total operating expenses (152,381) (67,066) (263,691) (142,545) Operating income $ 14,356 $ 3,038 $ 21,933 $ 6,757 Operating ratio 91.4 % 95.7 % 92.3 % 95.5 % Non-GAAP Presentation Total revenue $ 166,737 $ 70,104 $ 285,624 $ 149,302 Intersegment transactions (4,570) (3,038) (7,735) (5,479) Revenue, excluding intersegment transactions 162,167 67,066 277,889 143,823 Total operating expenses 152,381 67,066 263,691 142,545 Adjusted for: Intersegment transactions (4,570) (3,038) (7,735) (5,479) Amortization of intangibles 2 (97) — (97) — Adjusted Operating Expenses 147,714 64,028 255,859 137,066 Adjusted Operating Income $ 14,453 $ 3,038 $ 22,030 $ 6,757 Adjusted Operating Ratio 91.1 % 95.5 % 92.1 % 95.3 % 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. 2 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.
19 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Segment Adjusted Operating Income and Adjusted Operating Ratio 1 Quarter-to-Date June 30, Year-to-Date June 30, Intermodal Segment 2021 2020 2021 2020 GAAP Presentation (Dollars in thousands) Total revenue $ 115,378 $ 82,820 $ 222,444 $ 177,551 Total operating expenses (109,566) (87,295) (213,175) (184,763) Operating income (loss) $ 5,812 $ (4,475) $ 9,269 $ (7,212) Operating ratio 95.0 % 105.4 % 95.8 % 104.1 % Non-GAAP Presentation Total revenue $ 115,378 $ 82,820 $ 222,444 $ 177,551 Intersegment transactions (84) (121) (179) (230) Revenue, excluding intersegment transactions 115,294 82,699 222,265 177,321 Total operating expenses 109,566 87,295 213,175 184,763 Adjusted for: Intersegment transactions (84) (121) (179) (230) COVID-19 incremental costs 2 — (65) — (113) Adjusted Operating Expenses 109,482 87,109 212,996 184,420 Adjusted Operating Income (Loss) $ 5,812 $ (4,410) $ 9,269 $ (7,099) Adjusted Operating Ratio 95.0 % 105.3 % 95.8 % 104.0 % 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.
20 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Return on Net Tangible Assets 1 June 30, 2021 2020 (Dollars in thousands) Total Assets $ 8,682,459 $ 8,279,028 Adjusted for: Intangible assets, net (1,403,483) (1,412,192) Goodwill (2,971,023) (2,922,970) Tangible Assets $ 4,307,953 $ 3,943,866 Total Liabilities $ 2,584,406 $ 2,513,439 Adjusted for: Revolving line of credit, finance lease obligations, and long-term debt (592,286) (686,917) Accounts receivable securitization (278,372) (164,840) Deferred income tax liabilities (806,398) (792,839) Non-Interest Bearing Liabilities, excluding deferred income tax liabilities $ 907,350 $ 868,843 Net Tangible Assets $ 3,400,603 $ 3,075,023 Average Net Tangible Assets $ 3,237,813 Adjusted Net Income $ 595,875 Return on Net Tangible Assets 18.4 % 1 Pursuant to the requirements of Regulation G, this table reconciles Total Assets and Total Liabilities to Average Net Tangible Assets.
21 Non-GAAP Reconciliation Non-GAAP Reconciliation (Unaudited): Adjusted Income Before Income Taxes and Adjusted Net Income 1 Year-to-Date June 30, 2021 Year-to-Date December 31, 2020 Year-to-Date June 30, 2020 TTM June 30, 2021 (Dollars in thousands) GAAP: Net income attributable to Knight-Swift $ 282,594 410,002 145,615 546,981 Adjusted for: Income tax expense attributable to Knight-Swift 97,112 149,676 51,369 195,419 Income before income taxes attributable to Knight-Swift 379,706 559,678 196,984 742,400 Amortization of intangibles 2 23,733 45,895 22,948 46,680 Change in fair value of deferred earnout 3 — 6,730 — 6,730 Impairments 4 — 5,335 1,255 4,080 Legal accruals 5 2,121 6,160 — 8,281 COVID-19 incremental costs 6 — 12,259 12,259 — Transaction fees 7 659 — — 659 Adjusted income before income taxes 406,219 636,057 233,446 808,830 Provision for income tax expense at effective rate (103,788) (169,910) (60,743) (212,955) Non-GAAP Adjusted Net Income Attributable to Knight Swift $ 302,431 $ 466,147 $ 172,703 $ 595,875 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. 7 Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 6.
22 Non-GAAP Reconciliation (Unaudited): Net Leverage and Leverage Ratio 1 2 Non-GAAP Reconciliation June 30, 2021 (Dollars in thousands) Term loan $ 300,000 Revolving line of credit 55,000 Accounts receivable securitization 279,000 Other secured debt and finance leases 238,067 Total face value of debt 872,067 Unrestricted cash and cash equivalents (179,032) Non-GAAP: Net Leverage $ 693,035 Non-GAAP: Adjusted EBITDA TTM June 30, 2021 $ 1,287,962 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.
23 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 June 30, 2021 Year-to-Date December 31, 2020 Year-to-Date June 30, 2020 TTM June 30, 2021 (Dollars in thousands) GAAP: Net income $ 282,978 $ 410,635 $ 146,050 $ 547,563 Adjusted for: Depreciation and amortization of property and equipment 243,521 460,775 224,822 479,474 Amortization of intangibles 23,733 45,895 22,948 46,680 Interest expense 6,793 17,309 10,128 13,974 Interest income (564) (1,928) (1,269) (1,223) Income tax expense 97,112 149,676 51,369 195,419 Non-GAAP: EBITDA 653,573 1,082,362 454,048 1,281,887 Impairments 2 — 5,335 1,255 4,080 Stock compensation expense 19,194 19,639 8,363 30,470 Other non-cash gains, net 3 (24,793) (4,083) (401) (28,475) Non-GAAP: Adjusted EBITDA $ 647,974 $ 1,103,253 $ 463,265 $ 1,287,962