8-K
Knight-Swift Transportation Holdings Inc. (KNX)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 20, 2022
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___________________________________________________________________________________________________________________________________
Knight-Swift Transportation Holdings Inc.
(Exact name of registrant as specified in its charter)
___________________________________________________________________________________________________________________________________
| Delaware | 001-35007 | 20-5589597 |
|---|---|---|
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2002 West Wahalla Lane
Phoenix, Arizona 85027
(Address of principal executive offices and zip code)
(602) 269-2000
(Registrant's telephone number, including area code)
N/A
(Former name 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 | |||
| Common Stock $0.01 Par Value | KNX | New York Stock Exchange |
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 |
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On April 20, 2022, Knight-Swift Transportation Holdings Inc. (the "Company") issued a press release (the "Press Release") announcing its financial results for the quarter ended March 31, 2022. 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 |
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(d) Exhibits
| Exhibit | Description |
|---|---|
| Exhibit 99.1 | Knight-Swift Transportation Holdings Inc. Press Release Announcing Financial Results for the Quarter Ended March 31, 2022 |
| Exhibit 99.2 | Knight-Swift Transportation Holdings Inc. First Quarter 2022 Earnings Presentation |
| 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: | April 20, 2022 | /s/ Adam W. Miller |
| Adam W. Miller | ||
| Chief Financial Officer |
Document
| Exhibit 99.1 |
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April 20, 2022
Phoenix, Arizona
| Knight-Swift Transportation Holdings Inc. Reports First Quarter 2022 Revenue and Earnings |
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Knight-Swift Transportation Holdings Inc. (NYSE: KNX) ("Knight-Swift" or "the Company"), one of the largest and most diversified freight transportation companies, operating the largest full truckload fleet in North America, today reported first quarter 2022 net income attributable to Knight-Swift of $208.3 million and Adjusted Net Income Attributable to Knight-Swift of $224.9 million. GAAP earnings per diluted share for the first quarter of 2022 were $1.25, compared to $0.77 for the first quarter of 2021. The Adjusted EPS was $1.35 for the first quarter of 2022, compared to $0.83 for the first quarter of 2021.
| Key Financial Highlights |
|---|
Each reportable segment grew revenue while improving margins, leading to consolidated revenue growth of 45.4%, excluding truckload and less-than-truckload ("LTL") fuel surcharge, and an improvement of 83.7% in consolidated operating income to $298.1 million in the first quarter of 2022, as compared to the same quarter last year. Net Income Attributable to Knight-Swift increased by 60.5% to $208.3 million.
•Truckload — 78.2% Adjusted Operating Ratio, a 360 basis point improvement, supported by continued year-over-year revenue growth. This represents our strongest performance in a first quarter since the merger between Knight and Swift in 2017.
•Logistics — 85.7% Adjusted Operating Ratio with operating income improvement of 422.6%. Load count grew by 76.9%, leading to a 142.1% increase in revenue, excluding intersegment transactions.
•LTL — 85.9% Adjusted Operating Ratio, led by a 13.8% improvement in revenue, excluding fuel surcharge, per hundredweight, as well as cost synergies being realized, representing a sequential 440 basis point improvement. This was supported by a 24.8% sequential increase in total revenue, which includes the results of Midwest Motor Express ("MME") beginning December 6, 2021.
•Intermodal — 86.1% operating ratio within our Intermodal segment, a 1,070 basis point improvement, leading to a 338.8% increase in operating income with year-over-year revenue growth of 2.1%.
•Non-reportable Segments — Revenue growth of 132.2% was supported by the activities within our diverse operating segments of insurance, equipment maintenance, equipment leasing, and warehousing.
•Free Cash Flow — During the first quarter of 2022, we generated $352.4 million of free cash flow.
| Quarter Ended March 31, 1 | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||
| (Dollars in thousands, except per share data) | ||||||
| Total revenue | $ | 1,826,989 | $ | 1,223,014 | 49.4 | % |
| Revenue, excluding truckload and LTL fuel surcharge | $ | 1,647,878 | $ | 1,133,105 | 45.4 | % |
| Operating income | $ | 298,086 | $ | 162,259 | 83.7 | % |
| Adjusted Operating Income 2 | $ | 320,117 | $ | 175,250 | 82.7 | % |
| Net income attributable to Knight-Swift | $ | 208,337 | $ | 129,790 | 60.5 | % |
| Adjusted Net Income Attributable to Knight-Swift 2 | $ | 224,863 | $ | 139,433 | 61.3 | % |
| Earnings per diluted share | $ | 1.25 | $ | 0.77 | 62.3 | % |
| Adjusted EPS 2 | $ | 1.35 | $ | 0.83 | 62.7 | % |
1For information regarding comparability of the reported results due to acquisitions, refer to footnote 1 of the Condensed Consolidated Statements of Comprehensive Income in the schedules following this release.
2See GAAP to non-GAAP reconciliation in the schedules following this release.
Dave Jackson, CEO of Knight-Swift, commented, "We continue to grow and diversify our business while improving our results and achieved revenue growth and margin expansion in every segment, including recently-acquired AAA Cooper Transportation ("ACT") and MME, which together operated at an 85.9% Adjusted Operating Ratio during the quarter. Additionally, we expanded our network during the quarter by adding six LTL terminals, five in the Texas market and one in Las Vegas, which we will incorporate into the network in the coming quarters. Our non-truckload operations have grown to represent over 40% of our total revenue in the first quarter. We continue to see improvement in contract rates within our Truckload segment, leading to less exposure to the spot market. Logistics continues to grow load count, both through our power-only service offering and our traditional brokerage services, resulting in a Logistics gross margin of 20.2% for the current quarter. Margins within our Intermodal segment remain strong, and we anticipate year-over-year load count growth in the second half of 2022 as we build our customer base following our recent transition to the Union Pacific. Our diverse brands, economies of scale and the unique way we provide multiple service offerings position us to grow with less cyclicality and more sustainable performance."
Other (Expense) Income, net — We incurred $14.4 million of expense within "Other (expense) income, net" in the condensed consolidated statement of comprehensive income in the first quarter of 2022, representing an unfavorable change of $30.5 million, as compared to income of $16.1 million in the first quarter of 2021. The change was primarily driven by current quarter net losses within our portfolio of investments, including the unrealized loss from the mark-to-market adjustment of our investment in Embark Trucks Inc., which impacted the Adjusted EPS by $0.08.
Income Taxes — The effective tax rate was 24.9% for the first quarter of 2022, compared to 25.9% for the first quarter of 2021. We expect the full-year 2022 effective tax rate to be approximately 25%.
Dividend and Share Repurchase — On February 3, 2022, our board of directors declared a quarterly cash dividend of $0.12 per share of common stock, which is a 20% (or $0.02) increase from our existing quarterly dividend. The dividend was payable to the Company's stockholders of record as of March 4, 2022 and was paid on March 28, 2022. During the quarter, we repurchased approximately $150 million of our shares, which was calculated based on the trade dates.
| Segment Financial Performance |
|---|
Truckload Segment
| Quarter Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||||
| (Dollars in thousands) | ||||||||
| Revenue, excluding fuel surcharge and intersegment transactions | $ | 941,534 | $ | 872,814 | 7.9 | % | ||
| Operating income | $ | 205,117 | $ | 158,483 | 29.4 | % | ||
| Adjusted Operating Income 1 | $ | 205,441 | $ | 158,807 | 29.4 | % | ||
| Operating ratio | 81.0 | % | 83.5 | % | (250 | bps) | ||
| Adjusted Operating Ratio 1 | 78.2 | % | 81.8 | % | (360 | bps) |
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Our Truckload segment includes our irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border operations across our brands with 13,249 irregular route tractors and 4,716 dedicated tractors. Our truckload segment operated at a 78.2% Adjusted Operating Ratio, which improved by 360 basis points year-over-year. This, along with a 7.9% growth in revenue, excluding fuel surcharge and intersegment transactions, led to a 29.4% improvement in Adjusted Operating Income.
Revenue per loaded mile, excluding fuel surcharge and intersegment transactions increased 22.9%, while a 4.4% shorter length of haul contributed to a 9.6% decrease in miles per tractor. These factors ultimately led to a 9.4% increase in average revenue per tractor and improved margins.
We continue making modest progress with seating our tractors and operating them productively. We continue to add scale by increasing our trailer count which has increased by over 2,200 since the fourth quarter of 2021.
Logistics Segment
| Quarter Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||||
| (Dollars in thousands) | ||||||||
| Revenue, excluding intersegment transactions | $ | 280,171 | $ | 115,722 | 142.1 | % | ||
| Operating income | $ | 39,601 | $ | 7,577 | 422.6 | % | ||
| Adjusted Operating Income 1 | $ | 39,935 | $ | 7,577 | 427.1 | % | ||
| Operating ratio | 86.0 | % | 93.6 | % | (760 | bps) | ||
| Adjusted Operating Ratio 1 | 85.7 | % | 93.5 | % | (780 | bps) |
1See GAAP to non-GAAP reconciliation in the schedules following this release.
Demand for our logistics service offering remained strong throughout the quarter, as we continue to leverage our consolidated fleet of approximately 71,000 trailers to support our power-only service offering. Logistics revenue, excluding intersegment transactions, increased 142.1% as we grew load count by 76.9%, while increasing revenue per load by 36.8%. The Adjusted Operating Ratio improved to 85.7%, resulting in a 427.1% increase in Adjusted Operating Income. Brokerage gross margin was 20.2% in the first quarter of 2022, compared to 14.4% in the first quarter of 2021.
LTL Segment 1
| Quarter Ended March 31, | |||
|---|---|---|---|
| 2022 | |||
| (Dollars in thousands) | |||
| Revenue, excluding fuel surcharge | $ | 214,675 | |
| Operating income | $ | 26,377 | |
| Adjusted Operating Income 2 | $ | 30,322 | |
| Operating ratio | 89.7 | % | |
| Adjusted Operating Ratio 2 | 85.9 | % |
1For information regarding comparability of the reported results due to acquisitions, refer to footnote 1 of the Condensed Consolidated Statements of Comprehensive Income in the schedules following this release.
2See GAAP to non-GAAP reconciliation in the schedules following this release.
Our LTL segment operates approximately 3,100 tractors and 8,300 trailers across 100 facilities with a door count of 4,300. We generated $214.7 million in revenue, excluding fuel surcharge and an 85.9% Adjusted Operating Ratio during the first quarter of 2022. Revenue, excluding fuel surcharge, per hundredweight was $13.73, while revenue per shipment, excluding fuel surcharge was $150.70. We anticipate continued strength in revenue and margins within our LTL business in the coming quarters, as the ACT and MME teams continue to successfully connect their complementary networks. Additionally, we expanded our network during the quarter by adding six LTL terminals, five in the Texas market and one in Las Vegas.
Intermodal Segment
| Quarter Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||||
| (Dollars in thousands) | ||||||||
| Revenue, excluding intersegment transactions | $ | 109,192 | $ | 106,971 | 2.1 | % | ||
| Operating income | $ | 15,170 | $ | 3,457 | 338.8 | % | ||
| Operating ratio | 86.1 | % | 96.8 | % | (1,070 | bps) |
Operating income increased by 338.8%, as operating ratio improved from 96.8% to 86.1%. Continued chassis allocations and network fluidity resulted in a reduction in load count, but contributed to a 35.9% increase in revenue per load. We transitioned to a new rail partner during the quarter, while continuing to improve our operations, cost structure, and network design. To position Intermodal for continued growth, we are growing our container count by 2,000 over the course of 2022. Intermodal continues to provide value to our customers and complements the many services we offer. As a result of our new network and improved service offering, we expect load volumes to inflect positive year-over-year in the back half of the year as we grow with new customers and expand with existing customers.
Non-reportable Segments
| Quarter Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||
| (Dollars in thousands) | ||||||
| Total revenue | $ | 117,639 | $ | 50,669 | 132.2 | % |
| Operating income (loss) | $ | 11,821 | $ | (7,258) | 262.9 | % |
The non-reportable segments include support services provided to our customers and third-party carriers, including insurance, equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services. Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, as well as $11.6 million in quarterly amortization of intangibles related to the 2017 merger between Knight and Swift and certain acquisitions). Strong demand for the services within our non-reportable segments led to 132.2% revenue growth, which resulted in operating income improving by $19.1 million.
| Consolidated Liquidity, Capital Resources, and Earnings Guidance |
|---|
Cash Flow Sources (Uses) 1
| Quarter Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2022 | 2021 | Change | ||||
| (In thousands) | ||||||
| Net cash provided by operating activities | $ | 456,860 | $ | 306,113 | $ | 150,747 |
| Net cash used in investing activities | (110,187) | (74,141) | (36,046) | |||
| Net cash used in financing activities | (323,249) | (185,366) | (137,883) | |||
| Net increase in cash, restricted cash, and equivalents 2 | $ | 23,424 | $ | 46,606 | $ | (23,182) |
| Net capital expenditures | $ | (104,442) | $ | (43,845) | $ | (60,597) |
1For information regarding comparability of the reported results due to acquisitions, refer to footnote 1 of the Condensed Consolidated Statements of Comprehensive Income in the schedules following this release.
2"Net increase in cash, restricted cash, and equivalents" is derived from changes within "Cash and cash equivalents," "Cash and cash equivalents – restricted," and the long-term portion of restricted cash included in "Other long-term assets" in the condensed consolidated balance sheets.
Liquidity and Capitalization — As of March 31, 2022, we had a balance of $1.3 billion of unrestricted cash and available liquidity and $6.6 billion of stockholders' equity. The face value of our debt, net of unrestricted cash ("Net Debt") was $1.7 billion as of March 31, 2022. Free Cash Flow3 for the first quarter of 2022 was $352.4 million. During the first quarter of 2022, we generated $456.9 million in operating cash flows and paid down $133.3 million in long-term debt, $10.5 million in finance liabilities and $9.3 million in cash on our operating lease liabilities. We also repurchased approximately $150 million worth of our shares, calculated based on the trade dates, and issued $20.1 million in dividends to our stockholders.
Equipment and Capital Expenditures — Gain on sale of revenue equipment increased to $34.8 million in the first quarter of 2022, compared to $10.5 million in the same quarter of 2021. The average age of the tractor fleet within our Truckload segment was 2.6 years in the first quarter of 2022, compared to 2.3 years in the same quarter of 2021. The average age of the tractor fleet within our LTL segment was 4.5 years in the first quarter of 2022. Cash capital expenditures, net of disposal proceeds, were $104.4 million in the first quarter of 2022. We expect net cash capital expenditures will be in the range of $550.0 – $600.0 million for full-year 2022. Our net cash capital expenditures primarily represent replacements of existing tractors and trailers, as well as investment in our terminal network, driver amenities, and technology.
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3See GAAP to non-GAAP reconciliations in the schedules following this release.
Guidance — We expect that Adjusted EPS1 for full-year 2022 will range from $5.20 to $5.40, which is an update from our previously-disclosed range of $5.10 to $5.30. Our expected Adjusted EPS1 range is based on the current truckload, LTL, and general market conditions, recent trends, and the current beliefs, assumptions, and expectations of management, as follows:
•Double-digit truckload contract rate increases while spot rates moderate year-over-year
•Stable truck count with a modest sequential improvement in miles per tractor
•Strong Intermodal margins in the first half but normalizing to an Adjusted Operating Ratio in the high 80's to low 90's by the end of the year
•Intermodal load volume down in the first half of the year and positive year-over-year in the back half
•Logistics revenue growth over 30% with an Adjusted Operating Ratio in the high 80's to low 90's
•Year-over-year increases in LTL revenue with improved margins
•Continued growth in revenue and operating income in our non-reportable segments
•Inflationary pressure in most cost areas including driver related expenses, maintenance, equipment, and non-driving labor
•Approximate tax rate of 25.0% for the full year 2022
•Net cash capital expenditures for the full year 2022 expected range of $550.0 - $600.0 million
•Higher than normal equipment gains on sale, but moderating from the first quarter of 2022
The factors described under "Forward-Looking Statements," among others, could cause actual results to materially vary from this guidance. Further, we cannot estimate on a forward-looking basis, the impact of certain income and expense items on our earnings per share, because these items, which could be significant, may be infrequent, are difficult to predict, and may be highly variable. As a result, we do not provide a corresponding GAAP measure for, or reconciliation to, our Adjusted EPS1 guidance.
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1Our calculation of Adjusted EPS starts with GAAP diluted earnings per share and adds back the after-tax impact of intangible asset amortization (which is expected to be approximately $0.30 for full-year 2022), as well as noncash impairments and certain other unusual items, if any.
| Conference Call |
|---|
Knight-Swift will host a live conference call with analysts and investors to discuss the earnings release, the results of operations, and other matters following its earnings press release on Wednesday, April 20, 2022, at 4:30 p.m. EDT. The conference dial in information is (855) 733-9163 (Please note that, since the call will begin promptly as scheduled, you will need to join a few minutes prior to that time.) Slides to accompany this call will be posted on the Company’s website and will be available to download just prior to the scheduled conference call. To view the presentation, please visit https://investor.knight-swift.com/, "First Quarter 2022 Conference Call Presentation."
| 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 full truckload, LTL, intermodal, and logistics services. Knight-Swift uses a nationwide network of business units and terminals in the United States and Mexico to serve customers throughout North America. In addition to operating one of the country's largest tractor fleet, Knight-Swift also contracts with third-party equipment providers to provide a broad range of transportation services to our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors.
| 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," "feel", "goal," "continue," or similar expressions, which speak only as of the date the statement was made. Such statements are forward-looking statements and are within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and such statements are subject to the safe harbor created by those sections and the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation: any projections of or guidance regarding earnings, earnings per share, revenues, cash flows, dividends, share repurchases, leverage ratio, capital expenditures, or other financial items; any statement of plans, strategies, and objectives of management for future operations; any statements concerning proposed acquisition plans, new services or developments; any statements regarding future economic, industry, or Company conditions or performance, including, without limitation, expectations regarding future supply or demand, volume, or truckload capacity, 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 network design, cost structure, container count, margin, and volumes within our Intermodal segment, and the expected network, margin, and volumes within our LTL segment,
•future capital structure, capital allocation, growth strategies and opportunities, and liquidity, and
•future capital expenditures, including nature and funding of capital expenditures.
Such forward-looking statements are inherently uncertain, and are based upon the current beliefs, assumptions, and expectations of management and current market conditions, which are subject to significant risks and uncertainties as set forth in the Risk Factors section of Knight-Swift's Annual Report on Form 10-K for the year ended December 31, 2021, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.
| Financial Statements | | --- || Condensed Consolidated Statements of Comprehensive Income (Unaudited) 1 | | --- || | Quarter Ended March 31, | | | | --- | --- | --- | --- | | | | 2022 | | 2021 | | | | | (In thousands, except per share data) | | | | | Revenue: | | | | | | | Revenue, excluding truckload and LTL fuel surcharge | | $ | 1,647,878 | $ | 1,133,105 | | Truckload and LTL fuel surcharge | | 179,111 | | 89,909 | | | Total revenue | | 1,826,989 | | 1,223,014 | | | Operating expenses: | | | | | | | Salaries, wages, and benefits | | 536,056 | | 370,370 | | | Fuel | | 190,489 | | 118,236 | | | Operations and maintenance | | 95,883 | | 68,070 | | | Insurance and claims | | 98,192 | | 55,643 | | | Operating taxes and licenses | | 29,037 | | 22,048 | | | Communications | | 5,870 | | 5,037 | | | Depreciation and amortization of property and equipment | | 145,044 | | 119,915 | | | Amortization of intangibles | | 16,166 | | 11,749 | | | Rental expense | | 13,401 | | 16,864 | | | Purchased transportation | | 386,446 | | 258,230 | | | Impairments | | 810 | | — | | | Miscellaneous operating expenses | | 11,509 | | 14,593 | | | Total operating expenses | | 1,528,903 | | 1,060,755 | | | Operating income | | 298,086 | | 162,259 | | | Other (expenses) income: | | | | | | | Interest income | | 461 | | 294 | | | Interest expense | | (6,680) | | (3,486) | | | Other (expense) income, net | | (14,405) | | 16,105 | | | Total other (expenses) income, net | | (20,624) | | 12,913 | | | Income before income taxes | | 277,462 | | 175,172 | | | Income tax expense | | 69,174 | | 45,329 | | | Net income | | 208,288 | | 129,843 | | | Net income (loss) attributable to noncontrolling interest | | 49 | | (53) | | | Net income attributable to Knight-Swift | | $ | 208,337 | $ | 129,790 | | Other comprehensive loss | | (372) | | — | | | Comprehensive income | | $ | 207,965 | $ | 129,790 | | Earnings per share: | | | | | | | Basic | | $ | 1.26 | $ | 0.77 | | Diluted | | $ | 1.25 | $ | 0.77 | | Dividends declared per share: | | $ | 0.12 | $ | 0.08 | | Weighted average shares outstanding: | | | | | | | Basic | | 165,377 | | 167,478 | | | Diluted | | 166,499 | | 168,374 | |
________
1The reported results do not include the results of operations of ACT and its subsidiary prior to its acquisition by Knight-Swift on July 5, 2021 in accordance with the accounting treatment applicable to the transaction. The reported results do not include the results of operations of MME and its subsidiaries prior to its acquisition by Knight-Swift on December 6, 2021 in accordance with the accounting treatment applicable to the transaction.
| Condensed Consolidated Balance Sheets (Unaudited) | | --- || | March 31, 2022 | | December 31, 2021 | | | --- | --- | --- | --- | --- | | | (In thousands) | | | | | ASSETS | | | | | | Current assets: | | | | | | Cash and cash equivalents | $ | 242,860 | $ | 261,001 | | Cash and cash equivalents – restricted | 128,774 | | 87,241 | | | Restricted investments, held-to-maturity, amortized cost | 8,302 | | 5,866 | | | Trade receivables, net of allowance for doubtful accounts of $19,883 and $21,663, respectively | 939,704 | | 911,336 | | | Contract balance – revenue in transit | 21,185 | | 22,936 | | | Prepaid expenses | 86,742 | | 90,507 | | | Assets held for sale | 11,421 | | 8,166 | | | Income tax receivable | 217 | | 909 | | | Other current assets | 27,064 | | 26,318 | | | Total current assets | 1,466,269 | | 1,414,280 | | | Property and equipment, net | 3,579,685 | | 3,555,364 | | | Operating lease right-of-use assets | 141,363 | | 147,540 | | | Goodwill | 3,518,589 | | 3,515,135 | | | Intangible assets, net | 1,814,883 | | 1,831,049 | | | Other long-term assets | 175,017 | | 192,132 | | | Total assets | $ | 10,695,806 | $ | 10,655,500 | | LIABILITIES AND STOCKHOLDERS' EQUITY | | | | | | Current liabilities: | | | | | | Accounts payable | $ | 248,762 | $ | 224,844 | | Accrued payroll and purchased transportation | 237,909 | | 217,084 | | | Accrued liabilities | 188,008 | | 128,536 | | | Claims accruals – current portion | 223,382 | | 206,607 | | | Finance lease liabilities and long-term debt – current portion | 234,146 | | 262,423 | | | Operating lease liabilities – current portion | 33,822 | | 35,322 | | | Total current liabilities | 1,166,029 | | 1,074,816 | | | Revolving line of credit | 165,000 | | 260,000 | | | Long-term debt – less current portion | 1,029,159 | | 1,037,552 | | | Finance lease liabilities – less current portion | 277,839 | | 256,166 | | | Operating lease liabilities – less current portion | 103,161 | | 107,614 | | | Accounts receivable securitization – less current portion | 278,539 | | 278,483 | | | Claims accruals – less current portion | 202,737 | | 210,714 | | | Deferred tax liabilities | 881,287 | | 874,877 | | | Other long-term liabilities | 11,112 | | 11,828 | | | Total liabilities | 4,114,863 | | 4,112,050 | | | Stockholders’ equity: | | | | | | Common stock | 1,636 | | 1,660 | | | Additional paid-in capital | 4,360,889 | | 4,350,913 | | | Accumulated other comprehensive loss | (935) | | (563) | | | Retained earnings | 2,209,104 | | 2,181,142 | | | Total Knight-Swift stockholders' equity | 6,570,694 | | 6,533,152 | | | Noncontrolling interest | 10,249 | | 10,298 | | | Total stockholders’ equity | 6,580,943 | | 6,543,450 | | | Total liabilities and stockholders’ equity | $ | 10,695,806 | $ | 10,655,500 | | Segment Operating Statistics (Unaudited) | | --- | | | Quarter Ended March 31, | | | | --- | --- | --- | --- | | | | 2022 | | 2021 | | | Change | | | Truckload | | | | | | | | | | Average revenue per tractor 1 | | | | $ | 47,894 | | 9.4 | % | | Non-paid empty miles percentage | | 14.1 | % | 12.8 | | % | 130 | bps | | Average length of haul (miles) | | 394 | | 412 | | | (4.4 | %) | | Miles per tractor | | 18,916 | | 20,928 | | | (9.6 | %) | | Average tractors | | 17,965 | | 18,224 | | | (1.4 | %) | | Average trailers 2 | | 71,310 | | 59,797 | | | 19.3 | % | | Logistics | | | | | | | | | | Revenue per load 3 | | | | $ | 1,971 | | 36.8 | % | | Gross margin | | 20.2 | % | 14.4 | | % | 580 | bps | | LTL 4 5 | | | | | | | | | | Shipments per day | | 18,783 | | N/A | | | N/A | | | Weight per shipment (pounds) | | 1,098 | | N/A | | | N/A | | | Average length of haul (miles) | | 522 | | N/A | | | N/A | | | Revenue per shipment | | | | N/A | | | N/A | | | Revenue xFSR per shipment | | | | N/A | | | N/A | | | Revenue per hundredweight | | 16.25 | | N/A | | | N/A | | | Revenue xFSR per hundredweight | | 13.73 | | N/A | | | N/A | | | Average tractors 6 | | 3,091 | | N/A | | | N/A | | | Average trailers 7 | | 8,302 | | N/A | | | N/A | | | Intermodal | | | | | | | | | | Average revenue per load 3 | | | | $ | 2,549 | | 35.9 | % | | Load count | | 31,515 | | 41,968 | | | (24.9 | %) | | Average tractors | | 584 | | 597 | | | (2.2 | %) | | Average containers | | 11,027 | | 10,846 | | | 1.7 | % |
All values are in US Dollars.
1Computed with revenue, excluding fuel surcharge and intersegment transactions
2Includes 7,561 trailers related to leasing activities recorded within our non-reportable operating segments for the first quarter of 2022. Does not include 5,764 trailers related to leasing activities recorded within our non-reportable operating segments for the first quarter of 2021.
3Computed with revenue, excluding intersegment transactions
4Operating statistics within the LTL segment exclude dedicated and other businesses
5Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
6Includes 695 tractors from ACT's and MME's dedicated and other businesses for the first quarter of 2022.
7Includes 907 trailers from ACT's and MME's dedicated and other businesses for the first quarter of 2022.
| 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. 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 2 | Quarter Ended March 31, | ||||||
| --- | --- | --- | --- | --- | |||
| 2022 | 2021 | ||||||
| GAAP Presentation | (Dollars in thousands) | ||||||
| Total revenue | $ | 1,826,989 | $ | 1,223,014 | |||
| Total operating expenses | (1,528,903) | (1,060,755) | |||||
| Operating income | $ | 298,086 | $ | 162,259 | |||
| Operating ratio | 83.7 | % | 86.7 | % | |||
| Non-GAAP Presentation | |||||||
| Total revenue | $ | 1,826,989 | $ | 1,223,014 | |||
| Truckload and LTL fuel surcharge | (179,111) | (89,909) | |||||
| Revenue, excluding truckload and LTL fuel surcharge | 1,647,878 | 1,133,105 | |||||
| Total operating expenses | 1,528,903 | 1,060,755 | |||||
| Adjusted for: | |||||||
| Truckload and LTL fuel surcharge | (179,111) | (89,909) | |||||
| Amortization of intangibles 3 | (16,166) | (11,749) | |||||
| Impairments 4 | (810) | — | |||||
| Legal accruals 5 | (5,055) | (1,242) | |||||
| Adjusted Operating Expenses | 1,327,761 | 957,855 | |||||
| Adjusted Operating Income | $ | 320,117 | $ | 175,250 | |||
| Adjusted Operating Ratio | 80.6 | % | 84.5 | % |
1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio.
2 Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
3 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the July 5, 2021 ACT acquisition and other acquisitions.
4 "Impairments" reflects the non-cash impairment of building improvements (within our non-reportable segments).
5 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following:
•First quarter 2022 legal expense reflect costs related to certain settlements and class action lawsuits arising from employee and and contract related matters.
•First quarter 2021 legal costs related to certain class action lawsuits arising from employee and contract related matters.
| Non-GAAP Reconciliation (Unaudited): | |||||
|---|---|---|---|---|---|
| Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 2 | Quarter Ended March 31, | ||||
| --- | --- | --- | --- | ||
| 2022 | 2021 | ||||
| (Dollars in thousands, except per share data) | |||||
| GAAP: Net income attributable to Knight-Swift | $ | 208,337 | $ | 129,790 | |
| Adjusted for: | |||||
| Income tax expense attributable to Knight-Swift | 69,174 | 45,329 | |||
| Income before income taxes attributable to Knight-Swift | 277,511 | 175,119 | |||
| Amortization of intangibles 3 | 16,166 | 11,749 | |||
| Impairments 4 | 810 | — | |||
| Legal accruals 5 | 5,055 | 1,242 | |||
| Adjusted income before income taxes | 299,542 | 188,110 | |||
| Provision for income tax expense at effective rate | (74,679) | (48,677) | |||
| Non-GAAP: Adjusted Net Income Attributable to Knight-Swift | $ | 224,863 | $ | 139,433 |
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, | |||||
|---|---|---|---|---|---|
| 2022 | 2021 | ||||
| GAAP: Earnings per diluted share | $ | 1.25 | $ | 0.77 | |
| Adjusted for: | |||||
| Income tax expense attributable to Knight-Swift | 0.42 | 0.27 | |||
| Income before income taxes attributable to Knight-Swift | 1.67 | 1.04 | |||
| Amortization of intangibles 3 | 0.10 | 0.07 | |||
| Impairments 4 | — | — | |||
| Legal accruals 5 | 0.03 | 0.01 | |||
| Adjusted income before income taxes | 1.80 | 1.12 | |||
| Provision for income tax expense at effective rate | (0.45) | (0.29) | |||
| Non-GAAP: Adjusted EPS | $ | 1.35 | $ | 0.83 |
1Pursuant to the requirements of Regulation G, these tables reconcile consolidated GAAP net income attributable to Knight-Swift to non-GAAP consolidated Adjusted Net Income Attributable to Knight-Swift and consolidated GAAP diluted earnings per share to non-GAAP consolidated Adjusted EPS.
2Refer to Condensed Consolidated Statements of Comprehensive Income — footnote 1.
3Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 3.
4Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 4.
5Refer to Non-GAAP Reconciliation (Unaudited): Adjusted Operating Income and Adjusted Operating Ratio – footnote 5.
| Non-GAAP Reconciliation (Unaudited): | |||||||
|---|---|---|---|---|---|---|---|
| Segment Adjusted Operating Income and Adjusted Operating Ratio 1 | |||||||
| Quarter Ended March 31, | |||||||
| --- | --- | --- | --- | --- | |||
| Truckload Segment | 2022 | 2021 | |||||
| GAAP Presentation | (Dollars in thousands) | ||||||
| Total revenue | $ | 1,080,531 | $ | 962,947 | |||
| Total operating expenses | (875,414) | (804,464) | |||||
| Operating income | $ | 205,117 | $ | 158,483 | |||
| Operating ratio | 81.0 | % | 83.5 | % | |||
| Non-GAAP Presentation | |||||||
| Total revenue | $ | 1,080,531 | $ | 962,947 | |||
| Fuel surcharge | (138,661) | (89,909) | |||||
| Intersegment transactions | (336) | (224) | |||||
| Revenue, excluding fuel surcharge and intersegment transactions | 941,534 | 872,814 | |||||
| Total operating expenses | 875,414 | 804,464 | |||||
| Adjusted for: | |||||||
| Fuel surcharge | (138,661) | (89,909) | |||||
| Intersegment transactions | (336) | (224) | |||||
| Amortization of intangibles 2 | (324) | (324) | |||||
| Adjusted Operating Expenses | 736,093 | 714,007 | |||||
| Adjusted Operating Income | $ | 205,441 | $ | 158,807 | |||
| Adjusted Operating Ratio | 78.2 | % | 81.8 | % |
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.
| Non-GAAP Reconciliation (Unaudited): | |||||||
|---|---|---|---|---|---|---|---|
| Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued 1 | |||||||
| Quarter Ended March 31, | |||||||
| --- | --- | --- | --- | --- | |||
| Logistics Segment | 2022 | 2021 | |||||
| GAAP Presentation | (Dollars in thousands) | ||||||
| Total revenue | $ | 282,039 | $ | 118,887 | |||
| Total operating expenses | (242,438) | (111,310) | |||||
| Operating income | $ | 39,601 | $ | 7,577 | |||
| Operating ratio | 86.0 | % | 93.6 | % | |||
| Non-GAAP Presentation | |||||||
| Total revenue | $ | 282,039 | $ | 118,887 | |||
| Intersegment transactions | (1,868) | (3,165) | |||||
| Revenue, excluding intersegment transactions | 280,171 | 115,722 | |||||
| Total operating expenses | 242,438 | 111,310 | |||||
| Adjusted for: | |||||||
| Intersegment transactions | (1,868) | (3,165) | |||||
| Amortization of intangibles 2 | (334) | — | |||||
| Adjusted Operating Expenses | 240,236 | 108,145 | |||||
| Adjusted Operating Income | $ | 39,935 | $ | 7,577 | |||
| Adjusted Operating Ratio | 85.7 | % | 93.5 | % | |||
| LTL Segment 3 | Quarter Ended March 31, 2022 | ||||||
| --- | --- | --- | --- | --- | |||
| GAAP Presentation | (Dollars in thousands) | ||||||
| Total revenue | $ | 255,125 | |||||
| Total operating expenses | (228,748) | ||||||
| Operating income | $ | 26,377 | |||||
| Operating ratio | 89.7 | % | |||||
| Non-GAAP Presentation | |||||||
| Total revenue | $ | 255,125 | |||||
| Fuel surcharge | (40,450) | ||||||
| Revenue, excluding fuel surcharge | 214,675 | ||||||
| Total operating expenses | 228,748 | ||||||
| Adjusted for: | |||||||
| Fuel surcharge | (40,450) | ||||||
| Amortization of intangibles 4 | (3,945) | ||||||
| Adjusted Operating Expenses | 184,353 | ||||||
| Adjusted Operating Income | $ | 30,322 | |||||
| Adjusted Operating Ratio | 85.9 | % |
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 Condensed Consolidated Statements of Comprehensive Income — footnote 1.
4"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the ACT and MME acquisitions.
| Non-GAAP Reconciliation (Unaudited): | |||||||
|---|---|---|---|---|---|---|---|
| Segment Adjusted Operating Income and Adjusted Operating Ratio — Continued 1 | |||||||
| Quarter Ended March 31, | |||||||
| --- | --- | --- | --- | --- | |||
| Intermodal Segment | 2022 | 2021 | |||||
| GAAP Presentation | (Dollars in thousands) | ||||||
| Total revenue | $ | 109,222 | $ | 107,066 | |||
| Total operating expenses | (94,052) | (103,609) | |||||
| Operating income | $ | 15,170 | $ | 3,457 | |||
| Operating ratio | 86.1 | % | 96.8 | % | |||
| Non-GAAP Presentation | |||||||
| Total revenue | $ | 109,222 | $ | 107,066 | |||
| Intersegment transactions | (30) | (95) | |||||
| Revenue, excluding intersegment transactions | 109,192 | 106,971 | |||||
| Total operating expenses | 94,052 | 103,609 | |||||
| Adjusted for: | |||||||
| Intersegment transactions | (30) | (95) | |||||
| Adjusted Operating Expenses | 94,022 | 103,514 | |||||
| Adjusted Operating Income | $ | 15,170 | $ | 3,457 | |||
| Adjusted Operating Ratio | 86.1 | % | 96.8 | % | |||
| Non-GAAP Reconciliation (Unaudited): | |||||||
| --- | |||||||
| Free Cash Flow 2 | Quarter Ended March 31, 2022 | ||||||
| --- | --- | --- | |||||
| GAAP: Cash flows from operations | $ | 456,860 | |||||
| Adjusted for: | |||||||
| Proceeds from sale of property and equipment, including assets held for sale | 60,532 | ||||||
| Purchases of property and equipment | (164,974) | ||||||
| Non-GAAP: Free cash flow | $ | 352,418 |
1Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
2Pursuant to the requirements of Regulation G, this table reconciles GAAP cash flows from operations to non-GAAP Free Cash Flow.
| 15 |
|---|
exhibit99203312022
Exhibit 99.2
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, adjusted earnings per share, adjusted income before taxes, adjusted operating expenses, return on net tangible assets, 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 truckload segment fuel surcharges from revenue and nets these surcharges against fuel expense.
3 Adjustments • $16.2M in Q1 2022 and $11.7M in Q1 2021 of amortization expense from mergers and acquisitions • $5.1M in Q1 2022 and $1.2M in Q1 2021 of legal accrual expense • $0.8M in Q1 2022 of impairments 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation Knight-Swift Consolidated Q1 2022 Q1 2021 Change (Dollars in thousands, except per share data) Total revenue $ 1,826,989 $ 1,223,014 49.4 % Revenue xFSC $ 1,647,878 $ 1,133,105 45.4 % Operating income $ 298,086 $ 162,259 83.7 % Adj. Operating Income 1 $ 320,117 $ 175,250 82.7 % Net income attributable to Knight-Swift 2 $ 208,337 $ 129,790 60.5 % Adj. Net income Attributable to Knight Swift 1 2 $ 224,863 $ 139,433 61.3 % Earnings per diluted share 2 $ 1.25 $ 0.77 62.3 % Adj. EPS 1 2 $ 1.35 $ 0.83 62.7 % KNX Q1 2022 Comparative Results 2 Q1 2022 results include the $13.1M after tax (or $0.08 of EPS) unrealized mark-to-market loss of our investment in Embark Trucks
4 Segment Overview 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation 2 Excludes intersegment transactions 3 Includes 7,561 trailers related to leasing activities recorded within our non-reportable operating segments for the first quarter of 2022 Truckload Q1 2022 TTM Q1 '22 Revenue xFSR 2 $ 941.5 M $ 3,750.0 M Adjusted Op Income $ 205.4 M $ 832.4 M Adjusted OR 78.2 % 77.8 % ~ 13,250 irregular and 4,700 dedicated tractors ~ 71,000 trailers 3 Intermodal Q1 2022 TTM Q1 '22 Revenue 2 $ 109.2 M $ 460.8 M Adjusted Op Income $ 15.2 M $ 53.8 M Adjusted OR 86.1 % 88.3 % ~ 600 tractors, 11,000 containers Logistics Q1 2022 TTM Q1 '22 Revenue 2 $ 280.2 M $ 963.1 M Adjusted Op Income $ 39.9 M $ 127.0 M Adjusted OR 85.7 % 86.8 % Less-than-Truckload Q1 2022 Revenue xFSR $ 214.7 M Adjusted Op Income $ 30.3 M Adjusted OR 85.9 % - Approximately 100 Service Centers - Terminal door count over 4,300 Q1 2022 Revenue Diversification Truckload 57% LTL 13% Logistics 17% Other 6% Intermodal 7% 1 1 1
5 • 29.4% year-over-year improvement in Adjusted Operating Income • 78.2% Adjusted Operating Ratio in Q1 2022 compared to 81.8% the previous year • Shorter length of haul opportunities partially contributing to a 22.9% increase in revenue per loaded mile and a 9.6% decrease in miles per tractor • Continued investment in trailers which now exceed 71k • Truck count of 17,965 average tractors compared to 17,955 in Q4 2021 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. Truckload Operating Statistics Q1 2022 Q1 2021 Change Average revenue per tractor $52,409 $47,894 9.4 % Average tractors 17,965 18,224 (1.4 %) Average trailers 71,310 59,797 19.3 % Miles per tractor 18,916 20,928 (9.6 %) Truckload Financial Metrics Q1 2022 Q1 2021 Change (Dollars in thousands) Revenue xFSC $941,534 $872,814 7.9 % Operating income $205,117 $158,483 29.4 % Adjusted Operating Income 1 $205,441 $158,807 29.4 % Operating ratio 81.0% 83.5% (250 bps) Adjusted Operating Ratio 1 78.2% 81.8% (360 bps) Operating Performance – Truckload
6 • $30.3M of Adjusted Operating Income • 85.9% Adjusted Operating Ratio in Q1 2022 a sequential improvement of 410 bps from Q4 2021 • 12.0% increase in LTL Revenue xFSC per shipment compared to proforma Q1 2021 • 13.8% increase in revenue xFSR per hundredweight compared to proforma Q1 2021 • Purchased 6 terminals, 5 in Texas and 1 in Las Vegas • Capturing multiple synergy opportunities with more to come LTL Operating Statistics Q1 2022 LTL shipments per day 18,783 LTL weight per shipment 1,098 LTL revenue xFSR per hundredweight $13.73 LTL revenue xFSR per shipment $150.70 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. LTL Financial Metrics Q1 2022 (Dollars in thousands) Revenue xFSC $214,675 Operating income $26,377 Adjusted Operating Income 1 $30,322 Operating ratio 89.7% Adjusted Operating Ratio 1 85.9% Operating Performance – LTL
7 • 427.1% increase in Adjusted Operating income to $39.9M with minimal capital investment • 76.9% increase in load count • Power-only revenue more than quadrupled, driving a 142.1% increase in total Logistics revenue • 85.7% Adjusted Operating Ratio during the quarter, a 780 basis point improvement from the prior year • 20.2% Gross margin for Q1 representing a 580 basis point improvement from the prior year 1 See GAAP to non-GAAP reconciliation in the schedules following this presentation. Operating Statistics Q1 2022 Q1 2021 Change Revenue per load $2,697 $1,971 36.8 % Gross margin 20.2% 14.4% 580 bps Logistics Financial Metrics Q1 2022 Q1 2021 Change (Dollars in thousands) Revenue ex intersegment $280,171 $115,722 142.1 % Operating income $39,601 $7,577 422.6 % Adjusted Operating Income 1 $39,935 $7,577 427.1 % Operating ratio 86.0% 93.6% (760 bps) Adjusted Operating Ratio 1 85.7% 93.5% (780 bps) Operating Performance – Logistics
8 • $11.7M year-over-year improvement in Operating Income • 86.1% Operating Ratio during Q1 2022 compared with 96.8% the prior year • 35.9% year-over-year increase in average revenue per load • Chassis allocations and network disruption from switching rail providers contributed to a 24.9% decrease in load counts from Q1 2021 • Load volumes expected to increase sequentially leading to year-over-year increases in the back half of 2022 Intermodal Operating Statistics Q1 2022 Q1 2021 Change Average revenue per load $3,465 $2,549 35.9 % Load count 31,515 41,968 (24.9 %) Average tractors 584 597 (2.2 %) Average containers 11,027 10,846 1.7 % Intermodal Financial Metrics Q1 2022 Q1 2021 Change (Dollars in thousands) Revenue ex intersegment $109,192 $106,971 2.1 % Operating income $15,170 $3,457 338.8 % Operating ratio 86.1% 96.8% (1,070 bps) Operating Performance – Intermodal
9 • $67.0M increase in Revenue driven by expanded insurance and maintenance services provided to 3rd party carriers, and additional equipment leasing and warehousing activities • $19.1M year-over-year improvement in Operating Income • Expect year-over-year growth in revenue and operating income in 2022 Non-Reportable Financial Metrics Q1 2022 Q1 2021 Change (Dollars in thousands) Revenue $117,639 $50,669 132.2 % Operating income (loss) $11,821 $(7,258) 262.9 % Operating Performance – Non-Reportable
10 TTM Free Cash Flow 2018 - Q1 2022 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 $0M $1,000M $250M $500M $750M $1,250M Increasing Shareholder Value • Free Cash Flow1 of $352.4M in Q1 and $998.3M TTM • Generated a Return on Net Tangible Assets1 of 23.8% TTM • Increased dividend $0.02 or 20% during the quarter • Repurchased $150M of shares in Q1 • During the quarter, paid down $153.1M in long-term debt and leases (1) See GAAP to non-GAAP reconciliation in the schedules following this presentation. 1
11 KNX - An Industrial Growth Company GROWTH RESILIENCEDIVERSIFICATION • LTL strength with organic expansion and M&A opportunities • Logistics & Power Only • New Intermodal network and container investment • Iron Truck Services (insurance, maintenance, etc.) • Improving seated trucks • Adding terminals • Dedicated pipeline • Equipment leasing • Warehousing • 13% of revenue is LTL • 30% of revenue is asset light (Logistics, Intermodal, Other) • Truckload consists of over-the- road, dedicated, port, expedited, refrigerated, flatbed and cross border operations • 71k+ Trailers • Over 90% of dry van truckload moves involve a trailer pool • Nearly 40% of Logistics moves leverage a company trailer • LTL consistent and durable through freight cycles • Structural and lasting improvements within the Swift business • 14% of revenue is multi-year contracted truckload business • 24% of revenue is derived from business with variable cost models
12 Trucking Intermodal Logistics LTL Non-Reportable 2017 2018 2019 2020 2021 Q1 2022 0% 20% 40% 60% 80% 100% Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Diversification leading to consistent performance Substantial improvement in earnings as a result of significant margin improvements at Swift, growth in our Logistics business, development in new businesses, and investment in an LTL network Percent of Adjusted Operating Income 1 Rolling 4 Quarter Adjusted EPS 1. 2017 Pro forma historical information includes the results of Swift prior to the 2017 merger. This information has not been prepared in accordance with the rules of the Securities and Exchange Commission, including Article 11 of Regulation S-X, and it therefore does not reflect any of the pro forma adjustments that would be required by Article 11 of Regulation S-X
13 200+ Locations Not Easily Replicated Full Truckload • 18,000 Tractors • 71,000 Trailers • Cross-Border & Mexico Less-Than-Truckload • 3,100 Tractors • 8,300 Trailers • 4,300+ Doors
14 Environmental, Social & Corporate Governance ("ESG")
15 • Strong contract rates lead to an increase in commitments with less spot exposure • Trailer pool capacity remains at a premium • Declining spot rates, historically high used equipment market, limited availability to new equipment and high fuel costs increase barriers to entry • LTL demand remains strong with increases in revenue per hundredweight remaining in the double digits • Sourcing and retaining drivers remains challenging • Inflationary pressure on equipment, maintenance, labor and other cost items • Used equipment market remains strong but begins to normalize late in the year • Uncertainty in the market based on China lockdowns, significant inflation, war overseas, and consumer confidence Market Outlook FY 2022
16 Expected Adjusted EPS for the full year 2022 of $5.20 - $5.40, an increase from previous quarter's full year guidance of $5.10 - $5.30 Full Year Guidance Assumptions • Double digit truckload contract rate increases while spot rates moderate year-over-year • Stable truck count with a modest sequential improvement in miles per tractor • Strong Intermodal margins in the first half but normalizing to an Adjusted Operating Ratio the high 80's to low 90's by the end of the year. • Intermodal Load volume down year-over-year in the first half but growing in the back half of the year • Logistics revenue growth over 30% with an Operating Ratio in the high 80's to low 90's • Year-over-year increases in LTL revenue with improved margins • Continued growth in revenue and operating income in non-reportable • Inflationary pressure in most cost areas including driver-related expenses, maintenance, equipment, and non-driving labor • Net Cash Capex for the full year 2022 expected range of $550M - $600M • Higher than normal equipment gains on sale but moderating from Q1 • Approximate tax rate of 25.0% for the full year 2022 2022 Guidance
Appendix
Non-GAAP Reconciliation Adjusted Operating Income and Adjusted Operating Ratio 1 2 (Unaudited) Quarter Ended March 31, 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 1,826,989 $ 1,223,014 Total operating expenses (1,528,903) (1,060,755) Operating income $ 298,086 $ 162,259 Operating ratio 83.7 % 86.7 % Non-GAAP Presentation Total revenue $ 1,826,989 $ 1,223,014 Truckload fuel surcharge (179,111) (89,909) Revenue, excluding truckload fuel surcharge 1,647,878 1,133,105 Total operating expenses 1,528,903 1,060,755 Adjusted for: Truckload fuel surcharge (179,111) (89,909) Amortization of intangibles 3 (16,166) (11,749) Impairments 4 (810) — Legal accruals 5 (5,055) (1,242) Adjusted Operating Expenses 1,327,761 957,855 Adjusted Operating Income $ 320,117 $ 175,250 Adjusted Operating Ratio 80.6 % 84.5 %
Non-GAAP Reconciliation Adjusted Operating Income and Adjusted Operating Ratio (Unaudited) 1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio. 2 The reported results do not include the results of operations of ACT and its subsidiary prior to its acquisition by Knight-Swift on July 5, 2021 in accordance with the accounting treatment applicable to the transaction. The reported results do not include the results of operations of MME and its subsidiaries prior to its acquisition by Knight-Swift on December 6, 2021 in accordance with the accounting treatment applicable to the transaction. 3 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the July 5, 2021 ACT acquisition and other acquisitions. 4 "Impairments" reflects the non-cash impairment of building improvements (within our non-reportable segments). 5 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following: • First quarter 2022 legal expense reflect costs related to certain settlements and class action lawsuits arising from employee and and contract related matters. • First quarter 2021 legal costs related to certain class action lawsuits arising from employee and contract related matters.
Non-GAAP Reconciliation Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 2 (Unaudited) Quarter Ended March 31, 2022 2021 (Dollars in thousands, except per share data) GAAP: Net income attributable to Knight-Swift $ 208,337 $ 129,790 Adjusted for: Income tax expense attributable to Knight-Swift 69,174 45,329 Income before income taxes attributable to Knight-Swift 277,511 175,119 Amortization of intangibles 3 16,166 11,749 Impairments 4 810 — Legal accruals 5 5,055 1,242 Adjusted income before income taxes 299,542 188,110 Provision for income tax expense at effective rate (74,679) (48,677) Non-GAAP: Adjusted Net Income Attributable to Knight-Swift $ 224,863 $ 139,433 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.
Non-GAAP Reconciliation Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 2 (Unaudited) Quarter Ended March 31, 2022 2021 GAAP: Earnings per diluted share $ 1.25 $ 0.77 Adjusted for: Income tax expense attributable to Knight-Swift 0.42 0.27 Income before income taxes attributable to Knight-Swift 1.67 1.04 Amortization of intangibles 3 0.10 0.07 Impairments 4 — — Legal accruals 5 0.03 0.01 Adjusted income before income taxes 1.80 1.12 Provision for income tax expense at effective rate (0.45) (0.29) Non-GAAP: Adjusted EPS $ 1.35 $ 0.83 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.
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) Quarter Ended March 31, Truckload Segment 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 1,080,531 $ 962,947 Total operating expenses (875,414) (804,464) Operating income $ 205,117 $ 158,483 Operating ratio 81.0 % 83.5 % Non-GAAP Presentation Total revenue $ 1,080,531 $ 962,947 Fuel surcharge (138,661) (89,909) Intersegment transactions (336) (224) Revenue, excluding fuel surcharge and intersegment transactions 941,534 872,814 Total operating expenses 875,414 804,464 Adjusted for: Fuel surcharge (138,661) (89,909) Intersegment transactions (336) (224) Amortization of intangibles 2 (324) (324) Adjusted Operating Expenses 736,093 714,007 Adjusted Operating Income $ 205,441 $ 158,807 Adjusted Operating Ratio 78.2 % 81.8 % 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.
Non-GAAP Reconciliation Quarter Ended March 31, Logistics Segment 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 282,039 $ 118,887 Total operating expenses (242,438) (111,310) Operating income $ 39,601 $ 7,577 Operating ratio 86.0 % 93.6 % Non-GAAP Presentation Total revenue $ 282,039 $ 118,887 Intersegment transactions (1,868) (3,165) Revenue, excluding intersegment transactions 280,171 115,722 Total operating expenses 242,438 111,310 Adjusted for: Intersegment transactions (1,868) (3,165) Amortization of intangibles 2 (334) — Adjusted Operating Expenses 240,236 108,145 Adjusted Operating Income $ 39,935 $ 7,577 Adjusted Operating Ratio 85.7 % 93.5 % Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) 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.
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) LTL Segment 2 Quarter Ended March 31, 2022 GAAP Presentation (Dollars in thousands) Total revenue $ 255,125 Total operating expenses (228,748) Operating income $ 26,377 Operating ratio 89.7 % Non-GAAP Presentation Total revenue $ 255,125 Fuel surcharge (40,450) Revenue, excluding fuel surcharge 214,675 Total operating expenses 228,748 Adjusted for: Fuel surcharge (40,450) Amortization of intangibles 3 (3,945) Adjusted Operating Expenses 184,353 Adjusted Operating Income $ 30,322 Adjusted Operating Ratio 85.9 % 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 2. 3 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the ACT and MME acquisitions.
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) Quarter Ended March 31, Intermodal Segment 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 109,222 $ 107,066 Total operating expenses (94,052) (103,609) Operating income $ 15,170 $ 3,457 Operating ratio 86.1 % 96.8 % Non-GAAP Presentation Total revenue $ 109,222 $ 107,066 Intersegment transactions (30) (95) Revenue, excluding intersegment transactions 109,192 106,971 Total operating expenses 94,052 103,609 Adjusted for: Intersegment transactions (30) (95) Adjusted Operating Expenses 94,022 103,514 Adjusted Operating Income $ 15,170 $ 3,457 Adjusted Operating Ratio 86.1 % 96.8 % 1 Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio.
Truckload Segment Three Months Ended March 31, 2022 Year Ended December 31, 2021 Three Months Ended March 31, 2021 TTM March 31, 2022 GAAP Presentation (Dollars in thousands) Total revenue $ 1,080,531 $ 4,098,005 $ 962,947 $ 4,215,589 Total operating expenses (875,414) (3,313,569) (804,464) (3,384,519) Operating income $ 205,117 $ 784,436 $ 158,483 $ 831,070 Operating ratio 81.0 % 80.9 % 83.5 % 80.3 % Non-GAAP Presentation Total revenue $ 1,080,531 $ 4,098,005 $ 962,947 $ 4,215,589 Fuel surcharge (138,661) (415,606) (89,909) (464,358) Intersegment transactions (336) (1,128) (224) (1,240) Revenue, excluding fuel surcharge and intersegment transactions 941,534 3,681,271 872,814 3,749,991 Total operating expenses 875,414 3,313,569 804,464 3,384,519 Adjusted for: Fuel surcharge (138,661) (415,606) (89,909) (464,358) Intersegment transactions (336) (1,128) (224) (1,240) Amortization of intangibles 2 (324) (1,295) (324) (1,295) Impairments 3 — (41) — (41) Adjusted Operating Expenses 736,093 2,895,499 714,007 2,917,585 Adjusted Operating Income $ 205,441 $ 785,772 $ 158,807 $ 832,406 Adjusted Operating Ratio 78.2 % 78.7 % 81.8 % 77.8 % Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) 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 "Impairments" reflects the following non-cash impairments related to certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment).
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) 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. Logistics Segment Three Months Ended March 31, 2022 Year Ended December 31, 2021 Three Months Ended March 31, 2021 TTM March 31, 2022 GAAP Presentation (Dollars in thousands) Total revenue $ 282,039 $ 817,003 $ 118,887 $ 980,155 Total operating expenses (242,438) (723,083) (111,310) (854,211) Operating income $ 39,601 $ 93,920 $ 7,577 $ 125,944 Operating ratio 86.0 % 88.5 % 93.6 % 87.2 % Non-GAAP Presentation Total revenue $ 282,039 $ 817,003 $ 118,887 $ 980,155 Intersegment transactions (1,868) (18,314) (3,165) (17,017) Revenue, excluding intersegment transactions 280,171 798,689 115,722 963,138 Total operating expenses 242,438 723,083 111,310 854,211 Adjusted for: Intersegment transactions (1,868) (18,314) (3,165) (17,017) Amortization of intangibles 2 (334) (765) — (1,099) Adjusted Operating Expenses 240,236 704,004 108,145 836,095 Adjusted Operating Income $ 39,935 $ 94,685 $ 7,577 $ 127,043 Adjusted Operating Ratio 85.7 % 88.1 % 93.5 % 86.8 %
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) 1 Pursuant to the requirements of Regulation G, this table reconciles GAAP operating ratio to non-GAAP Adjusted Operating Ratio. Intermodal Segment Three Months Ended March 31, 2022 Year Ended December 31, 2021 Three Months Ended March 31, 2021 TTM March 31, 2022 GAAP Presentation (Dollars in thousands) Total revenue $ 109,222 $ 458,867 $ 107,066 $ 461,023 Total operating expenses (94,052) (416,807) (103,609) (407,250) Operating income $ 15,170 $ 42,060 $ 3,457 $ 53,773 Operating ratio 86.1 % 90.8 % 96.8 % 88.3 % Non-GAAP Presentation Total revenue $ 109,222 $ 458,867 $ 107,066 $ 461,023 Intersegment transactions (30) (284) (95) (219) Revenue, excluding intersegment transactions 109,192 458,583 106,971 460,804 Total operating expenses 94,052 416,807 103,609 407,250 Adjusted for: Intersegment transactions (30) (284) (95) (219) Adjusted Operating Expenses 94,022 416,523 103,514 407,031 Adjusted Operating Income $ 15,170 $ 42,060 $ 3,457 $ 53,773 Adjusted Operating Ratio 86.1 % 90.8 % 96.8 % 88.3 %
Non-GAAP Reconciliation Return on Net Tangible Assets 1 (Unaudited) March 31, 2022 2021 (Dollars in thousands) Total Assets $ 10,695,806 $ 8,519,475 Adjusted for: Intangible assets, net (1,814,883) (1,393,346) Goodwill (3,518,589) (2,958,709) Tangible Assets $ 5,362,334 $ 4,167,420 Total Liabilities $ 4,114,863 $ 2,570,137 Adjusted for: Revolving line of credit, finance lease obligations, and long-term debt (1,706,144) (626,439) Accounts receivable securitization (278,539) (198,957) Deferred income tax liabilities (881,287) (797,019) Non-Interest Bearing Liabilities, excluding deferred income tax liabilities $ 1,248,893 $ 947,722 Net Tangible Assets $ 4,113,441 $ 3,219,698 Average Net Tangible Assets $ 3,666,570 Adjusted Net Income $ 873,611 Return on Net Tangible Assets 23.8 % 1 Pursuant to the requirements of Regulation G, this table reconciles Total Assets and Total Liabilities to Average Net Tangible Assets.
Non-GAAP Reconciliation Adjusted Income Before Income Taxes and Adjusted Net Income 1 2 (Unaudited) Three Months Ended March 31, 2022 Year Ended December 31, 2021 Three Months Ended March 31, 2021 TTM March 31, 2022 (Dollars in thousands) GAAP: Net income attributable to Knight-Swift $ 208,337 743,388 129,790 821,935 Adjusted for: Income tax expense attributable to Knight-Swift 69,174 230,887 45,329 254,732 Income before income taxes attributable to Knight-Swift 277,511 974,275 175,119 1,076,667 Amortization of intangibles 3 16,166 55,299 11,749 59,716 Impairments 4 810 299 — 1,109 Legal accruals 5 5,055 (2,481) 1,242 1,332 Transaction fees 6 — 4,445 — 4,445 Write-off of deferred debt issuance costs 7 — 1,024 — 1,024 Adjusted income before income taxes 299,542 1,032,861 188,110 1,144,293 Provision for income tax expense at effective rate (74,679) (244,680) (48,677) (270,682) Non-GAAP Adjusted Net Income Attributable to Knight Swift $ 224,863 $ 788,181 $ 139,433 $ 873,611 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 The reported results do not include the results of operations of ACT and its subsidiary prior to its acquisition by Knight-Swift on July 5, 2021 in accordance with the accounting treatment applicable to the transaction. The reported results do not include the results of operations of MME and its subsidiaries prior to its acquisition by Knight-Swift on December 6, 2021 in accordance with the accounting treatment applicable to the transaction. 3 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the July 5, 2021 ACT acquisition, and other acquisitions. 4 "Impairments" reflects the following non-cash impairments: • First quarter 2022 impairment reflects the non-cash impairment of building improvements (within our non-reportable segments).; • 2021 impairments related to certain revenue equipment held for sale (within the non-reportable segments and the Truckload segment). 5 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following: • First quarter 2022 legal expense reflect costs related to certain settlements and class action lawsuits arising from employee and and contract related matters. • Third quarter 2021 reversal related to an accrued legal matter previously identified as probable in 2019. This was based on the recent decision of the appellate court, resulting in a change to a remote likelihood that a loss was incurred. Additional 2021 legal costs relate to certain class action lawsuits arising from employee and contract related matters. 6 "Transaction fees consist of legal and professional fees associated with the acquisitions of UTXL, ACT, and MME. The transaction fees are included within "Miscellaneous operating expense" in the condensed consolidated statements of comprehensive income. 7 "Write-off of deferred debt issuance costs" is included within "Other income, net" in the condensed consolidated statements of comprehensive income for 2021. The loss was incurred as a result of replacing the 2017 Debt Agreement with the 2021 Debt Agreement in September
Non-GAAP Reconciliation Free Cash Flow 1 (Unaudited) Three Months Ended March 31, 2022 Year Ended December 31, 2021 Three Months Ended March 31, 2021 TTM March 31, 2022 GAAP: Cash flows from operations $ 456,860 $ 1,190,153 $ 306,113 $ 1,340,900 Adjusted for: Proceeds from sale of property and equipment, including assets held for sale 60,532 252,080 67,175 245,437 Purchases of property and equipment (164,974) (534,096) (111,020) (588,050) Non-GAAP: Free cash flow $ 352,418 $ 908,137 $ 262,268 $ 998,287 1 Pursuant to the requirements of Regulation G, this table reconciles cash flows from operations to Free Cash Flow.