Knight Swift Transportation : First Quarter 2026 Transcript
KNX
Published on 04/28/2026 at 03:24 pm EDT
NYSE:KNX
Earnings Call
Wednesday, April 22, 2026 9:30 PM GMT
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EXECUTIVES
Chief Executive Officer & Director
Chief Financial Officer
Treasurer & Senior VP of Investor Relations
ANALYSTS
Citigroup Inc., Research Division
JPMorgan Chase & Co, Research Division
Wolfe Research, LLC
Robert W. Baird & Co. Incorporated, Research Division
Evercore ISI Institutional Equities, Research Division
BofA Securities, Research Division
Morgan Stanley, Research Division
Deutsche Bank AG, Research Division
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Good afternoon. My name is Sarah, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Knight-Swift Transportation First Quarter 2026 Earnings Call.
Speakers from today's call will be Adam Miller, Chief Executive Officer; Andrew Hess, Chief Financial Officer; and Brad Stewart, Treasurer and Senior VP of Investor Relations.
Mr. Stewart, the meeting is now yours.
Treasurer & Senior VP of Investor Relations
Thank you, Sarah. Good afternoon, everyone and thank you for joining our first quarter 2026 earnings call. Today we plan to discuss topics related to the results of the quarter, current market conditions, and our earnings guidance. We have slides to accompany this call which are posted on our investor website.
Our call is scheduled to last one hour. Following our commentary, we will answer questions related to these topics. In order to get to as many participants as possible, we limit the questions to one per participant. If you have a second question please feel free to get back in the queue. We will answer as many questions as time allows. If we are not able to get to your question due to time restrictions, you may call (602)-606-6349.
To begin, I will first refer you to the disclosures on slide 2 of the presentation and note the following:
This conference call and presentation may contain forward-looking statements made by the Company that involve risks, assumptions, and uncertainties that are difficult to predict. Investors are directed to the information contained in item 1(a), risk factors, or part 1 of the Company's Annual Report on Form 10-K filed with the United States SEC for a discussion of the risks that may affect the Company's future operating results. Actual results may differ.
Now I will hand the call over to Adam for some opening remarks.
CEO & Director
Thanks Brad, and good afternoon, everyone. These are certainly interesting times, and there are now more reasons to be optimistic about our industry than we have seen in over four years. We operate one of the largest fleet in the truckload industry, and roughly 70% of our fleet is deployed in one-way, or over-the-road service. It is true the one-way market has been the most difficult place to be over the past three plus years as this market has felt the brunt of the influx of capacity over the last several years. Much of that capacity may have been playing by a different set of rules and therefore operating with a different cost structure, which distorted pricing behaviors and cyclical patterns. The ongoing efforts of the FMCSA and DOT to prevent and revoke invalidly issued CDLs, shut down non-compliant CDL schools, and address hours-of-service abuses are in the early stages and are already having an impact on the market. This cleanup effort should, in our view, have an outsized impact on not just the one-way truckload market but on the lowest-priced capacity in this market. The market that was hardest hit over the past few years is now benefiting the most from the removal of capacity, a dynamic which we expect will continue.
As we mentioned last quarter, the market has progressed to a point where even small changes can cause disruption, and we saw evidence of that during the first quarter, as the severe weather in January led to acute tightness and an elevated spot market almost overnight. We were able to leverage our one-way, over-the-road capacity at scale to provide solutions across multiple brands to help our customers recover from the storm when others in our space were not able. Following the recovery from the storm, the tightness in the truckload market has continued to build, largely due to declining capacity, though some indications of
improving demand are beginning to emerge. Broad truckload market indicators show improving trends for load tenders, tender rejections, and spot pricing. Our business is experiencing even stronger levels on these metrics, as our leading presence in the one-way market grows increasingly valuable to shippers. Late in the first quarter, we began to see the outcomes from early first quarter bids, which showed our volumes generally holding steady or growing while achieving mid-single digit percentage rate increases. For reference, that is better than last year at this time when targeting slightly lower price increases often caused us to lose volume.
Pricing activity is very busy now. In addition to bid season being in full swing, mini-bid activity has increased, indicating incumbent carriers are unable to or perhaps unwilling to service freight at existing rates. In addition, turnback bids are happening more frequently as bid awards are being at least partially rejected by the awarded carriers as networks have shifted or the market has moved well past rates that were proposed even one or two months ago. Unlike the past few years, shippers are generally not issuing off-cycle bids opportunistically to improve service or drive prices lower, these actions are driven by a need to secure capacity. At the same time, previously deep discounts in the spot market have evaporated, further encouraging shippers to align with quality asset-based capacity. This is on top of a trend of shippers favoring asset-based relationships that had formed late last year in response to the regulatory enforcement efforts. Whether for these reasons or because of expectations of improving demand, we have already had a number of shippers initiate discussions about peak season demand support, which is not typical this early in the year.
As we navigate a busy and rapidly evolving bid environment, we have shifted our bid targets to a range of high single to low double-digit percentage increases on current pricing activity, as compared to our low-to-mid single-digit target one quarter ago. Across our truckload brands, we are reviewing business that is not subject to current or near-term bids and addressing rates that are below market. Aside from the market developments and our position in one-way service, we believe our work over the past two years structurally cutting cost out of our business with ongoing opportunities for further progress sets us up for greater incremental margin as business conditions improve. As the market improves, recruiting and retaining quality drivers have and will become more challenging. We believe we have an advantage with our terminal network and academies to source and develop drivers, however, we expect this to be a challenge for the industry in the back half of the year.
While the LTL sector is not seeing the same sharp tightening as Truckload, we are seeing our freight mix improve and rate renewals continue at a mid-single digit pace. Shipment volume trends have been directionally in line with normal seasonal patterns, though somewhat understated until late in the first quarter. However, we saw a notable improvement in weight per shipment for the first time in years, with this measure progressively growing throughout the quarter. This is a result of bringing on more industrial customers who can leverage our expanded network footprint to move heavier and longer length of haul shipments. We believe we are in the early stages of our network transition from regional to national. We expect that over time, growing into our network investments, a maturing freight mix, improvement in network density, and continuously refining our operational and cost execution will allow us to drive sustained, methodical improvement in operating margin. We remain committed to thoughtfully deploying capital, intentionally leveraging our strengths, and creatively unlocking synergy opportunities across our businesses.
With that, I will turn the call over to Andrew & Brad to review the results and our guidance.
Chief Financial Officer
Thanks Adam.
The charts on slide 3 compare our consolidated first quarter revenue and earnings results on a year-over-year basis. Consolidated revenue, excluding truckload and LTL fuel surcharge, was essentially flat, and operating income declined by $38 million year-over-year largely due to $18 million of expense for claim development in our LTL segment, primarily related to an adverse arbitration ruling on a 2022 claim, $4
million of expense in our Truckload segment for an adverse decision on VAT reimbursement in Mexico for prior tax years, warehousing project business deferred to future quarters, and an estimated $12 to $14 million net negative impact from volume and cost headwinds from severe winter weather disruptions and sharply rising fuel prices during the quarter. Adjusted operating income declined $37 million year-over-year primarily driven by the same items. GAAP earnings per diluted share for the first quarter of 2026 were a loss of $0.01, primarily due to the items noted above. GAAP earnings per diluted share in the prior year quarter were $0.19. Adjusted EPS was $0.09 for the first quarter of 2026, compared to $0.28 for the first quarter of 2025. Our consolidated Adjusted Operating Ratio was 97.0%, up 230 basis points year-over-year. The effective tax rate on our GAAP results was 7% and our non-GAAP effective tax rate was 28.0%.
Slide 4 illustrates the revenue and adjusted operating income for each of our segments for the quarter. Overall, the relative shares of our various service offerings remained largely consistent quarter-over-quarter, with LTL gaining slightly over the fourth quarter as it exits its seasonally weakest period of the year.
Now, we will discuss each of our segments, starting with our Truckload segment on slide 5.
Aside from the negative impacts to volumes and cost from severe winter weather and fuel challenges in the quarter, most operational metrics were improving throughout the quarter. Revenue per loaded mile excluding fuel surcharge and intersegment transactions turned out stronger than we anticipated and even improved sequentially over our end of year peak season result, largely driven by spot opportunities that developed within the quarter. However, volumes and cost per mile for the quarter were both unfavorable as a result of the weather and fuel challenges. On the whole, our Truckload Adjusted Operating Ratio of 96.3% only degraded 70 basis points year-over-year as a reduction in empty miles and the strengthening rate environment largely offset the headwinds to volume and cost. Q1 marks the 7th consecutive quarter of year-over-year improvement in miles per tractor. Importantly, the strengthening rate backdrop and improving network efficiency have ongoing implications for our business, while the weather issues are not expected to recur.
On a year-over-year basis, revenue excluding fuel surcharge was essentially flat, as a 1.4% improvement in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, largely offset a 1.8% decrease in loaded miles. Adjusted Operating Income declined $7.6 million year-over-year, largely as a result of the adverse decision in VAT reimbursement as noted earlier, as well as the cost headwinds from the severe winter weather and fuel escalation in the quarter.
U.S. Xpress made further progress on operating efficiency and trailed the legacy brands in Adjusted Operating Ratio by approximately 300 basis points for the quarter. The ongoing progress at U.S. Xpress is encouraging, and we expect this business will continue closing the gap in margin performance with our legacy brands as the market improves.
Moving on to slide 6, our LTL business grew revenue, excluding fuel surcharge, 2.6% year-over-year driven by a 5.2% increase in weight per shipment and an 8.5% increase in length of haul. Tonnage trends showed momentum as the quarter progressed, ending with March average daily tonnage up 7% year-over-year. Our expanded service coverage and presence in new markets is helping us to win business with new customers, gradually increase our industrial exposure, and transition our network and freight mix from regional to national. Shipments per day were down 1% year-over-year for the quarter, largely as a result of the winter weather disruption in January and the shift in freight mix to a higher weight per shipment. Revenue per hundredweight, excluding fuel surcharge, fell slightly by 70 basis points year-over-year driven by the increase in weight per shipment while renewal rates continue their trend of mid single-digit increases.
We continue to make progress normalizing operational and cost fundamentals following a period of significant change to our network and freight. Purchased transportation as a % of revenue, equipment rent, and variable labor per shipment all showed improvement year-over-year in the first quarter, and we anticipate further improvements in efficiency as we refine our network and freight flows.
As mentioned earlier, Adjusted Operating Income and Adjusted Operating Ratio were negatively impacted year-
over-year by the adverse claim development. We are encouraged by emerging seasonal freight patterns, steady progress on rate renewals, accelerating volume trends late in the quarter, and an improvement in weight per shipment for the first time in years as the freight mix continues to develop into our expanded terminal network.
Now I will turn it over to Brad for a discussion of our Logistics segment on slide 7.
Treasurer & Senior VP of Investor Relations
Thanks Andrew.
Logistics' Revenue for the first quarter declined 9.9% year-over-year as volumes were down 18.9% while revenue per load grew 10.4%. Third-party carrier capacity grew more difficult to source during the fourth quarter, and this trend continued through the first quarter. Gross margin of 16.6% for the first quarter declined 150 basis points year-over-year but improved 110 basis points from fourth quarter levels as strengthening spot opportunities helped offset pressure on contractually priced business. Despite the year-over-year decline in volumes and gross margin, our Logistics segment produced an Adjusted Operating Ratio of 96.2%, only a 70 basis point degradation year-over-year.
In addition to the increase in third-party carrier costs brought on by the regulatory pressures on capacity, our Logistics business experienced increased pressure on gross margin as we further enhanced our already rigorous carrier qualification standards in response to a sharp increase in cargo thefts in the industry and the troubling carrier practices exposed by recent regulatory efforts. This affects not only new applicants seeking to join our carrier base but also resulted in a reduction in the number of existing carriers we are tendering loads to. While such efforts were a headwind to capacity costs and caused us to reject more loads as unprofitable, as we reset contractual pricing through the bid season, we expect load count to improve and pressure on gross margin to lessen. Given the complementary relationship between our Logistics and asset-based Truckload segments, we believe the improving market dynamics would ultimately benefit both our asset and logistics businesses over time.
Our Logistics business has demonstrated its agility in navigating a volatile market the past few years by maintaining its operating margin close to target levels through disciplined pricing and cost management. This team is now further leveraging technology to take cost efficiencies to a new level as well as to improve our responsiveness and ability to capture opportunities in the market, which we expect will contribute to earnings in 2026.
Now on to slide 8 for a discussion of our Intermodal business.
The Intermodal segment grew revenue 2.7% and improved its operating ratio 50 basis points year-over-year as a 1.6% increase in revenue per load and a 1.2% increase in load count offset headwinds from winter weather in the quarter. Load count and revenue per load improved progressively throughout the quarter with March load count up 8.4% year-over-year. While the intermodal pricing environment is more competitive than truckload at this point, we are encouraged by ongoing opportunities to leverage our strong service performance and our truckload relationships to continue growing our volumes at improving rates. We remain focused on delivering excellent service and driving appropriate returns through growing our load count with disciplined pricing, cost control, network balance, and equipment utilization.
On slide 10, we have outlined our guidance and the key assumptions, which are also stated in the earnings release. Actual results may differ from our expectations. Based on our assumptions, we project our Adjusted EPS for the second quarter of 2026 will be in the range of $0.45 - $0.49. This range represents a larger than normal sequential increase in quarterly results as the first quarter was negatively impacted by events that we do not expect to recur and because freight market fundamentals are improving exiting the quarter. Our projections reflect recent trends in volumes, spot rates, and bid activity, as well as expectations for a continued seasonal build in freight demand for both truckload and LTL services. The key assumptions underpinning this guidance are listed on this slide.
Disclaimer
Knight-Swift Transportation Holdings Inc. published this content on April 28, 2026, and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT), unedited and unaltered, on April 28, 2026 at 19:23 UTC.