Yahoo Finance Knight-Swift Transportation Holdings Inc (KNX) Q1 2024 Earnings Call Transcript Highlights: ...
Revenue (excluding fuel surcharge): Increased 11% year-over-year.
Adjusted Operating Income: Declined by 68.5%.
GAAP Earnings Per Diluted Share: Loss of $0.02.
Adjusted EPS: $0.12, would have been $0.20 excluding a $19.5 million loss from the insurance business.
Net Interest Expense: Increased by $18 million, impacting EPS by approximately $0.08.
LTL Segment Revenue: Grew nearly 13% year-over-year, excluding fuel charge.
Shipments Per Day: Increased 6% in the LTL segment.
Revenue Per Hundredweight (excluding fuel surcharge): Increased 3% year-over-year in the LTL segment.
Adjusted Operating Ratio for LTL: 90%, with operating income declining over 20% year-over-year.
Truckload Revenue (excluding fuel surcharge): Increased 26% year-over-year.
Revenue Per Loaded Mile: Fell 10% year-over-year, or 9% before including U.S. Xpress.
Miles Per Tractor: Increased 8% overall, or 6% before the inclusion of U.S. Xpress.
Logistics Business Revenue: Down 7% year-over-year.
Intermodal Business Revenue: Decreased 20% year-over-year.
All Other Segments Revenue: Declined 40% year-over-year, primarily due to winding down the third-party insurance business.
Release Date: April 24, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Congratulations to Adam, Andrew, and Brad on your respective new positions. Adam, your commentary on the average margins being in line with historical levels was interesting. Do you think that's a good benchmark for how we think about normalized mid-cycle margins in the next cycle and beyond that? And the same thing for EPS as well, obviously (inaudible) U.S. Xpress? Or how do you think of what normalized earnings look like? A: Yes, I think that's a great question, Ravi. And I think that's a good goalpost to use in terms of just trying to gauge what the performance will be across the next cycle. I do believe that we probably don't see the same highs as we saw in the COVID cycle or the pandemic and certainly hoping not the lows that we are currently experiencing right now. I do feel like it won't take long for the U.S. Xpress business to begin to align their performance with Knight and Swift. It may not be right in the first up cycle, but maybe the second one might be when we close that gap, but I think we will make some progress here in the first up cycle.
Q: I appreciate the perspective on kind of how to think about cycles. I wanted to see if you could offer some thoughts on, I guess, in the prior 2 cycles, it seems like the amplitude of the step-up in rates has been even bigger in 2018 with ELD and then obviously, COVID, pretty unusual a big step-up. Do you think that -- I mean, I guess it's hard to know ahead of time, but do you think that the likely outcome is to find another catalyst that gives you a big step-up? Because -- or do you think its base case should be that it kind of ends up being like a slow grind-up? A: Yes. I don't know that my crystal ball is any better than yours, Tom. When I think about the last few cycles, I think they've all had a unique catalyst that have kind of kicked them off. I think of 2013, early '14, we've been in a long period of kind of pressure on the carrier, and it was somewhat of a severe weather event to kind of kick that off and all of a sudden, it was tough to find a truck. And I think the capacity that had been coming out of the market finally caught up with where demand was. And that led to, I think, very healthy rate increases and very strong margins.
Q: I think there was some maybe small signs of life as we progress through the end of March, but it was obviously uncertain that was the timing around when Easter fell or was it something real? Can you just maybe give us an update on that in terms of if you saw any of that actually carry over into April? And Adam, I think like I assume one of the reasons for the depths of the decline is because you aren't signing up for contracts and you're participating probably more so in company load boards than you have in the past. A: Okay. I'll answer your three questions in one, Amit, that works. And that was, I think, the best pronouncement of your name, so credit to the operator there. So yes, in March, and I think we've talked about this, I think, in our preannouncement, I believe, with some of the analysts. We did see a little bit of seasonality going to the quarter end. And it's really the first time that we've really seen a change in volume and a few projects here or there in certain markets that first we've seen that at the quarter end in quite some time. That was short-lived and it's really a few weeks and then you hit April. And you usually -- and you have a little bit of a lull in April as you get through quarter end, especially as you mentioned, it was aligned with Easter.
Q: So I just want to focus on the guidance a little bit. So Q2 higher than Q1 and then Q3 earnings higher than Q2. Some years, Q3 is higher than Q2, but some years worse. So I guess, ultimately, I'm trying to understand here, are you assuming that truckload rates start moving higher in order to get to this guidance? Or is this assuming rates stayed flat? And then on the LTL side, you've got rev per hundredweight up low to mid-teens in Q2, Q3. That's just -- it's a lot of -- those are big increases. And just curious your visibility of that, particularly in Q3 once we start to (inaudible)? A: All right. Scott, I'm going to have Andrew, he'll kind of dive into some of those questions here.
Q: Adam and Andrew, congrats on the roles. Andrew, you mentioned back online in operating ratio for Intermodal in the second quarter. I don't know what back online means? What level is that? How much of the fleet is parked right now? And I guess, Adam, what do you eventually sell this or get out if you can't flip this to profitability? We've been hearing about this for years. And that goes back to, I guess, Knight's historic religious focus on costs. A: Yes, Intermodal, specifically, Ken, is your question?
Q: Just sort of talking about LTL for a second. Obviously, pretty strong expansion plans for the balance of this year. Can you talk to the ability to get the staffing headcount needed both in terms of drivers and the terminal folks? And is there much wage inflation to sort of get these people? And then maybe just an update on how you expect the rollout of the next '25 to go? A: Yes. I mean, thus far, we haven't had a challenge of staffing those buildings. I mean there was obviously a terminal there before and labor that supported those locations, now maybe different labor that we'd be looking for. But thus far, that hasn't been the biggest challenge for us. As we kind of manage the rollout of these locations where we want to be very deliberate and not put too much pressure on the cost side of our business. But typically, you're going to have some labor and some start-up costs to get a building operating.
Q: Just one for you, Adam, maybe you can just talk about. I know it's probably a question you get to the bottom of the cycle -- was hopefully at the bottom of cycle. But as we look up and figure out how this can play out, do you think anything has really structurally changed, this might not be for permanent, but maybe elongating the trough here? And you think about things like there's more guaranteed payout there, there's more trailer pools that have more capacity, should present more data. Obviously, you got the
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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