Knight-Swift Profit Plunges 68% on Claims, Weather Hit
The trucking and logistics company reported adjusted earnings of $0.09 a share, down from $0.28 a year earlier, after a string of one-time charges eroded first-quarter results.
Knight-Swift Transportation Holdings (KNX) reported first-quarter adjusted earnings of $0.09 a share, down 67.9% from $0.28 a year earlier, as adverse claims development, severe weather, and a fuel spike overwhelmed a top line that barely moved. The results landed at the low end of a guidance range the company had already slashed in April, when it cited an unfavorable arbitration ruling on a 2022 claim and an adverse Mexico VAT decision among the headwinds.
Consolidated revenue edged up 1.4% to $1.85 billion, though stripping out fuel surcharges the gain was just 0.3%. Operating income fell 57.1% to $28.6 million, and the adjusted operating ratio widened to 97.0% from 94.7% a year ago. The company attributed roughly $0.15 a share of the earnings shortfall to items it characterized as transitory: $18.0 million in unfavorable less-than-truckload claims development tied to an arbitration outcome, a $4.1 million Mexico VAT charge, and an estimated $12 million to $14 million combined hit from weather and fuel.
The truckload segment, Knight-Swift's largest, saw revenue excluding fuel surcharges essentially flat as a 1.4% gain in revenue per loaded mile nearly offset a 1.8% decline in loaded miles. The adjusted operating ratio deteriorated 70 basis points year over year to 96.3%, extending a slide that has carried the metric from 92.2% in the fourth quarter of 2024 through 95.6% a year ago to the current reading. The company's U.S. Xpress unit trailed legacy truckload brands by roughly 300 basis points on operating ratio, though it had narrowed the gap by 430 basis points in the prior quarter. The average tractor count fell 4.0% year over year to 21,027, continuing a multi-quarter fleet reduction, while the average vehicle age ticked up to 2.9 years from 2.7 years at the end of 2025.
In less-than-truckload, tonnage per day grew 4.1% and weight per shipment rose 5.2% to 1,033 pounds — the first increase in years — as freight mix shifted toward national from regional lanes. Revenue excluding fuel surcharges grew 2.6%, but the adjusted operating ratio ballooned 540 basis points to 99.6%, almost entirely because of the $18.0 million claims charge, which alone carried a 570-basis-point impact. The logistics division posted a 9.9% revenue decline to $127.6 million on an 18.9% drop in load count, though revenue per load climbed 10.4% and gross margin improved 110 basispts sequentially to 16.6% on strengthening spot opportunities. Intermodal revenue grew 2.7% to $93.6 million, with load count reaching its highest first-quarter level since 2021, and the operating ratio improved 50 basis points to 101.5%.
Management introduced second-quarter adjusted EPS guidance of $0.45 to $0.09 a share, a sharp sequential rebound predicated on the non-recurrence of first-quarter transitory items and improving freight fundamentals. The company raised its truckload bid-season pricing targets to high-single to low-double-digit percentage increases, up from low-to-mid single digits one quarter ago, as the freight market tightens. For the second quarter, Knight-Swift guided truckload revenue excluding fuel surcharges up a low single digit year over year with operating margins improving 100 to 200 basis points, LTL adjusted operating ratio in the low 90s, and intermodal load count rising high-single to low-double digits sequentially. Full-year net cash capital expenditure guidance was narrowed to $600 million to $650 million from an earlier $625 million to $675 million range.
The quarter also brought a leadership transition. Co-founder Kevin Knight retired as executive chairman effective June 3, and lead independent director David Vander Ploeg was appointed to succeed him; Knight agreed to serve as a consultant for two years. Separately, Knight-Swift priced an upsized $1.3 billion convertible senior notes offering — increased from an initially announced $1.0 billion — carrying a 1.00% coupon due 2031 and an initial conversion price of roughly $80.11 a share, a 30% premium to the stock price at pricing. Net proceeds of approximately $1.27 billion are earmarked to retire a $300 million term loan due 2027, pay down $400 million of a $700 million term loan due 2030, and repay revolver balances, after roughly $92.8 million in capped-call costs. The board also raised the quarterly dividend to $0.20 a share from $0.18, declared in February.