Knight-Swift Transportation reported a difficult first quarter, but the company says market conditions are increasingly moving in its favour as the truckload sector tightens.
The group posted a net loss of $1.3 million for the first quarter. On an adjusted basis, earnings came in at 9 cents per share, matching the negative preannouncement issued last week but falling well short of the 25-cent consensus estimate that had been in place at the time.
The quarter was affected by several factors that management said are not expected to repeat. These included 8 cents per share tied to negative claims development in the company’s less-than-truckload (LTL) business, 5 to 6 cents per share linked to weather and fuel-related pressures, and another 2 cents per share resulting from an adverse value-added tax ruling in Mexico.
Chief executive Adam Miller said the quarter was challenging, but described many of those headwinds as temporary. He added that the weather disruptions had actually helped expose how tight the market is becoming, while the spike in fuel prices is creating additional pressure on truckload capacity.
Miller said the truckload market is continuing to tighten as higher regulation and rising fuel costs push more capacity to the sidelines. Reflecting that shift, Knight-Swift is now targeting high-single-digit to low-double-digit rate increases during bid season, compared with the low- to mid-single-digit increases it had expected at the start of the year.
He added that while the pricing backdrop is improving, the industry is still seeing carrier failures, as many operators remain under strain after a prolonged downturn and a recent fuel-driven cash flow squeeze.
The company reiterated its second-quarter adjusted earnings guidance of 45 to 49 cents per share, a range that was also provided last week and which at that time bracketed market expectations.
On the revenue side, Knight-Swift reported first-quarter consolidated revenue of $1.85 billion, up 1% year on year.
Within the truckload (TL) division, revenue was essentially flat at $1.05 billion. The number of tractors in service declined 4%, but this was offset by a 4% increase in revenue per tractor, excluding fuel surcharges. That gain was driven by a 2.3% rise in loaded miles per tractor and a 1.6% increase in revenue per loaded mile, again excluding fuel.
The truckload segment posted an adjusted operating ratio of 96.3%, equivalent to a 3.7% operating margin, which was 70 basis points weaker than a year earlier. Fuel and weather were among the factors weighing on performance.
The LTL division delivered a 3% year-on-year revenue increase to $313 million. A 1% decline in daily shipments was offset by a 4% increase in revenue per shipment, excluding fuel. The business also recorded its highest weight per shipment since 2021, while rate renewals continued to come in at mid-single-digit percentage increases.
The segment reported a 99.6% adjusted operating ratio, though the adverse claims development represented a 570-basis-point headwind in the quarter.
Knight-Swift was scheduled to host an investor call at 5:30 p.m. EDT on Wednesday to discuss the first-quarter results in more detail.
