USX - Knight-Swift falls after EPS miss warning on soft freight demand

2023-04-20 16:22:09 ET

Knight-Swift Transportation ( NYSE: KNX ) fell in postmarket trading on Thursday after missing consensus estimates with Q1 EPS coming in at $0.73 vs. $0.81 expected.

Revenue fell 10.4% during the quarter to $1.64B and adjusted operating income was down 49% to $164M. The truckload segment accounted for 59% of KNX's revenue tally, the logistics segment made up 9%, and the LTL segment was 15% of the total.

KNX's adjusted operating ratio for the truckload segment rose sharply to 86.6% from 78.2% a year ago. The results were impacted by negative development on certain large prior year insurance claims totaling $8.5M pre-tax, primarily related to an unfavorable jury verdict during the quarter.

KNX reported free cash flow of $144.2M for the quarter as cash capital cash capital expenditures were heavier than the full year run rate.

CEO David Jackson said the unusually soft demand experienced in Q4 of 2022 continued through the first quarter of 2023, as demand proved worse than expected. The weakness with demand was also noted to have continued thus far in April.

Looking ahead, KNX now sees full-year EPS of $3.35 to $3.55 vs. a prior forecast for $4.05 to $4.25 and the consensus mark of $3.88.

As part of its outlook, Knight-Swift ( KNX ) pointed to softness with freight demand and said capacity continues to exit at an accelerating rate. The company also said contract rates continue to be under pressure for the TL business and demand is muted in Q2 for the logistics segment, which is keeping spot rates lower.

Knight-Swift ( KNX ) fell 2.00% in after-hours trading to $55.98.

The upcoming conference call with Knight-Swift Transportation Holdings ( KNX ) execs could include more details on the monster deal to acquire U.S. Xpress Enterprises ( USX ).

The Seeking Alpha Quant Rating on KNX is at Hold

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