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Knight-Swift (KNX) Beats on Q1 Earnings, Ups 2021 EPS View

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Knight-Swift Transportation Holdings Inc.’s KNX first-quarter 2021 earnings (excluding 6 cents from non-recurring items) of 83 cents per share surpassed the Zacks Consensus Estimate of 70 cents. Moreover, the bottom line surged 88.6% year over year owing to significant improvement in adjusted operating ratio (operating expenses as a percentage of revenues) in all the segments (Trucking, Logistics and Intermodal).

Total revenues of $1,223 million beat the Zacks Consensus Estimate of $1,192.6 million and increased 8.7% year over year. The upside was driven by increase in revenues in the Trucking, Logistics and Intermodal segments.

Total operating expenses increased 3.7% year over year to $1,060.8 million. Adjusted operating ratio increased to 81.8% from 86.5% in the year-ago quarter. Lower the value of the metric, the better. Knight-Swift’s adjusted operating income rose 50.1% year over year.

KnightSwift Transportation Holdings Inc. Price, Consensus and EPS Surprise

KnightSwift Transportation Holdings Inc. Price, Consensus and EPS Surprise
KnightSwift Transportation Holdings Inc. Price, Consensus and EPS Surprise

KnightSwift Transportation Holdings Inc. price-consensus-eps-surprise-chart | KnightSwift Transportation Holdings Inc. Quote

Segmental Results

Revenues in the Trucking segment totaled (excluding fuel surcharge and inter-segment transactions) $872.8 million, up 6.3% year over year. Results were driven by 7.7% increase in ave, age revenue per tractor. Average revenue per tractor was strong in the quarter owing to 16.1% rise in revenue per loaded mile (excluding fuel surcharge and intersegment transactions). Adjusted segmental operating income also moved up 43.3% to $158.8 million. Adjusted operating ratio (operating expenses as a percentage of revenues) increased 470 basis points (bps) to 81.8%.

Revenues in the Logistics segment (excluding inter-segment transactions) amounted to $115.7 million, up 50.8% year over year due to 43% increase in brokerage revenue per load and 5.4% increase in load volumes. Both adjusted operating ratio improved 170 bps to 93.5% and segmental adjusted operating income surged 103.7% to $7.6 million.

Revenues in the Intermodal segment (excluding inter-segment transactions) totaled approximately $107 million, up 13.1% year over year as a result of increasing load count and revenue per load by 2.6% and 10.2%, respectively. Segmental adjusted operating ratio increased 600 bps to 96.8%. Segmental operating income was $3.5 million in the quarter, up more than 100% year over year.

Liquidity

Knight-Swift, carrying a Zacks Rank #3 (Hold), exited the first quarter with cash and cash equivalents of $194.7 million compared with $156.7 million at the end of 2020. During the first quarter of 2021, the company returned $67.3 million to shareholders in the form of dividends and through share buybacks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Dividend Hike

On Apr 19, 2021, the company’s board of directors announced a quarterly cash dividend of 10 cents per share, which is a hike of 25% from the existing dividend pay-out. The hiked dividend will be paid out to shareholders on Jun 28, as of record date Jun 4.

2021 Guidance

Knight-Swift raised its adjusted earnings per share (EPS) guidance for the full year 2021. It now expects its EPS to be in the band of $3.45-$3.60 (previous expectation: $3.20-$3.40) for full year 2021. The midpoint ($3.52) of the revised guidance is above the Zacks Consensus Estimate of $3.38.

Net capital expenditures are anticipated between $450 million and $500 million (in-line with the previous declaration).

Effective tax rate is anticipated in the range of 25.5-27.0% (in line with the previous declaration) before discrete items.

Sectorial Snapshot

Within the broader Transportation sector, Delta Air Lines DAL, J.B. Hunt Transport Services JBHT and Kansas City Southern KSU recently reported first-quarter 2021 results.

Delta, carrying a Zacks Rank #3, incurred a loss (excluding $1.70 from non-recurring items) of $3.55 per share. The figure was wider than the Zacks Consensus Estimate of a loss of $3.08. Meanwhile, total revenues of $4,150 million topped the Zacks Consensus Estimate of $3,821.3 million.

J.B. Hunt, a Zacks #3 ranked player, reported earnings of $1.37 per share. The figure beat the Zacks Consensus Estimate of $1.18. Total operating revenues of $2,618.1 million also surpassed the Zacks Consensus Estimate of $2,486.9 million.

Kansas City Southern, carrying a Zacks Rank of 3, reported earnings (excluding 23 cents from non-recurring items) of $1.91 per share. The figure missed the Zacks Consensus Estimate of $2. Moreover, quarterly revenues of $706 million lagged the Zacks Consensus Estimate of $714.3 million.

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