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Knight-Swift's (KNX) Q2 Earnings Beat, 2021 EPS View Up

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·4 min read
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Knight-Swift Transportation Holdings Inc.’s KNX second-quarter 2021 earnings (excluding 6 cents from non-recurring items) of 98 cents per share surpassed the Zacks Consensus Estimate of 87 cents. The bottom line surged 71.9% from the second quarter of 2020, which saw significantly low volumes due to weak freight market conditions caused by the coronavirus pandemic.

Total revenues of $1,315.7 million outperformed the Zacks Consensus Estimate of $1,300.8 million. The top line jumped 24% year over year driven by an increase in revenues in the Trucking, Logistics and Intermodal segments.

Total operating expenses increased 17.3% year over year to $1.12 billion. Adjusted operating ratio (operating expenses as a percentage of revenues) improved to 83.1% from 87.6% in the second quarter of 2020. Lower the value of the metric, the better. Knight-Swift’s adjusted operating income rose 65.1% 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) $882.56 million, up 8.2% year over year. Results were driven by 10.3% increase in average revenue per tractor. Average revenue per tractor was strong in the quarter owing to an18.8% increase in revenue per loaded mile (excluding fuel surcharge and intersegment transactions). Adjusted segmental operating income surged 42.8% to $168.78 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 460 basis points to 80.9%.

Revenues in the Logistics segment (excluding inter-segment transactions) amounted to $162.17 million, up more than 100% year over year, due to 55.3% increase in brokerage load volumes and 55.8% (including benefits from the UTXL acquisition) rise in revenue per load. Adjusted operating ratio improved to 91.1% in the second quarter from 95.5% in the year-ago period. Segmental adjusted operating income surged more than 300% to $14.45 million.

Revenues in the Intermodal segment (excluding inter-segment transactions) totaled approximately $115.29 million, up 39.4% year over year as a result of 19.9% and 16.3% increase in load counts and revenue per load, respectively. Segmental adjusted operating ratio improved to 95% in the reported quarter from 105.3% in year-ago quarter. Segmental operating income (adjusted) was $5.81 million in the quarter, against an adjusted operating loss of $4.41 million in the second quarter of 2020.

Liquidity & Share Buyback

Knight-Swift, currently carrying a Zacks Rank #3 (Hold), exited the second quarter with cash and cash equivalents of $179.03 million compared with $156.70 million at the end of 2020. During the first half of 2021, the company returned $53.7 million to shareholders in the form of share repurchases and $30.3 million in the form of dividends. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

2021 Guidance

Knight-Swift raised its adjusted earnings per share guidance for full-year 2021. It now expects the same to be in the range of $3.90-$4.05, compared with the previous expectation of $3.45-$3.60. The Zacks Consensus Estimate for 2021 earnings is pegged at $3.81. The company’s improved guidance is a result of the expected benefits from its recent acquisitions of UTXL and AAA Cooper Transportation as well as improved freight market conditions.

The company anticipates net cash capital expenditures in the band of $500–$550 million for 2021. The amount will primarily be spent on replacements of existing tractors and trailers, investments in terminal network and driver amenities.

Sectorial Snapshots

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

Delta, currently carrying a Zacks Rank of 3, incurred a loss (excluding $2.09 from non-recurring items) of $1.07 per share, narrower than the Zacks Consensus Estimate of a loss of $1.41. Total revenues of $7,126 million also topped the Zacks Consensus Estimate of $6,340.9 million.

J.B. Hunt, presently carrying a Zacks Rank #3, reported earnings of $1.61 per share, surpassing the Zacks Consensus Estimate of $1.55. Total operating revenues of $2908.4 million outperformed the Zacks Consensus Estimate of $2722 million.

Kansas City Southern, carrying a Zacks Rank #4 (Sell) at present, reported earnings (excluding $6.23 from non-recurring items) of $2.06 per share, missing the Zacks Consensus Estimate of $2.16. However, quarterly revenues of $749.5 million surpassed the Zacks Consensus Estimate of $733.1 million.


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