Knight-Swift Transportation delivered better-than-expected second-quarter results on Wednesday, attributing improved market conditions to increased regulatory enforcement removing non-compliant carriers from the industry. The carrier reported adjusted earnings per share of 63 cents, significantly exceeding both year-over-year comparisons and consensus expectations. Revenue reached $2.1 billion, representing 13% year-over-year growth and surpassing analyst estimates.
The truckload division showed particular strength, with revenue per tractor increasing 6% year-over-year despite a 3% decline in average trucks in service. The unit achieved a 91% adjusted operating ratio, improving 360 basis points year-over-year. Contract rates climbed throughout the period, with rate increases accelerating from low-single digits in April to 8% in June. Management noted recent bids are garnering double-digit rate increases, and spot market exposure expanded to 15% from 10% at the start of the year. The carrier’s tender rejection rate was twice the industry average, reflecting tighter market conditions.
The less-than-truckload segment faced headwinds, with revenue declining 1% year-over-year to $333 million as yield pressures offset tonnage gains. However, shipment declines moderated as the quarter progressed. The logistics division posted a 96.4% adjusted operating ratio, weighed down by elevated purchased transportation costs, though brokerage revenue per load surged 30% year-over-year. Intermodal operations returned to profitability with a 99.4% adjusted operating ratio and 35% year-over-year revenue growth.
Management expects the positive momentum to intensify starting in September and carry through the remainder of the year. Third-quarter guidance calls for adjusted earnings per share of 71 to 77 cents, exceeding consensus expectations. CEO Adam Miller characterized the regulatory-driven market changes as “durable” and stated they would “raise the floor” for rates in future downturns. The company noted driver pay as a creeping headwind but indicated it would rely on improved asset utilization and enhanced compensation strategies rather than broad-based wage increases to manage labor costs. Shares declined 0.5% in after-hours trading following the announcement.
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