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    KNX
    Earnings call· Mar 2026(Q1 FY26)

    Knight-Swift Transportation Holdings Q1 FY26 earnings call KNX

    Apr 22, 2026 Source

    Executive summary

    Knight-Swift Q1 FY26 — Truckload Market Inflection and LTL Network Transition

    The first quarter saw Knight-Swift navigate a challenging environment marked by severe weather and specific segment expenses, resulting in a GAAP loss. However, the company highlighted a significant inflection in the truckload market driven by regulatory capacity reduction, leading to strong bid season activity and anticipated high single to low double-digit rate increases. The LTL segment continued its network transition with improving freight mix and mid-single-digit rate renewals, while U.S. Xpress made progress on margin convergence.

    Highlights

    4

    • Truckload market indicators show improving trends for load tenders, tender rejections, and spot pricing, with early Q1 bids showing mid-single-digit percentage rate increases, now targeting high single to low double-digit increases.

    • LTL revenue excluding fuel surcharge grew 2.6% year-over-year, driven by a 5.2% increase in weight per shipment and an 8.5% increase in length of haul.

    • U.S. Xpress made further progress on operating efficiency, trailing legacy brands in adjusted operating ratio by approximately 300 basis points.

    • Intermodal segment grew revenue 2.7% and improved its operating ratio 50 basis points year-over-year, with March load count up 8.4% year-over-year.

    Concerns

    5

    • Consolidated operating income declined by $38 million year-over-year.

    • LTL segment was negatively impacted by $18 million of expense for claim development.

    • Truckload segment incurred $4 million of expense for an adverse decision on VAT reimbursement in Mexico.

    • Estimated $12 million to $14 million net negative impact from severe winter weather disruptions and sharply rising fuel prices during the quarter.

    • Consolidated adjusted operating ratio was 97%, up 230 basis points year-over-year.

    Guidance & targets

    3
    CategoryTargetConfidence
    Adjusted EPS
    $0.45 to $0.49
    high materiality
    High
    LTL Operating Ratio
    sub-90%
    medium materiality
    Medium
    Truckload Pricing Activity
    high single to low double-digit percentage increases
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Consolidated
    Consolidated revenue, excluding truckload and LTL fuel surcharge, was essentially flat. Operating income declined by $38 million year-over-year. Adjusted operating income declined $37 million year-over-year. Consolidated adjusted operating ratio was 97%, up 230 basis points year-over-year.
    		essentially flat——declined $38M
    Truckload
    Revenue excluding fuel surcharge was essentially flat year-over-year. Adjusted operating income declined $7.6 million year-over-year, largely due to a $4 million VAT reimbursement expense and $12M-$14M net negative impact from winter weather and fuel costs. U.S. Xpress adjusted operating ratio trailed legacy brands by approximately 300 basis points.
    Revenue per loaded mile (ex-fuel surcharge, intersegment): +1.4% YoYLoaded miles: -1.8% YoYMiles per tractor: 7th consecutive quarter of YoY improvement
    		essentially flat——96.3% adjusted operating ratio
    LTL
    Revenue excluding fuel surcharge grew 2.6% year-over-year. Adjusted operating income and adjusted operating ratio were negatively impacted by an $18 million adverse claim development. Progress noted in purchased transportation, equipment rent, and variable labor per shipment.
    Weight per shipment: +5.2% YoYLength of haul: +8.5% YoYMarch average daily tonnage: +7% YoYShipments per day: -1% YoYRevenue per hundredweight (ex-fuel surcharge): -70 bps YoY
    		+2.6% YoY+2.6%——
    Logistics
    Revenue declined 9.9% year-over-year. Gross margin declined 150 basis points year-over-year but improved 110 basis points from Q4 levels. Increased third-party carrier costs and enhanced carrier qualification standards impacted results.
    Volumes: -18.9% YoYRevenue per load: +10.4% YoYGross margin: 16.6% (declined 150 bps YoY, improved 110 bps QoQ)
    		-9.9% YoY-9.9%—96.2% adjusted operating ratio
    Intermodal
    Revenue grew 2.7% and operating ratio improved 50 basis points year-over-year. Load count and revenue per load improved progressively throughout the quarter. Pricing environment is more competitive than truckload.
    Revenue per load: +1.6% YoYLoad count: +1.2% YoYMarch load count: +8.4% YoY
    		+2.7% YoY+2.7%—improved 50 bps operating ratio YoY
    All Other Segments
    Revenue increased 13.5%. Operating results declined to an operating loss, partially due to the inclusion of $5 million of costs for the accounts receivable securitization program and start-up costs on new warehousing contracts.
    		+13.5% YoY+13.5%—operating loss

    Operational metrics

    12
    GAAP EPS
    -$0.01vs $0.19 in Q1 FY25
    Q1 FY26

    primarily due to the items noted above

    Adjusted EPS
    $0.09vs $0.28 in Q1 FY25
    Q1 FY26
    GAAP Effective tax rate
    7%
    Q1 FY26
    Non-GAAP Effective tax rate
    28%
    Q1 FY26
    LTL claim development expense
    $18M
    Q1 FY26

    primarily related to an adverse arbitration ruling on the 2022 claim

    Truckload VAT reimbursement expense
    $4M
    Q1 FY26

    for an adverse decision on VAT reimbursement in Mexico for prior tax years

    Net negative impact from Q1 headwinds
    $12M-$14M
    Q1 FY26

    for volume and cost headwinds from severe winter weather disruptions and sharply rising fuel prices

    Accounts receivable securitization program costs
    $5M
    Q1 FY26

    beginning January 1, 2026, all other segments also includes the cost of our accounts receivable securitization program that was formerly reported below the line in interest expense in prior quarters.

    Logistics carriers reduction
    30%
    YTD Q1 FY26

    Just since the beginning of this year, we're down 30% and we had made a large cut even earlier last year.

    Hair follicle drug test detection rate
    14xvs urinalysis
    over a decade

    the hair follicle test identifies roughly 14x the drug users that the urinalysis test does.

    U.S. Xpress CSA Crash BASIC
    >60% better
    since acquisition

    That's over 60% better than where we were at the acquisition.

    U.S. Xpress revenue
    ~$1.7B
    annual

    I think between the trucking and the logistics business, I mean, you're just under $2 billion between those 2, probably about $1.7 billion, close to that.

    Industry KPIs

    5
    MetricValueDetails
    Safety>60% better%
    Volume1.8% decrease%
    Operating ratio97%%
    Revenue per load ex fuel1.4% improvement%
    Intermodal truckload volume5.2% increase%

    Deals & partnerships

    1
    U.S. XpressAcquisition of U.S. Xpress

    The acquisition involved adjusting the freight network, changing hiring standards for drivers, and selling off excess capacity to improve the business's foundation and long-term health.

    Risks & headwinds

    5
    Regulatory capacity reduction impact on driver availabilityback half of the year

    recruiting and retaining quality drivers have and will become more challenging

    Mitigation: Leveraging terminal network and academies to source and develop drivers.

    Increased third-party carrier costs and stricter qualification standards in LogisticsQ1 FY26

    resulted in a reduction in the number of existing carriers we are tendering loads to and caused us to reject more loads as unprofitable

    Mitigation: Resetting contractual pricing through bid season, leveraging technology for cost efficiencies.

    LTL claim development expenseQ1 FY26

    $18 million

    Mitigation: Management expects this to be put behind them.

    Truckload VAT reimbursement expenseQ1 FY26

    $4 million

    Mitigation: Not explicitly stated, but presented as a one-time adverse decision.

    Severe winter weather and fuel price volatilityQ1 FY26

    $12 million to $14 million net negative impact

    Mitigation: Weather issues are not expected to recur.

    What to watch in Q2 FY26

    5

    Truckload contractual rate increases

    Late Q2 and into Q3
    CurrentMid-single-digit percentage increases in early Q1 bids, now targeting high single to low double-digit.
    TargetFlow through of high single to low double-digit rate increases.

    Why it matters

    This is the primary driver for Truckload segment margin recovery and overall company profitability.

    The recent strengthening of the truckload pricing environment will generally impact our contractual rates beginning late in the second quarter and into the third.

    Q&A highlights

    6

    How does the improving pricing environment translate into margin and earnings for the Truckload business, and can it reach mid-cycle levels (mid-teens margin)?

    Adam Miller stated that the current capacity pressure from regulatory forces is unprecedented, potentially leading to more capacity removal than typical. If the company can capture rate, improve utilization, and grow seated trucks, they expect to return to normalized mid-80s operating ratios (mid-teens margin) for Truckload, including U.S. Xpress. The LTL business is expected to improve margins methodically, aiming for sub-90% OR this year. Logistics and Intermodal are also expected to improve with a strengthening cycle.

    “I don't think we've ever really seen the pressure on capacity and that coming from regulatory forces versus just normal economics. And so I think we could see more capacity coming out of the network than we typically would see in a cycle.”

    asked by Christian Wetherbee · answered by Adam Miller

    3 min read7 chapters

    Detailed Narrative

    01

    Truckload Market Inflection and Pricing Power

    The one-way truckload market, previously challenging, is now benefiting significantly from capacity removal driven by FMCSA/DOT enforcement actions, including CDL revocations and addressing hours of service abuses. This has led to acute market tightness and an elevated spot market, with early Q1 bids securing mid-single-digit rate increases. The company has since shifted bid targets to high single to low double-digit percentage increases, indicating a strong inflection point in pricing power.

    02

    LTL Network Transition and Freight Mix Improvement

    The LTL business is progressing with its network transition from regional to national, leveraging an expanded footprint to attract new industrial customers. This shift is yielding a notable improvement in freight mix, characterized by a 5.2% increase in weight per shipment and an 8.5% increase in length of haul. March average daily tonnage was up 7% year-over-year, and rate renewals continue at a mid-single-digit pace, supporting methodical margin improvement.

    03

    Regulatory Impact on Industry Capacity

    Ongoing regulatory efforts by the FMCSA and DOT are having a substantial impact on the lowest-price capacity in the truckload market. Actions such as preventing and revoking invalid CDLs, shutting down noncompliant CDL schools, and addressing hours of service abuses are pushing non-compliant capacity out of the market. Management believes these aggregate efforts are already influencing the market and will continue to drive capacity reduction, creating a more favorable environment for compliant carriers.

    04

    U.S. Xpress Integration and Margin Convergence

    U.S. Xpress continued to make operational efficiency progress, with its adjusted operating ratio trailing legacy brands by approximately 300 basis points in Q1. Management expects this gap to narrow as the market improves and the team, led by an integral part of Swift's post-merger improvement, focuses on adjusting the freight network and securing more sustainable rates. Significant improvements in CSA Crash BASIC scores (over 60% better since acquisition) are also expected to positively impact the business.

    05

    Logistics Segment Navigates Market Volatility

    The Logistics segment faced headwinds from increased third-party carrier costs and enhanced carrier qualification standards, implemented in response to rising cargo thefts and regulatory scrutiny. These efforts led to a 30% reduction in the number of carriers worked with since the beginning of the year and resulted in rejecting more unprofitable loads. However, management anticipates improved load counts and gross margins as contractual pricing resets through the bid season.

    06

    Intermodal Performance and Path to Profitability

    The Intermodal segment demonstrated resilience with a 2.7% revenue growth and a 50 basis point improvement in operating ratio year-over-year, despite Q1 winter weather. Load count and revenue per load showed progressive improvement throughout the quarter, with March load count up 8.4% year-over-year. While the pricing environment remains competitive, the company is focused on leveraging its service and truckload relationships to grow volumes and achieve profitability.

    07

    Q1 Specific Headwinds and Non-Recurring Impacts

    Consolidated results for Q1 were significantly impacted by several non-recurring📎 or temporary headwind📎s. These included an $18 million LTL claim development expense, a $4 million Truckload VAT reimbursement expense, and an estimated $12 million to $14 million net negative impact from severe winter weather and sharply rising fuel prices. These specific issues are not expected to recur in subsequent quarters, setting the stage for improved performance.

    AI-generated summary of the company’s earnings call. Not investment advice.