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    KNX
    Earnings call· Jun 2026(Q2 FY26)

    Knight-Swift Transportation Holdings Inc. KNX

    Jul 22, 2026 Source

    Executive summary

    Knight-Swift Transportation Q2 FY26 — Strong Truckload Recovery and Margin Expansion

    Knight-Swift Transportation reported a strong Q2 FY26, driven by a rapidly improving truckload freight market characterized by tightening supply and accelerating contract rates. The company's asset-based businesses, particularly Truckload, demonstrated significant margin expansion and network efficiency gains. Management is strategically addressing driver availability and leveraging regulatory changes like the Montgomery ruling to enhance its competitive position, while also navigating potential fuel cost headwinds in the upcoming quarter.

    Highlights

    5

    • Consolidated revenue, excluding fuel surcharge, increased 5.5% year-over-year.

    • Adjusted operating income grew $47.2 million or 45.5% year-over-year.

    • Adjusted EPS increased 80% year-over-year to $0.63.

    • Consolidated adjusted operating ratio improved 240 basis points year-over-year to 91.4%.

    • Truckload segment adjusted operating income grew 69.4% year-over-year, with its adjusted operating ratio improving 360 basis points to 91%.

    Concerns

    5

    • Logistics segment adjusted operating ratio degraded 160 basis points year-over-year to 96.4%.

    • Logistics gross margin declined 350 basis points year-over-year to 15.4%.

    • All Other segments reported an operating loss due to $5.8 million in securitization costs and an $18.2 million severance charge.

    • Driver availability is becoming a utilization and volume headwind, requiring targeted actions in Q3.

    • Fuel is anticipated to be a quarter-over-quarter headwind in Q3 based on recent trends.

    Guidance & targets

    3
    CategoryTargetConfidence
    Adjusted EPS
    $0.71 to $0.77
    high materiality
    High
    Truckload revenue growth (ex-fuel surcharge)
    mid-single digits
    medium materiality
    Medium
    LTL fuel surcharge impact
    quarter-over-quarter headwind
    low materiality
    Medium

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Consolidated
    Consolidated revenue, excluding truckload and LTL fuel surcharge, increased. The improvement in earnings was primarily driven by pricing and network efficiency gains across asset-based businesses.
    Operating income: +$32.2 million (+44.4% YoY)Adjusted operating income: +$47.2 million (+45.5% YoY)
    		—+5.5%——
    Truckload
    Revenue growth excluding fuel surcharge, driven by disciplined network management and strategic capacity deployment. Adjusted operating ratio improved 360 basis points year-over-year, yielding the best adjusted operating margin in over 3 years. US Xpress Over-the-Road division achieved its first profitable quarter since acquisition.
    Adjusted operating income: +69.4% YoY
    		—+2.8%—91%
    LTL
    Revenue declined excluding fuel surcharge, driven by a decrease in shipments per day as certain volumes were metered for freight mix and network efficiency. Adjusted operating ratio improved 100 basis points year-over-year. Freight mix continues to improve, and rate renewals remained steady at a mid-single-digit pace.
    Adjusted operating income: +13.3%
    		—-1.4%—92.1%
    Logistics
    Revenue grew year-over-year, driven by an increase in revenue per load, partially offset by a decline in load count due to a disciplined approach to profitability and carrier quality. Adjusted operating ratio degraded 160 basis points year-over-year.
    		$8.9%——96.4%
    Intermodal
    Revenue grew significantly, driven by increased load count, revenue per load, and improvements in costs and network efficiency. Load count and core pricing improved progressively throughout the quarter. The pricing environment remains more competitive than truckload.
    Operating ratio improved: 470 bps YoY
    		—+34.9%——
    All Other
    Revenue reached its highest mark in over 3 years, driven by growth in warehousing and trailer leasing services. Operating results declined to an operating loss due to the inclusion of $5.8 million for the accounts receivable securitization program and an $18.2 million severance charge.
    		—+41.8%—operating loss

    Operational metrics

    20
    GAAP EPS
    $0.26+23.8% YoY
    Q2 FY26

    GAAP earnings per diluted share for the second quarter.

    Adjusted EPS
    $0.63+80% YoY
    Q2 FY26

    Adjusted earnings per diluted share for the second quarter.

    Effective tax rate (GAAP)
    34.1%
    Q2 FY26

    Effective tax rate on GAAP results.

    Effective tax rate (non-GAAP)
    24.4%
    Q2 FY26

    Non-GAAP effective tax rate.

    Intermodal revenue growth
    +21.2%sequentially
    Q2 FY26

    Intermodal segment revenue growth sequentially over Q1.

    Deadhead miles reduction
    140
    Q2 FY26

    Reduction in deadhead miles, amplifying margin opportunity.

    Loaded miles per tractor
    improved7th consecutive quarter YoY
    Q2 FY26

    Loaded miles per tractor continued its healthy trend.

    LTL weight per shipment
    +7.9%YoY
    Q2 FY26

    Improvement in freight mix drove growth in weight per shipment.

    LTL length of haul
    +5.3%YoY
    Q2 FY26

    Improvement in freight mix drove growth in length of haul.

    LTL revenue per hundredweight (ex-fuel surcharge)
    -4.2%
    Q2 FY26

    Revenue per hundredweight fell, driven by the strong increase in weight per shipment.

    LTL revenue per shipment (ex-fuel surcharge)
    +3.4%YoY
    Q2 FY26

    Revenue per shipment increased year-over-year.

    Logistics gross margin
    15.4%-350 bps YoY, -120 bps QoQ
    Q2 FY26

    Gross margin for the Logistics segment declined due to tightness in third-party carrier capacity.

    Accounts receivable securitization program cost
    $5.8M
    Q2 FY26

    Cost included in All Other segments, contributing to an operating loss.

    Severance charge
    $18.2M
    Q2 FY26

    Primarily related to the retirement of the former Executive Chairman, contributing to an operating loss in All Other segments.

    Convertible bond annual savings
    $44M
    annual

    Expected annual savings from issuing bonds at 1% to pay off floating rate debt around 5%.

    Call spread purchase
    $107M
    Q2 FY26

    Proceeds used to purchase a call spread to increase the effective conversion price of the convertible bonds.

    Effective conversion price
    $105from $80/share
    Q2 FY26

    Increased effective conversion price of convertible bonds due to call spread purchase.

    Dilution at $115 stock price
    1%
    hypothetical

    Expected dilution of current shares outstanding if stock appreciates 87% from issuance to $115.

    Spot market exposure
    mid-teensfrom ~10% at start of year
    Q2 FY26

    Increased exposure to the robust spot market.

    Truckload operating ratio
    high 80s
    Q3 FY26

    Expected operating ratio for the aggregate truckload business, including dedicated, in Q3.

    Industry KPIs

    8
    MetricValueDetails
    Safety—
    Volume—
    Operating ratio91.4%%
    Merger synergy metrics—
    Revenue per load ex fuel—
    Fuel surcharge diesel price—
    Intermodal truckload volume—
    Labor productivity headcount—

    Deals & partnerships

    1
    US XpressAcquisition of a truckload carrier to enhance scale and market position.

    The acquisition was a key pillar in the company's thesis, particularly for resetting rates given the relative starting points of pricing portfolios.

    Risks & headwinds

    3
    Montgomery ruling impact on insurance and vettingOngoing

    Premium rates increased to multiples of prior coverage within weeks of the decision; insurers seeking exclusions regarding carrier vetting practices.

    Mitigation: Long-standing commitment to safety and significant investments in support of it; rigorous carrier vetting practices; expectation of incremental opportunities outweighing incremental costs for asset division.

    Driver availability and retentionQ3 FY26 and beyond

    Constrained driver market affecting over-the-road, dedicated, LTL, and drayage; becoming a utilization and volume headwind.

    Mitigation: Making thoughtful, targeted investments in Q3 for hiring and productivity incentives; leveraging terminal network, academies, diverse service offerings, and new AI tools for recruiting and training.

    Fuel price volatilityQ3 FY26

    Anticipated quarter-over-quarter headwind in Q3.

    Mitigation: Aim to offset margin headwind with further efficiency gains, volume recovery, and pricing progress.

    What to watch in Q3 FY26

    5

    Truckload rate acceleration

    September and Q4 FY26
    CurrentRevenue per loaded mile ex-fuel +8.4% YoY in June
    TargetDouble-digit rate increases

    Why it matters

    Indicates the pace of market recovery and the company's ability to capture pricing power, crucial for margin expansion.

    I think rates could start to trend in that double-digit range as you get into September. And then I feel like if things play out as expected, fourth quarter would really see a ramp-up as you'd expect to have a good amount of projects and a heavy amount of spot opportunities and even some backup opportunities as we go into the fourth quarter.

    Q&A highlights

    5

    How quickly can utilization improve and new pricing from contracts roll in, given the deadhead impact and timing of new bids?

    Management explained that network efficiency gains, driven by enhanced planning tools and a favorable market, are reducing deadhead miles and improving loaded miles per tractor. Rate improvement accelerated in June with new bids, and ongoing mini bids, turnback bids, and spot market opportunities will continue to drive rate recovery, with normal seasonality expected to lead to a strong peak season in Q4.

    “In terms of the pace of how the rates are playing out, I think as we touched on in the prepared remarks, we saw that really accelerate in June. We had a lot of the bid activity get implemented in June, and we'll have some additional activity get implemented in July.”

    asked by Ken Hoexter · answered by Adam Miller

    2 min read5 chapters

    Detailed Narrative

    01

    Truckload Market Dynamics and Pricing Momentum

    The truckload freight market has rapidly progressed, with spot rates trading well ahead of normal seasonality and tender rejection rates reaching levels not seen since 2021. Contractual bid activity is increasingly supportive, largely driven by supply constraints, though demand signs are emerging. Revenue per mile began recovering in Q2, accelerating in June with double-digit percentage gains from recent bids. The company is focused on ongoing rate recovery through mini bids, turnback bids, and rate reviews on existing business, with spot market exposure increasing from ~10% to mid-teens.

    02

    Impact of Regulatory Changes and Montgomery Ruling

    Efforts by FMCSA and DOT to prevent invalid CDLs, address cabotage, and shut down noncompliant CDL schools are expected to continue, disproportionately impacting the one-way truckload market and lowest-price capacity. The recent Montgomery ruling is anticipated to further tighten the market by increasing insurance costs and raising shipper/broker selection standards, squeezing out marginal carriers. Knight-Swift, with its long-standing commitment to safety, expects this ruling to bring future opportunities to its asset-based business, while potentially structurally changing economic incentives for less rigorous brokers.

    03

    Driver Market and Retention Strategies

    The constrained driver market is affecting over-the-road, dedicated, LTL, and drayage segments. Knight-Swift is making thoughtful, targeted investments in Q3, generally in the form of hiring and productivity incentives, to improve seated truck count and opportunity capture. The company aims to restore margins while calibrating investments based on sustainable rate gains, noting that the current labor market differs from the 2021 cycle, requiring more precise and data-based driver pay decisions rather than broad-based increases.

    04

    LTL and Intermodal Segment Performance

    The LTL sector, while not as sharply tightened as truckload, is seeing stable demand with pockets of improvement. The company is optimizing freight mix and network efficiency, leading to a 100 basis point improvement in adjusted operating ratio. Intermodal revenue grew significantly, driven by increased load count and revenue per load, alongside cost and network efficiency improvements. The intermodal pricing environment remains competitive, but the company leverages its service and truckload relationships for volume growth and modal conversion opportunities.

    05

    Logistics Segment and Convertible Bond Issuance

    The Logistics segment grew revenue but saw its operating ratio degrade due to tightness in third-party carrier capacity and declining gross margins. The company maintains a disciplined approach to profitability and carrier quality, expecting to benefit from share gains as less robust brokers exit the market post-Montgomery ruling. Knight-Swift also issued convertible bonds at 1% to pay off floating rate debt around 5%, expecting $44 million in annual pretax savings, extending maturities, and reducing floating rate exposure. A $107 million call spread purchase increased the effective conversion price to $105 per share.

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