Knight-Swift blames trade uncertainty for reduced Q2 outlook, no Q3 guide

Knight-Swift Transportation said changes in trade policy are weighing on customer decision making. The Phoenix-based multimodal transportation provider beat expectations for the first quarter, according to an earnings report sent out Wednesday after the market closed, but reeled in its second-quarter guidance and didn’t provide a third-quarter outlook.

Knight-Swift (NYSE: KNX) reported adjusted earnings per share of 28 cents for the first quarter. The result came in below management’s guidance range of 29 to 33 cents but was 4 cents higher than the consensus estimate.

The number excluded acquisition-related expenses but included gains on equipment sales of $15.5 million, an $8.8 million increase, or a 4-cent tailwind.

The company lowered second-quarter adjusted EPS guidance to 30 to 38 cents (from 46 to 50 cents) and didn’t provide a third-quarter guide given a lack of visibility. The second-quarter consensus estimate was 41 cents at the time of the print.

“Because of the significant uncertainty created by the current fluid trade policy situation and its implications for inflation, consumer demand, and demand from our customers, we are providing a wider range than normal for the next quarter’s earnings and are not providing guidance for the third quarter,” a news release stated.

It plans to issue third-quarter guidance when it reports second-quarter results and will resume issuing guidance for two quarters out if it regains adequate visibility.

The truckload unit saw a 4% y/y revenue decline (excluding fuel) as average tractors in service were down 6%, partially offset by a 2% increase in revenue per tractor. The company has been focused on culling the fleet count to improve asset utilization.

The TL unit recorded a 95.6% operating ratio (inverse of operating margin), which was 170 basis points better y/y. Contract rates were up and total revenue per loaded mile (excluding fuel) increased y/y for the first time in 10 quarters. It also reported an operating profit at U.S. Xpress for the first time since it was acquired in July 2023.

“Following a solid start to the year, conditions grew more challenging as weather disruptions in January and February gave way to a tariff drag on March activity that dampened the typical seasonal build in freight volumes,” said CEO Adam Miller in a news release. “Our customers are grappling with a fluid trade policy situation that is causing some to delay decisions while others manage inventories more tightly out of an abundance of caution.”

The company said TL demand was stable in the first half of April.

The less-than-truckload unit reported a 27% y/y revenue increase due to an acquisition. The unit’s OR deteriorated 420 bps y/y to 94.2% due to startup costs at new facilities and lingering integration costs from the acquisition. It opened seven new terminals in the quarter.

The company said operations improved as the quarter progressed, allowing it to achieve a 90.6% adjusted OR in March.

Knight-Swift will host a conference call at 5:30 p.m. EDT on Wednesday to discuss first-quarter results.

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