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Knight-Swift (KNX) Q2 Earnings Beat, Revenues Decline Y/Y

Knight-Swift Transportation Holdings Inc.’s KNX second-quarter 2020 earnings (excluding 10 cents from non-recurring items) of 57 cents per share beat the Zacks Consensus Estimate of 35 cents. However, the bottom line dipped 1.7% year over year due to persistent weakness in the freight environment, aggravated by the coronavirus pandemic.

Meanwhile, total revenues of $1,060.7 million missed the Zacks Consensus Estimate of $1,078.6 million and fell 14.6% year over year with sluggish revenues at each of its three segments.

Total operating expenses declined 15.4% year over year to $958.53 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved to 87.6% from 87.8% in the year-ago quarter. Lower the value of the metric, the better. Knight-Swift’s adjusted operating income declined 9.5% year over year to $123.96 million.

This Zacks Rank #3 (Hold) company exited the second quarter with cash and cash equivalents of $117.76 million compared with $159.72 million at the end of 2019. During the first half of 2020, the company returned $27.7 million to its shareholders in the form of dividends and $34.6 million through share buybacks. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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) $816.03 million, down 9.4% year over year. Results were hampered by 6.5% decline in average revenue per tractor. Average revenue per tractor was weak in the quarter due to a 3.9% decrease in miles per tractor. Adjusted segmental operating income also dropped 7.9% to $118.17 million. Adjusted operating ratio (operating expenses as a percentage of revenues) improved 30 basis points (bps) to 85.5%.

Revenues in the Logistics segment (before inter-segment transactions) amounted to $67.07 million, down 16.5% year over year due to 14.2% decrease in brokerage revenues. While adjusted operating ratio deteriorated 180 bps to 95.5%, segmental operating income slumped 39.5% to $3.04 million.

Revenues in the Intermodal segment (excluding inter-segment transactions) totaled $82.7 million, down 29.8% year over year as a result of load count and revenue per load declining 23.9% and 7.8% respectively. Segmental adjusted operating ratio deteriorated 890 bps to 105.3%. Segmental operating loss was $4.41 million, against operating income of $4.19 million in the year-ago period.

2020 Outlook

The company expects adjusted earnings per share in the band of $2.15-$2.30 for the full year. The Zacks Consensus estimate for the same stands at $1.74. Net capital expenditures are anticipated between $500 million and $525 million with deferral in certain investments. Previously, the same was expected in the range of $515-$540 million.

Sectorial Snapshot

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

Delta, carrying a Zacks Rank #4 (Sell), incurred a loss (excluding $4.58 from non-recurring items) of $4.43 per share in the June quarter, wider than the Zacks Consensus Estimate of a loss of $3.97. Total revenues in the quarter came in at $1,468 million, surpassing the Zacks Consensus Estimate of $1,400.8 million.

J.B. Hunt, carrying a Zacks Rank #3, reported second-quarter earnings of $1.14 per share, which surpassed the Zacks Consensus Estimate by 31 cents. Total revenues of $2,145.6 million also beat the Zacks Consensus Estimate of $2,060.9 million.

Kansas City Southern’s second-quarter earnings (excluding a penny from non-recurring items) of $1.15 per share beat the Zacks Consensus Estimate of $1.12. This Zacks Rank #3 company’s total revenues of $547.9 million lagged the Zacks Consensus Estimate of $550.2 million.

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