Knight-Swift Transportation results weighed down by insurance, Truckload segments

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Knight-Swift Transportation (NYSE:KNX) shares were trading ~2% lower in Wednesday’s after-hours trade after the trucking company reported an unadjusted loss of $10.7M attributed to the poor performance of its third-party insurance business and Truckload segment, and set profit guidance below expectations.
Total revenue increased by almost 11% from the same quarter last year to $1.93B, missing the Street’s consensus estimate by $30M. Less operating expenses of $1.61B, adjusted earnings fell to just $0.09 per share versus $1.00 per share in the same quarter last year. This was below the consensus estimate of $0.44.
“The Truckload segment continues to experience an extremely difficult environment [with freight demand] slowing meaningfully in December, ” the company’s CEO said. As a result, operating income in this segment fell 58.7% year-over-year.
The $83.5M operating loss within the company’s “All Other Segments” was primarily driven by a $71.7M operating loss in its third-party insurance business. Because of the negative results, Knight-Swift has decided to exit the business, cease all third-party insurance operations, and cancel any remaining policies by the end of Q1 2024.
On the plus side, the less-than-truckload, or LTL business, continues to see positive volume and pricing. This segment saw a 13.8% increase in sales for the quarter to $232M.
As of the end of the quarter, the company had a balance of $1.2B in unrestricted cash and $7.1B in stockholders’ equity. The gain on the sale of revenue equipment was $18M versus $19.5M in the same quarter last year.
For Q1, the company sets EPS guidance at $0.37 to $0.41 versus a consensus estimate of $0.44. For Q2, the company expects to report a profit of $0.53-$0.57 per share versus a consensus estimate of $0.64.

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