Knight-Swift Transportation Holdings Inc. (NYSE: KNX) has recently made adjustments to its earnings guidance for the first and second quarters of 2024. The Company provided insights into the factors influencing these updates and offered a glimpse into its expectations for the upcoming quarters.
Adjusted EPS Revision
The preliminary results indicate that the Adjusted EPS for the first quarter of 2024 will range from $0.11 to $0.12. This update reflects a significant shift from the previously forecasted range of $0.37 to $0.41. The adjustment includes a loss of $0.08 per share attributable to the closure of the third-party insurance business at the end of the quarter. Excluding this loss, the expected Adjusted EPS range would be $0.19 to $0.20.
Market Challenges
The truckload industry confronts persistent challenges, characterized by oversupply and demanding market conditions. Weather disruptions in January had a more substantial impact than initially assessed, leading to decreased volumes and increased operating costs. Furthermore, early bid season dynamics exerted pressure on freight rates, with some shippers seeking further rate reductions. Knight-Swift’s strategic stance on unsustainable contractual rates resulted in the reallocation of capacity to the spot market, intensifying pressure on revenue per mile and utilization.
Segment Performance
While the less-than-truckload (LTL) segment exhibited positive volume and yield trends year-over-year, it faced significant weather-related disruptions. Although volume recovery was notable, it couldn’t fully mitigate the impact on operating costs, resulting in lower-than-expected operating income. On the other hand, the logistics segment experienced volume pressure due to diverted loads to offset contractual volume losses in the truckload segment.
Revised Outlook for Q2
Looking ahead to the second quarter of 2024, Knight-Swift anticipates Adjusted EPS ranging from $0.26 to $0.30, contrasting with the previously announced range of $0.53 to $0.57. This revision considers ongoing market challenges, bid season trends, and adjustments for less pronounced seasonality in the truckload market.
Forward-Looking Statements
Knight-Swift Transportation emphasized that the Adjusted EPS ranges are based on current market conditions, recent trends, and management’s beliefs and assumptions. However, it’s crucial to recognize the inherent uncertainties and risks associated with forward-looking statements.
