Sign in

You're signed outSign in or to get full access.

KT

Knight-Swift Transportation Holdings Inc. (KNX)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 adjusted EPS was $0.32 (GAAP $0.05), impacted by $0.10 from a $11.2M loss contingency and $12.0M U.S. Xpress claim settlements; total revenue was $1.927B (+2.7% y/y) and adjusted operating ratio was 93.8% .
  • LTL continued to scale: revenue ex-FSC +21.5% y/y, adjusted operating income +10.1% y/y, adjusted OR 90.6%, with brand consolidation under AAA Cooper and a $28.8M tradename impairment adjusted out of non-GAAP .
  • Truckload margin was negatively impacted by U.S. Xpress claims; legacy TL ran at 93.7% adjusted OR excluding U.S. Xpress; Logistics and Intermodal improved adjusted OR y/y through disciplined pricing and cost actions .
  • Q4 2025 guidance: adjusted EPS $0.34–$0.40; TL margin +250–350 bps seq; LTL revenue ex-FSC +10–15% y/y; effective tax rate ~23–24%; FY 2025 net cash capex cut to $475–$525M (from $525–$575M in Q2, and $575–$625M in Q1) .
  • Wall Street consensus via S&P Global was unavailable for EPS/revenue/EBITDA; however, actual adjusted EPS was below the company’s prior Q3 guidance ($0.36–$0.42), primarily due to insurance-related items not excluded from non-GAAP .

What Went Well and What Went Wrong

What Went Well

  • LTL volumes and yield improved: shipments/day +14.2% y/y; revenue per CWT ex-FSC +6.1%; adjusted operating income +10.1% y/y; adjusted OR improved 250 bps sequentially despite typical seasonal headwinds .
  • Logistics and Intermodal margin discipline: Logistics adjusted OR 94.3% (gross margin 17.8%); Intermodal adjusted OR improved 160 bps y/y and 430 bps sequentially as revenue/load rose and cost/network balance improved .
  • Strategic brand move in LTL: “We are adopting the strong and historically significant AAA Cooper brand across our entire LTL business... operating seamlessly on one system through one network...” — CEO Adam Miller .

What Went Wrong

  • Insurance-related headwinds: $12.0M higher U.S. Xpress auto liability claim costs (two large 2023 claims) reduced adjusted EPS by $0.05 and TL adjusted OR by 110 bps; $11.2M loss contingency from wind-down of third‑party carrier insurance business reduced adjusted EPS by another $0.05 .
  • GAAP impairments: $34.8M in tradename/software/lease impairments led to GAAP EPS $0.05; while excluded from adjusted EPS, these lowered consolidated GAAP operating income by 38.2% y/y .
  • LTL GAAP OR 100.4% due to the $28.8M tradename impairment despite core adjusted margin progress; early Q4 LTL demand appeared softer than normal seasonality per management .

Financial Results

MetricQ3 2024 (YoY)Q2 2025 (QoQ)Q3 2025 (Current)
Total Revenue ($USD Billions)$1.877B $1.862B $1.927B
Revenue ex-FSC ($USD Billions)$1.681B $1.672B $1.721B
Operating Income ($USD Millions)$81.4 $72.6 $50.3
Operating Ratio (%)95.7% 96.1% 97.4%
Adjusted Operating Income ($USD Millions)$101.7 $103.8 $106.0
Adjusted Operating Ratio (%)93.9% 93.8% 93.8%
GAAP Diluted EPS ($)$0.19 $0.21 $0.05
Adjusted EPS ($)$0.34 $0.35 $0.32

Segment performance (Q3 2025 vs Q3 2024):

SegmentQ3 2024Q3 2025
Truckload: Rev ex-FSC ($MM)$1,107.5 $1,084.4
Truckload: Op Inc ($MM)$45.4 $35.9
Truckload: Adj Op Inc ($MM)$48.5 $41.2
Truckload: OR / Adj OR (%)96.4 / 95.6 97.1 / 96.2
LTL: Rev ex-FSC ($MM)$280.2 $340.5
LTL: Op Inc ($MM)$24.6 $(1.7)
LTL: Adj Op Inc ($MM)$29.1 $32.1
LTL: OR / Adj OR (%)92.5 / 89.6 100.4 / 90.6
Logistics: Revenue ($MM)$143.6 $140.4
Logistics: Op Inc / Adj Op Inc ($MM)$6.7 / $7.8 $6.8 / $8.0
Logistics: OR / Adj OR (%)95.3 / 94.5 95.1 / 94.3
Intermodal: Revenue ($MM)$102.7 $94.1
Intermodal: Op Loss / Adj Op Inc ($MM)$(1.4) / $(1.4) $(2.3) / $0.2
Intermodal: OR / Adj OR (%)101.4 / 101.4 102.4 / 99.8
All Other: Revenue / Op Inc ($MM)$68.4 / $6.2 $88.9 / $11.6

Key operating KPIs:

KPIQ3 2024Q3 2025
TL Miles per Tractor20,469 21,337
TL Average Revenue per Tractor ($)48,543 50,864
LTL Shipments per Day21,907 25,028
LTL Rev per CWT ex-FSC ($)17.37 18.43
LTL Rev per Shipment ex-FSC ($)173.83 185.27
Logistics Rev per Load ($)1,898 1,967
Intermodal Avg Rev per Load ($)2,569 2,660
Intermodal Load Count39,968 35,375

Non-GAAP adjustments and tax:

  • Adjusted effective tax rate: 29.6% in Q3 2025; GAAP effective tax 47% (higher than expected due to combining LTL legal entities) .
  • Items impacting comparability: $34.8M impairments (excluded from non-GAAP), $11.2M insurance loss contingency and $12.0M claims costs (included in non-GAAP; total $0.10 adjusted EPS impact) .

Liquidity and capital:

  • YTD Sep 30, 2025: Operating cash flow $543.4M; Free cash flow $136.1M; Net cash capex $407.3M; Net Debt $2.7B; liquidity ~$1.0B; stockholders’ equity $7.1B .
  • FY 2025 net cash capex expectation reduced to $475–$525M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EPS ($)Q3 2025$0.36–$0.42 Actual $0.32 Miss vs company guidance
Adjusted EPS ($)Q4 2025N/A$0.34–$0.40 New
TL MarginQ4 2025N/AOR improves +250–350 bps seq New
TL Rev per Loaded MileQ4 2025N/ALow single-digit % seq improvement New
LTL Revenue ex-FSCQ4 2025N/A+10–15% y/y New
LTL Adjusted ORQ4 2025N/ASimilar to Q4 2024 New
LogisticsQ4 2025N/ARev & Adj Op Inc up mid-teens % seq New
IntermodalQ4 2025N/ALoad count improves mid-single-digit % seq; Adj OR stable New
All Other Op Inc (pre amort.)Q3 2025$15–$20M Q4 ~break-even Lowered sequentially
Gain on Sale ($MM)Q3 2025$18–$23 Q4 $18–$23 Maintained
Effective Tax Rate (Adjusted)Q3 202527–28% Q4 ~23–24% Lowered
FY Net Cash Capex ($MM)FY 2025$575–$625 (Q1) $525–$575 (Q2) $475–$525 (Q3)
Dividend per Share ($)Q3 2025$0.18 declared Aug 6; paid Sep 22 $0.18 declared Nov 7; payable Dec 22 Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2 2025)Current Period (Q3 2025)Trend
Regulatory enforcement (non-domiciled CDLs, English proficiency)Not prominent in Q1; Q2 noted market uncertainty and crosscurrents CEO: enforcement actions may accelerate capacity exit; pockets of tightening emerging; could shift supply-demand in 2026 Increasing focus; potential positive for asset-based carriers
Tariffs/macro seasonalityQ1: tariff drag in March dampened seasonality Q3: peak projects present but base demand stable; limited seasonality embedded in Q4 guide Mixed; cautious near-term
LTL expansion & brand consolidationQ1/Q2: aggressive door growth and network expansion; integration costs; improving OR trajectory Adopt AAA Cooper brand; adjusted OR improved 250 bps sequentially; early Q4 demand softness noted, pricing rational Scaling with margin initiatives; short-term volume sensitivity
Cost structure and technology (incl. AI)Q1/Q2: tightening equipment profile; technology-enabled efficiencies in TL CFO: lean/tech (including AI) to reduce G&A/overhead; fixed/variable CPM reduction goals; results expected to build into 2026 Structural margin tailwinds developing
Intermodal network balance/chassisQ2: converting to private chassis in five markets Q3: sequential load recovery +8.2%; adjusted OR +430 bps seq; investments in chassis and network balance Improving trajectory
Private fleet dynamicsLimited in Q1/Q2Anecdotal signs of plateau/reversal as replacement cycles bite and costs rise; outsourcing favorable Potential demand shift to for-hire

Management Commentary

  • CEO Adam Miller on capacity catalysts: “We believe there are several potential catalysts that may accelerate the exit of capacity over the next few quarters... enforcement of the English language proficiency requirement and... non-domiciled CDLs... could meaningfully impact capacity...” .
  • CEO on LTL brand: “We are adopting the strong and historically significant AAA Cooper brand across our entire LTL business...” .
  • CFO Andrew Hess on unusual items: “Our GAAP results... include $58 million of significant unusual items... impairments... loss contingency... US Xpress auto liability claims... negatively impacted our adjusted EPS by $0.10.” .
  • CFO on cost program: “We reduced our fixed cost spend... our goal is to reduce our equipment cost per mile year over year... deploying... lean and technology-based initiatives... including AI...” .

Q&A Highlights

  • Regulatory capacity impact: Management expects sustained enforcement to tighten capacity, particularly in one-way OTR; early pockets of tightening seen in brokerage lanes .
  • LTL margin vs seasonality: Sequential Q3 LTL margin improvement was due to labor, P&D tech, and cost reductions; Q4 seasonality likely stronger vs peers due to customer mix; pricing remains disciplined .
  • Adjusted EPS accounting: Company kept claims and loss contingency in non-GAAP (historical practice), hence $0.32 vs a hypothetical $0.42 if those were excluded; impairments were adjusted out .
  • Bid season and pricing: Early bid season seeing low single-digit rate improvements with volume focus; margin improvement in 2026 expected from both volume and later pricing as capacity tightens .
  • Peak projects: Some awarded projects underway; upside exists if mid-Q4 projects emerge as in prior year, but not assumed in guidance .

Estimates Context

  • S&P Global consensus estimates for EPS, revenue, and EBITDA for Q3 2025, Q4 2025, and Q1 2026 were unavailable at the time of review; therefore, we cannot present a comparison vs Wall Street consensus. Values retrieved from S&P Global.*
  • Relative to company guidance (provided with Q2 results), adjusted EPS of $0.32 was below the prior Q3 guidance range of $0.36–$0.42 due to insurance-related items included in non-GAAP .

Key Takeaways for Investors

  • Core margin resilience masked by insurance items: Adjusted operating income grew y/y despite GAAP headwinds; excluding insurance impacts, TL adjusted OR would have improved y/y, supporting the structural cost narrative .
  • LTL scaling with margin improvement: Sequential adjusted OR improvement and strong volume/yield support diversification; monitor early-Q4 softness and continued execution on labor and P&D tech initiatives .
  • Intermodal turning the corner: Sequential and y/y adjusted OR gains on pricing and network balance suggest margin recovery potential into 2026 .
  • Guidance de-risked: Q4 EPS guide embeds limited seasonality and TL margin improvement; capex cuts enhance FCF durability; tax rate lower in Q4 helps EPS optics .
  • Regulatory enforcement is a medium-term bull case: Potential capacity exit in one-way OTR could improve rate environment and asset utilization, benefiting KNX’s scale and service positioning .
  • Watch insurance/claims volatility: Management highlighted claims cost volatility industry-wide; continued safety improvements aim to turn insurance into competitive advantage .
  • Dividend continuity: $0.18 quarterly dividend maintained; near-term cash returns and improving FCF trend provide capital allocation stability .