Knight-Swift Transportation Q2 Earnings Call Highlights

Key Points

• Knight-Swift said the truckload market tightened sharply in Q2 2026, with spot rates, tender rejections and bid activity all improving. Management said the tighter environment was largely supply-driven, though demand signs are also starting to improve.
• Second-quarter earnings improved meaningfully, with adjusted EPS rising 80% year over year to $0.63 and consolidated adjusted operating ratio improving 240 basis points to 91.4%. The company also guided Q3 adjusted EPS to $0.71 to $0.77, above Q2 results.
• Truckload was the standout segment, benefiting from better pricing and network efficiency, while U.S. Xpress posted its first profitable quarter since acquisition. By contrast, Logistics was weaker and LTL was mixed, though both intermodal and LTL margins improved.

Knight-Swift Transportation NYSE: KNX executives said the truckload freight market tightened sharply during the second quarter of 2026, helping drive year-over-year earnings improvement and prompting the company to issue third-quarter adjusted earnings guidance above its second-quarter result.

Chief Executive Officer Adam Miller said spot rates have been “trending well ahead of normal seasonality,” tender rejection rates have reached levels not seen since 2021, and contractual bid activity has become increasingly supportive. He characterized the tightening as “largely supply-driven,” though he said signs of improving demand are beginning to appear.

Miller said the company’s own tender rejection rates ran at roughly twice the level of public market indications during the second quarter, which he cited as evidence that demand for Knight-Swift’s truckload service offering is outpacing the broader market. He said realized revenue per mile began to recover in the quarter, with revenue per mile accelerating in June as more recent bids took effect. Those bids, he said, largely reflected double-digit percentage pricing gains.

Second-Quarter Earnings Improve

Chief Financial Officer Andrew Hess said consolidated revenue, excluding truckload and LTL fuel surcharge, increased 5.5% year over year. GAAP earnings per diluted share were $0.26, up 23.8% from the prior-year period, while adjusted earnings per share were $0.63, an 80% increase. Consolidated adjusted operating ratio improved 240 basis points to 91.4%.

Hess said the earnings improvement was primarily driven by pricing and network efficiency gains across the company’s asset-based businesses. He said all reportable segments other than Logistics improved their operating margins and income contribution year over year.

The company projected adjusted earnings per share of $0.71 to $0.77 for the third quarter of 2026. Treasurer and Senior Vice President of Investor Relations Brad Stewart said the outlook reflects recent trends in volumes, spot rates, rate activity and driver hiring, as well as expected seasonal patterns in truckload and LTL services.

Truckload Segment Benefits From Pricing and Network Efficiency

Knight-Swift’s Truckload segment increased revenue, excluding fuel surcharge, by 2.8% year over year, while adjusted operating income rose 69.4%. Revenue per loaded mile, excluding fuel surcharge and intersegment transactions, increased 5.5% for the quarter.

Hess said the company reduced deadhead miles by 140 basis points, improving revenue per total mile. The segment’s adjusted operating ratio improved 360 basis points year over year to 91%, which he said was the best adjusted operating margin for the combined Truckload segment in more than three years.

Rate improvement accelerated in June, Hess said, with Truckload revenue per loaded mile, excluding fuel surcharge, up 8.4% year over year and revenue excluding fuel surcharge per tractor up 10.1%. He said results were stronger in the over-the-road service, which he described as the most capacity-constrained portion of the market.

Hess also said U.S. Xpress is making greater rate gains than Knight-Swift’s legacy brands, consistent with the company’s acquisition thesis. He said the U.S. Xpress over-the-road division posted its first profitable quarter since the acquisition.

During the question-and-answer portion of the call, Miller said Knight-Swift started the year with spot market exposure of about 10% and is now in the mid-teens. He said the company is continuing to see mini-bids, turnback bids and project activity as shippers look for capacity.

LTL, Logistics and Intermodal Results Diverge

In the LTL segment, revenue excluding fuel surcharge declined 1.4% year over year, driven by a 3.7% decrease in shipments per day as the company metered certain volumes to improve freight mix and network efficiency. Daily tonnage increased 4%, weight per shipment rose 7.9%, and length of haul increased 5.3%.

Revenue per hundredweight, excluding fuel surcharge, declined 4.2%, which Hess attributed to the increase in weight per shipment, while revenue per shipment rose 3.4%. The segment’s adjusted operating ratio improved 100 basis points to 92.1%, and adjusted operating income increased 13.3%.

Hess said LTL demand has been generally stable, with “pockets of improvement” and some indirect benefits from truckload tightness. In response to an analyst question, he said shipments per day improved through the quarter, with year-over-year declines narrowing from 6.5% in April to 3.2% in May and 1.3% in June.

The Logistics segment grew revenue 8.9% year over year, driven by a 29.6% increase in revenue per load, partially offset by a 16.4% decline in load count. Stewart said the company maintained a disciplined approach to profitability and carrier quality. Gross margin declined to 15.4%, down 350 basis points year over year, and the adjusted operating ratio deteriorated 160 basis points to 96.4%.

Intermodal revenue increased 34.9% year over year, with load count up 19.6% and revenue per load up 12.8%. The segment improved its operating ratio by 470 basis points. Stewart said load count improved progressively through the quarter, while core pricing also improved. He said intermodal pricing remains more competitive than truckload, but the company is seeing opportunities from mini-bids, turnback bids and modal conversion.

Regulatory and Legal Changes Seen Tightening Capacity

Miller said the company expects ongoing federal efforts to address invalid commercial driver’s licenses, cabotage, non-compliant CDL schools and hours-of-service abuses to continue affecting capacity. He said those initiatives should have an “outsized impact” on the one-way truckload market, particularly among lower-priced capacity.

Miller also discussed the Supreme Court’s Montgomery ruling, saying it could tighten the market further by increasing insurance costs and raising shipper and broker selection standards. He said the ruling should not add cost to Knight-Swift’s asset-based business because of the company’s longstanding safety investments, but could create opportunities as shippers favor quality asset-based capacity.

For brokerage operations, Miller said the ruling could change economic incentives across a large portion of the industry. He said some shippers are asking for higher insurance limits, seeking more information on carrier vetting practices, or requesting the right to approve broker carriers before assignment. He also said Knight-Swift’s brokerage insurance renewal was affected shortly after the ruling, with premium rates increasing to multiples of the prior coverage.

Driver Availability and Capital Structure in Focus

Miller said recruiting and retaining quality drivers has become more challenging as market conditions tighten. He said the company is making targeted investments beginning in the third quarter, generally in the form of hiring and productivity incentives, while seeking to preserve margin recovery.

In response to analyst questions, Miller said the current driver labor market differs from 2020 and 2021, when carriers were competing with government stimulus and a tighter overall labor market. He said driver pay increases are expected to be more targeted this cycle, and not as broad-based as in the prior upcycle.

Stewart also reviewed the company’s second-quarter convertible bond issuance. He said Knight-Swift issued bonds at 1% to repay floating-rate debt around 5%, which the company expects to generate approximately $44 million in annual pretax savings after deal costs. The company also used $107 million of proceeds to purchase a call spread, increasing the effective conversion price from roughly $80 per share to $105 per share.

About Knight-Swift Transportation (NYSE:KNX)

Knight-Swift Transportation Holdings Inc NYSE: KNX is one of North America's largest asset-based truckload carriers, offering a wide range of transportation and logistics services. The company was formed in 2017 through the merger of Knight Transportation and Swift Transportation, each with decades of experience in long-haul dry van and refrigerated freight. Since the merger, Knight-Swift has pursued a growth strategy that includes fleet expansions, targeted acquisitions, and investments in technology to enhance service reliability and network efficiency.

The company's core business activities include full truckload operations for dry van, temperature-controlled and flatbed shipments.

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