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The call balanced near-term, largely one-time headwinds (adverse claim ruling, VAT decision, weather/fuel impacts and securitization costs) and YoY earnings pressure against clear signs of market inflection and operational progress. Management highlighted strengthening truckload pricing, improved LTL tonnage and mix, intermodal momentum, structural cost reductions, tighter carrier qualifications and a constructive Q2 earnings guide ($0.45–$0.49 adjusted EPS). While several nonrecurring and timing-related negatives materially depressed Q1 results, the company presented a credible path to margin recovery driven by capacity reduction, bid-renewal momentum and operational leverage across segments.
Knight‑Swift guided second‑quarter adjusted EPS of $0.45–$0.49 (a larger‑than‑normal sequential increase versus Q1 adjusted EPS of $0.09 and Q1 GAAP loss of $0.01), citing improving freight fundamentals and an expectation that truckload contractual rates will begin to reprice late in Q2 into the back half of 2026; management said bid targets have moved from low‑mid single digits to high‑single/low‑double‑digit increases and noted spot exposure exiting Q1 in the low‑to‑mid‑teens. Q1 was impacted by $18M of LTL claim development, $4M of truckload VAT expense and an estimated $12–14M of weather/fuel disruption, with consolidated adjusted operating income down ~$37M YoY (operating income down ~$38M) and a consolidated adjusted operating ratio of 97% (up 230 bps YoY). Segment metrics called out include Truckload OR 96.3% (worse 70 bps YoY), revenue per loaded mile +1.4% and loaded miles −1.8%; LTL revenue ex‑fuel +2.6%, weight per shipment +5.2%, length‑of‑haul +8.5% and March tonnage +7% YoY; Logistics revenue −9.9% (volumes −18.9%, revenue per load +10.4%, gross margin 16.6%); Intermodal revenue +2.7% (revenue per load +1.6%, load count +1.2%, March load count +8.4%); All‑Other revenue +13.5% (including ~$5M of securitization costs). Tax rates cited were GAAP 7% and non‑GAAP 28%, and management said they expect margin expansion (targeting sub‑90 OR during the year) as contract resets and improving network efficiency flow through.
Late in Q1 management saw mid-single-digit rate increases with volumes holding or growing; company shifted bid targets to high single- to low double-digit percentage increases as incumbents revisit contracts and turndown/turn-back activity increases.
Company projects Q2 adjusted EPS of $0.45 to $0.49, representing a larger-than-normal sequential increase driven by nonrecurring Q1 headwinds being behind them and improving freight fundamentals.
Truckload revenue per loaded mile (ex-fuel) improved 1.4% year-over-year; miles per tractor improved for the seventh consecutive quarter, and adjusted operating ratio only degraded 70 bps to 96.3% despite weather/fuel headwinds.
LTL revenue excluding fuel grew 2.6% YoY driven by a 5.2% increase in weight per shipment and an 8.5% increase in length of haul; March average daily tonnage was up ~7% YoY and Q1 tonnage built sequentially (Jan +1.6%, Feb +2.6%, Mar +6.9%).
Intermodal revenue grew 2.7% YoY with load count up 1.2% and revenue per load up 1.6%; March load count accelerated +8.4% YoY and operating ratio improved 50 bps YoY.
Although Logistics revenue declined YoY, gross margin recovered 110 bps sequentially from Q4 and management reports gross margin of 16.6% for Q1 with an adjusted operating ratio of 96.2% (degraded only 70 bps YoY).
Company significantly tightened carrier qualification standards (carrier base down ~30% since the beginning of the year) and emphasized safety initiatives (hair-follicle testing adoption internally) expected to improve long-term service quality and reduce claims/insurance costs.
Management cites two years of structural cost reductions and ongoing opportunities to drive incremental margin as the market improves; LTL shows improving purchased transportation %, equipment rent and variable labor per shipment year-over-year.
Good afternoon. My name is Sarah, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Knight-Swift Transportation First Quarter 2026 Earnings Call. [Operator Instructions] Speakers from today's call will be Adam Miller, Chief Executive Officer; Andrew Hess, Chief Financial Officer; Brad Stewart, Treasurer and Senior VP of Investor Relations. Mr. Stewart, the meeting is now yours.
Thank you, Sarah. Good afternoon, everyone, and thank you for joining our first quarter 2026 earnings call. Today, we plan to discuss topics related to the results of the quarter, current market conditions and our earnings guidance. We have slides to accompany this call, which are posted on our investor website. Our call is scheduled to last 1 hour. Following our commentary, we will answer questions related to these topics. In order to get to as many participants as possible, we limit the questions to one per participant. If you have a second question, please feel free to get back in the queue.
We will answer as many questions as time allows. If we are not able to get to your question due to time restrictions, you may call (602) 606-6349. To begin, I will first refer you to the disclosures on Slide 2 of the presentation and note the following: this conference call and presentation contain forward-looking statements made by the company that involve risks, assumptions and uncertainties that are difficult to predict. Investors are directed to the information contained in Item 1A Risk Factors or Part 1 of the company's annual report on Form 10-K filed with...