Knight-swift Transportation Holdings Inc. · NYSE:KNX
Knight-swift Transportation — Q4 2022 Earnings Presentation
25 slides from Knight-swift Transportation's earnings presentation, Jan 25, 2023
Slide 1: Fourth Quarter 2022
KNIGHT TRANSPORTATION ISWIET™ KNIGHT * SWIFT*® AAA COOPER* BARR-NUNNeABILENE*® MME Fourth Quarter 2022
Slide 2: Disclosure
Disclosure This presentation, including documents incorporated herein by reference, will contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements
Slide 3: KNX Q4 2022 Comparative Results
KNX Q4 2022 Comparative Results Solid results in a challenging freight environment Total Revenue Revenue xFSC Operating Income Adj. Operating Inc. 1 (4.0%) (9.5%) (40.8%) (39.3%) 1,817 1,744 342 1,675 1,516 360 In millions In millions 203 219 4Q21 4Q22 4Q21 4Q22 4Q21 4Q22 4Q21 4Q22 Net Income Adj. N
Slide 4: Segment Overview
Segment Overview Strong margins in a muted peak season Truckload Less-than-Truckload Q4 2022 Revenue Diversification Q4 2022 FY 2022 Q4 2022 FY 2022 Revenue xFSR 2 $ 920.8M $ 3,811.6M Revenue xFSR $ 204.0M $ 867.3M Truckload 981.5 57.3 % Adjusted Op Income 1 $ 159.7M $ 747.9M Adjusted Op Income 1 $
Slide 5: Operating Performance - Truckload
Operating Performance - Truckload Truckload continuing to generate industry-leading margins Truckload Financial Metrics • 82.7% Adjusted Operating Ratio1 in Q4 2022 compared to 74.7% the previous year Q4 2022 Q4 2021 Change (Dollars in thousands) • 36.4% year-over-year decrease in Adjusted Operating
Slide 6: Operating Performance - LTL
Operating Performance - LTL Steady improvements continue while positioning for growth LTL Financial Metrics • 85.5% Adjusted Operating Ratio1 in Q4 2022 Q4 2022 Q4 2021 Change • $29.6M of Adjusted Operating Income1 (Dollars in thousands) • 7.4% increase in LTL Revenue xFSC per shipment Revenue xFSC
Slide 7: Operating Performance - Logistics
Operating Performance - Logistics Logistics finding success in a tough freight environment Logistics Financial Metrics 1 • 86.4% Adjusted Operating Ratio during the quarter, a Q4 2022 Q4 2021 Change 150 basis point improvement from the prior year; 40 (Dollars in thousands) basis point sequential imp
Slide 8: Operating Performance - Intermodal
Operating Performance - Intermodal Soft fourth quarter Intermodal demand Intermodal Financial Metrics • 8.6% decrease in Revenue excluding intersegment Q4 2022 Q4 2021 Change transactions (Dollars in thousands) • 94.7% operating ratio during Q4 2022 compared Revenue ex intersegment $112,916 $123,564
Slide 9: Tapping into New Growth Verticals while Diversifying
Tapping into New Growth Verticals while Diversifying 69% revenue growth in 2022 Q4 Non-Reportable Performance: Non Reportable Revenue and Operating Income Trends • 32.1% increase in revenue to $131.5M $600M $75M • ($11.6M) in operating loss $500M $50M ◦ ($15.4M) adjustment in third-party insurance r
Slide 10: Diversification Leading to Consistent Performance
Diversification Leading to Consistent Performance Continued focus on growing LTL network and less asset intensive services while leveraging core Truckload business Percent of Adjusted Operating Income 1 Adjusted EPS 2018 - 2022 100% $5.50 $5.00 80% $4.50 $4.00 60% $3.50 $3.00 $2.50 40% $2.00 $1.50 2
Slide 11: Capital Allocation
Capital Allocation Significant reduction in debt and leases while increasing value to shareholders Full Year 2022: Free Cash Flow 1 • Generated Free Cash Flow1 of $818.7M 2018 - 2022 $1,250M • Increased dividend 20% to $0.12 generating a total return to shareholders of $78.3M $1,000M • Repurchased $
Slide 12: KNX Creating Value for Shareholders
KNX Creating Value for Shareholders Internal investments and acquisitions have driven a FY 2022 return on net tangible assets 1 of 19.0% • Growing less asset intensive business 25% $1,000 ◦ Power Only ◦ Logistics ◦ Iron Services 20% $800 ◦ Warehousing • Acquiring businesses and improving results 15%
Slide 13: Market Outlook 2023
Market Outlook 2023 • Continued softness in freight demand with few non-contract opportunities through the first half of 2023 as shippers work through higher inventory levels • Freight volumes improve in the 2nd half of the year with a more typical peak season • Spot pricing troughs in Q1 and builds
Slide 14: 2023 Guidance
2023 Guidance Expected Adjusted EPS for 2023 to be in the range of $4.05 - $4.25 2023 Guidance Assumptions • Truckload rates continue to be pressured with year-over-year decreases in the mid-to-high single digits before inflecting positive in the fourth quarter • Truckload tractor count stable with
Slide 15: Appendix
Appendix
Slide 16: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Operating Income and Adjusted Operating Ratio 1 2 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, 2022 2021 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 1,743,623 $ 1,816,859 $ 7,428,582 $ 5,998,019 Total operating expenses (1
Slide 17: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Operating Income and Adjusted Operating Ratio (Unaudited) 1 Pursuant to the requirements of Regulation G, this table reconciles consolidated GAAP operating ratio to consolidated non-GAAP Adjusted Operating Ratio. 2 The reported results do not include the results of o
Slide 18: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 2 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, 2022 2021 2022 2021 (Dollars in thousands, except per share data) GAAP: Net income attributable to Knight-Swift $ 148,701 $ 254,616 $ 771,3
Slide 19: Non-GAAP Reconciliation
Non-GAAP Reconciliation Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS 1 2 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, 2022 2021 2022 2021 GAAP: Earnings per diluted share $ 0.92 $ 1.52 $ 4.73 $ 4.45 Adjusted for: Income tax expense attributable to Knight-Sw
Slide 20: Non-GAAP Reconciliation
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, Truckload Segment 2022 2021 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 1,101,040 $ 1,107,868 $ 4,531,115 $ 4,098,005 Tot
Slide 21: Non-GAAP Reconciliation
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, LTL Segment 2 2022 2021 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 251,967 $ 204,402 $ 1,069,554 $ 396,308 Total operati
Slide 22: Non-GAAP Reconciliation
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, Logistics Segment 2022 2021 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 179,333 $ 305,041 $ 920,707 $ 817,003 Total opera
Slide 23: Non-GAAP Reconciliation
Non-GAAP Reconciliation Segment Adjusted Operating Income and Adjusted Operating Ratio 1 (Unaudited) Quarter-to-Date December 31, Year-to-Date December 31, Intermodal Segment 2022 2021 2022 2021 GAAP Presentation (Dollars in thousands) Total revenue $ 112,916 $ 123,622 $ 485,786 $ 458,867 Total oper
Slide 24: Non-GAAP Reconciliation
Non-GAAP Reconciliation Return on Net Tangible Assets 1 (Unaudited) December 31, 2022 2021 (Dollars in thousands) Total Assets $ 10,951,666 $ 10,655,500 Adjusted for: Intangible assets, net (1,776,569) (1,831,049) Goodwill (3,519,339) (3,515,135) Tangible Assets $ 5,655,758 $ 5,309,316 Total Liabili
Slide 25: Non-GAAP Reconciliation
Non-GAAP Reconciliation Free Cash Flow 1 (Unaudited) Year-to-Date December 31, 2022 GAAP: Cash flows from operations $ 1,435,853 Adjusted for: Proceeds from sale of property and equipment, including assets held for sale 183,421 Purchases of property and equipment (800,563) Non-GAAP: Free cash flow $
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