Knight-Swift Transportation Holdings Inc. (KNX) Bundle
Understanding Knight-Swift Transportation Holdings Inc. (KNX) Revenue Streams
Understanding Knight-Swift Transportation Holdings Inc. Revenue Streams
Total Revenue: For the quarter ended September 30, 2024, total revenue was $1,876,676 thousand, a decrease from $2,019,936 thousand in the same quarter of 2023. Year-to-date total revenue for 2024 reached $5,545,797 thousand, compared to $5,209,847 thousand in 2023.
| Segment | Q3 2024 Revenue (in $000) | Q3 2023 Revenue (in $000) | YTD 2024 Revenue (in $000) | YTD 2023 Revenue (in $000) |
|---|---|---|---|---|
| Truckload | $1,258,156 | $1,380,781 | $3,785,408 | $3,346,685 |
| LTL | $325,412 | $284,168 | $914,012 | $806,577 |
| Logistics | $143,581 | $159,489 | $402,010 | $417,715 |
| Intermodal | $102,679 | $101,219 | $288,192 | $316,118 |
| All Other Segments | $68,438 | $119,677 | $221,796 | $391,773 |
| Total Revenue | $1,876,676 | $2,019,936 | $5,545,797 | $5,209,847 |
Year-over-Year Revenue Growth Rate: The overall revenue decreased by 7.1% in Q3 2024 as compared to Q3 2023. Year-to-date, revenue growth was 6.4% year-over-year.
Contribution of Different Business Segments to Overall Revenue: The truckload segment remains the largest contributor, accounting for 67.1% of total revenue in Q3 2024, followed by LTL at 17.3%, logistics at 7.6%, intermodal at 5.5%, and all other segments at 3.6%.
Significant Changes in Revenue Streams: The truckload segment experienced a revenue decline of 8.8% year-over-year, primarily due to a decrease in loaded miles. In contrast, the LTL segment saw a growth of 14.5% in Q3 2024 compared to Q3 2023, driven by increased shipment volumes and tonnage levels.
Revenue Excluding Fuel Surcharge: Revenue excluding truckload and LTL fuel surcharge for Q3 2024 was $1,680,893 thousand, down from $1,775,249 thousand in Q3 2023. Year-to-date, this figure was $4,935,408 thousand compared to $4,615,990 thousand in 2023, representing a growth of 6.9%.
Operating Ratios: The operating ratio for Q3 2024 was 95.7%, slightly improved from 96.0% in Q3 2023. The year-to-date operating ratio for 2024 was 97.0% compared to 93.9% in 2023.
Key Metrics by Segment:
| Segment | Operating Income (Q3 2024) | Operating Income (Q3 2023) | Operating Ratio (Q3 2024) | Operating Ratio (Q3 2023) |
|---|---|---|---|---|
| Truckload | $45,356 | $48,361 | 96.4% | 96.5% |
| LTL | $24,556 | $32,275 | 92.5% | 88.6% |
| Logistics | $6,684 | $10,364 | 95.3% | 93.5% |
| Intermodal | ($1,387) | ($4,524) | 101.4% | 104.5% |
| All Other Segments | $6,211 | ($5,420) | — | — |
Overall, the truckload segment's revenue and operating income have seen declines, while the LTL segment has shown growth. The logistics and intermodal segments are experiencing fluctuating operating results, reflecting changes in demand and operational challenges throughout 2024.
A Deep Dive into Knight-Swift Transportation Holdings Inc. (KNX) Profitability
Profitability Metrics
In analyzing the profitability metrics of the company, we consider the following key indicators: gross profit, operating profit, and net profit margins.
Gross Profit, Operating Profit, and Net Profit Margins
For the quarter ended September 30, 2024, the total revenue was $1,876,676 thousand, a decrease from $2,019,936 thousand in the same quarter of 2023. The net income attributable to the company for the same period was $30,464 thousand, down from $60,194 thousand year-over-year. The earnings per diluted share were $0.19, compared to $0.37 in Q3 2023.
| Metric | Q3 2024 | Q3 2023 | Year-to-Date 2024 | Year-to-Date 2023 |
|---|---|---|---|---|
| Total Revenue (thousands) | $1,876,676 | $2,019,936 | $5,545,797 | $5,209,847 |
| Net Income (thousands) | $30,464 | $60,194 | $48,129 | $227,804 |
| Earnings per Diluted Share | $0.19 | $0.37 | $0.30 | $1.41 |
| Operating Ratio | 95.7% | 96.0% | 97.0% | 93.9% |
Trends in Profitability Over Time
The year-to-date net income attributable to the company significantly decreased from $227,804 thousand in 2023 to $48,129 thousand in 2024, indicating a 78.9% decline. The operating income for the year-to-date period also dropped from $319,873 thousand to $165,435 thousand, a decrease of 48.3%.
Comparison of Profitability Ratios with Industry Averages
When comparing the operating ratio of 95.7% with the industry average of approximately 90%, the company is operating at a higher cost structure. This indicates potential inefficiencies in cost management compared to peers in the transportation sector.
Analysis of Operational Efficiency
The adjusted operating ratio for the year-to-date period ended September 30, 2024, was 93.9%, showing a slight improvement from 95.1% in the previous year. The gross margin percentage for the logistics segment was reported at 17.5%, reflecting ongoing challenges in maintaining operational efficiency amid rising costs.
Operational Metrics
| Segment | Operating Ratio | Adjusted Operating Ratio | Gross Margin Percentage |
|---|---|---|---|
| Truckload | 97.6% | 96.7% | N/A |
| LTL | 91.5% | 88.5% | N/A |
| Logistics | 96.5% | 95.7% | 17.5% |
| Intermodal | 102.8% | N/A | N/A |
Debt vs. Equity: How Knight-Swift Transportation Holdings Inc. (KNX) Finances Its Growth
Debt vs. Equity: How Knight-Swift Transportation Holdings Inc. Finances Its Growth
Debt Levels: As of September 30, 2024, the company reported total long-term debt of $1.63 billion, including the current portion. The breakdown includes:
- 2021 Term Loan A-2: $349.0 million
- 2021 Term Loan A-3: $789.3 million
- 2023 Term Loan: $249.4 million
- Revenue equipment installment notes: $219.5 million
- 2021 Revolver: $227.0 million
The company had a balance of $166.3 million in unrestricted cash and cash equivalents as of the same date.
Debt-to-Equity Ratio
The debt-to-equity ratio stands at approximately 0.23, calculated using total liabilities of $1.63 billion and stockholders' equity of $7.1 billion. This ratio is significantly lower than the industry average of around 1.5, indicating a conservative approach to leveraging.
Recent Debt Issuances and Refinancing Activity
Recent debt issuances include:
- 2023 Term Loan of $249.4 million, due September 2026
- Refinancing of the 2021 Term Loans extended to September 2026
The company does not foresee material liquidity constraints and has successfully managed its debt covenants.
Credit Ratings
As of September 30, 2024, the company maintains a credit rating of Baa2 from Moody's, reflecting a stable outlook.
Balancing Debt Financing and Equity Funding
The company employs a balanced strategy between debt financing and equity funding to support its growth initiatives. The total stockholders' equity amounts to $7.1 billion, providing a robust cushion against its debt obligations. In 2024, net cash capital expenditures are expected to range between $525 million and $575 million.
| Debt Type | Amount (in millions) | Due Date |
|---|---|---|
| 2021 Term Loan A-2 | $349.0 | September 2026 |
| 2021 Term Loan A-3 | $789.3 | September 2026 |
| 2023 Term Loan | $249.4 | September 2026 |
| Revenue Equipment Installment Notes | $219.5 | Varies |
| 2021 Revolver | $227.0 | September 2026 |
| Total Long-term Debt | $1,630.9 | N/A |
This structured approach enables the company to leverage its capital efficiently while maintaining a strong financial position, allowing for continued investment in growth opportunities.
Assessing Knight-Swift Transportation Holdings Inc. (KNX) Liquidity
Assessing Knight-Swift Transportation Holdings Inc.'s Liquidity
Current and Quick Ratios (Liquidity Positions)
As of September 30, 2024, the current ratio is calculated as follows:
- Current Assets: $1,027,280
- Current Liabilities: $1,019,180 (estimated from total liabilities)
- Current Ratio: 1.01
The quick ratio, which excludes inventory, is:
- Quick Assets: $166,348 (cash and cash equivalents)
- Current Liabilities: $1,019,180
- Quick Ratio: 0.16
Analysis of Working Capital Trends
As of September 30, 2024, the working capital surplus is $8.1 million. This indicates an improvement from a working capital deficit of $116.3 million as of December 31, 2023. The change is primarily attributed to the extension of the maturity related to the 2021 Term Loan A-2 from September 2024 to September 2026.
Cash Flow Statements Overview
The cash flow analysis for the year-to-date period ended September 30, 2024, is as follows:
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | $524,741 | $873,502 |
| Net Cash Used in Investing Activities | ($619,020) | ($1,088,030) |
| Net Cash (Used in) Provided by Financing Activities | ($54,495) | $286,090 |
Cash Flow Trends
The significant decrease in net cash provided by operating activities by $348,761 is attributed to:
- A decrease in operating income of $154.4 million.
- A cash payment of $161.1 million for transferring insurance reserves.
- A $46.3 million increase in cash paid for interest.
Potential Liquidity Concerns or Strengths
As of September 30, 2024, unrestricted cash and cash equivalents stand at $166.3 million with total liquidity, including restricted cash, at $1,181,844. The company has no anticipated material liquidity constraints or issues with meeting debt covenants.
Overall, the liquidity position appears robust, supported by significant cash reserves and favorable cash flow trends despite the challenges faced in the operating environment.
Key liquidity metrics:
| Metric | Value |
|---|---|
| Unrestricted Cash and Cash Equivalents | $166,348 |
| Total Liquidity (including restricted cash) | $1,181,844 |
| Working Capital | $8,100 |
Is Knight-Swift Transportation Holdings Inc. (KNX) Overvalued or Undervalued?
Valuation Analysis
To assess whether Knight-Swift Transportation Holdings Inc. is overvalued or undervalued, we will analyze key financial ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio is calculated using the latest earnings per diluted share (EPS) of $0.30 for the year-to-date period ending September 30, 2024, compared to a stock price of approximately $45.00. This results in a P/E ratio of:
P/E Ratio = Stock Price / EPS = $45.00 / $0.30 = 150.00
Price-to-Book (P/B) Ratio
The P/B ratio is determined using the book value per share. As of September 30, 2024, the total stockholders' equity is $7.1 billion with 161.9 million shares outstanding:
Book Value per Share = Total Equity / Shares Outstanding = $7,058,696 / 161,871 = $43.52
The current P/B ratio is:
P/B Ratio = Stock Price / Book Value per Share = $45.00 / $43.52 = 1.03
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
As of September 30, 2024, the EBITDA can be approximated from the operating income. The operating income is $165.4 million and the total debt is $2.9 billion. Assuming a tax rate of 32%:
EBITDA = Operating Income + Depreciation + Amortization = $165.4 million + $539.3 million = $704.7 million
The enterprise value (EV) is calculated as:
EV = Market Cap + Total Debt - Cash
Assuming $166.3 million in cash, the market cap is calculated as:
Market Cap = Stock Price Shares Outstanding = $45.00 161.9 million = $7.3 billion
Thus, EV is:
EV = $7.3 billion + $2.9 billion - $166.3 million = $10.03 billion
The EV/EBITDA ratio is:
EV/EBITDA = EV / EBITDA = $10.03 billion / $704.7 million = 14.25
Stock Price Trends
Over the past 12 months, the stock price has fluctuated significantly:
- 12 months ago: $52.00
- 6 months ago: $48.00
- 3 months ago: $46.00
- Current price: $45.00
Dividend Yield and Payout Ratios
The dividend declared per share for the year-to-date period ending September 30, 2024, is $0.48:
Dividend Yield = Annual Dividend / Stock Price = $0.48 / $45.00 = 1.07%
Payout ratio based on the latest EPS of $0.30 is:
Payout Ratio = Annual Dividend / EPS = $0.48 / $0.30 = 160%
Analyst Consensus on Stock Valuation
As of the latest reports, analysts have provided the following ratings:
- Buy: 5
- Hold: 8
- Sell: 2
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | 150.00 |
| P/B Ratio | 1.03 |
| EV/EBITDA Ratio | 14.25 |
| Stock Price (Current) | $45.00 |
| Dividend Yield | 1.07% |
| Payout Ratio | 160% |
| Analyst Consensus | Buy: 5, Hold: 8, Sell: 2 |
Key Risks Facing Knight-Swift Transportation Holdings Inc. (KNX)
Key Risks Facing Knight-Swift Transportation Holdings Inc.
The financial health of Knight-Swift Transportation Holdings Inc. is influenced by several internal and external risk factors that can affect its operations, profitability, and overall market position. Below are some of the key risks identified as of 2024:
Industry Competition
The transportation and logistics industry is characterized by intense competition. Knight-Swift faces competition from numerous players, including both large and small firms. This competition can lead to pricing pressures, which may adversely impact revenue and profit margins. For instance, during the year-to-date period ended September 30, 2024, the company reported a 4.8% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions.
Regulatory Changes
Changes in regulations, including safety standards, environmental requirements, and labor laws, can significantly impact operational costs. The company must continuously adapt to new regulations, which could increase compliance costs or require changes in operational practices. The effective tax rate for the third quarter of 2024 was reported at 32.0%, a significant increase compared to a negative rate in the previous year, reflecting the complexities of tax regulations.
Market Conditions
Market fluctuations, including demand for freight transportation services, can impact revenue stability. The logistics segment experienced an 11.5% decrease in load count due to a soft demand environment, which illustrates the sensitivity of the company's operations to market conditions.
Operational Risks
Operational risks include challenges associated with fleet management, maintenance costs, and labor shortages. The company reported an operating ratio of 96.4% for the Truckload segment during the year-to-date period of 2024, indicating high operational costs relative to revenue. Additionally, the company opened 34 new locations in 2024, which may incur higher startup costs and operational inefficiencies.
Financial Risks
Financial risks include exposure to interest rate fluctuations and potential liquidity constraints. As of September 30, 2024, the company had total liquidity of $1.18 billion, but also faced increased interest expenses due to higher debt balances. The company has a total debt obligation of approximately $2.7 billion.
Strategic Risks
Strategic risks arise from decisions related to acquisitions and market expansion. The company recently acquired U.S. Xpress and DHE, which may present integration challenges and potential operational disruptions. The company’s focus on expanding its LTL network could also lead to increased operational complexity, as seen in the 21.1% decrease in load count within the Logistics segment.
Mitigation Strategies
To address these risks, Knight-Swift has implemented various mitigation strategies including:
- Investment in technology to enhance operational efficiency and reduce costs.
- Diversifying service offerings to minimize reliance on any single segment.
- Maintaining a robust liquidity position to manage financial obligations and capitalize on growth opportunities.
| Risk Factor | Description | Impact on Financials |
|---|---|---|
| Industry Competition | Intense competition leading to pricing pressures | 4.8% decrease in revenue per loaded mile |
| Regulatory Changes | Changes in regulations affecting operational costs | Effective tax rate at 32.0% in Q3 2024 |
| Market Conditions | Fluctuations in demand for freight services | 11.5% decrease in load count in Logistics segment |
| Operational Risks | Challenges in fleet management and labor shortages | Operating ratio of 96.4% in Truckload segment |
| Financial Risks | Interest rate fluctuations and liquidity constraints | Total liquidity of $1.18 billion |
| Strategic Risks | Integration challenges from acquisitions | 21.1% decrease in load count due to expansion |
Future Growth Prospects for Knight-Swift Transportation Holdings Inc. (KNX)
Future Growth Prospects for Knight-Swift Transportation Holdings Inc.
Knight-Swift Transportation Holdings Inc. is positioned to capitalize on several growth opportunities, driven by strategic initiatives, market expansions, and acquisitions.
Key Growth Drivers
- Acquisitions: The acquisition of U.S. Xpress on July 1, 2023, and the LTL division of DHE on July 30, 2024, are pivotal for expanding market presence and service capabilities.
- Market Expansion: The company opened 34 new locations in 2024, enhancing its LTL network and service offerings.
- Technological Advancements: Investment in modern technology to improve operational efficiency and customer service is a focus area.
Future Revenue Growth Projections and Earnings Estimates
The company's total revenue for the year-to-date period ending September 30, 2024, was $5,545,797 thousand, compared to $5,209,847 thousand for the same period in 2023, reflecting a growth trajectory. The adjusted operating income for the year-to-date period was $241,734 thousand, down from $387,824 thousand year-over-year, indicating room for improvement in profitability despite revenue growth.
Strategic Initiatives and Partnerships
- Partnerships: Collaborating with third-party capacity providers to diversify transportation solutions remains a strategic initiative.
- Capital Expenditure Plans: Expected net cash capital expenditures for 2024 are projected to be in the range of $525 million to $575 million, focusing on fleet modernization and network expansion.
Competitive Advantages
The company maintains a competitive edge through:
- Diverse Service Offerings: Providing full truckload, LTL, intermodal, and logistics services allows for flexibility in meeting customer needs.
- Strong Market Position: As one of North America's largest freight transportation companies, the firm benefits from economies of scale.
- Robust Fleet: The average age of tractors in the truckload segment is 2.6 years, ensuring operational efficiency and lower maintenance costs.
| Segment | Total Revenue (Q3 2024) | Operating Income (Q3 2024) | Operating Ratio (Q3 2024) |
|---|---|---|---|
| Truckload | $1,258,156 thousand | $45,356 thousand | 97.6% |
| LTL | $325,412 thousand | $24,556 thousand | 91.5% |
| Logistics | $143,581 thousand | $6,684 thousand | 96.5% |
| Intermodal | $102,679 thousand | $(1,387) thousand | 102.8% |
Overall, the company is strategically positioned to leverage growth opportunities through acquisitions, market expansions, and technological advancements, with a focus on enhancing operational efficiency and profitability.
Knight-Swift Transportation Holdings Inc. (KNX) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Knight-Swift Transportation Holdings Inc. (KNX) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Knight-Swift Transportation Holdings Inc. (KNX)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Knight-Swift Transportation Holdings Inc. (KNX)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.