Knight-Swift Transportation 10Q 2024 Q3 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________________________________________________________________________________________________________________________________________________

FORM 10-Q

_________________________________________________________________________________________________________________________________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35007

_________________________________________________________________________________________________________________________________________________________

___________________________________________________________________________________________________________________________________

Knight-Swift Transportation Holdings Inc.

(Exact name of registrant as specified in its charter)

___________________________________________________________________________________________________________________


Delaware						20-5589597
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

2002 West Wahalla Lane

Phoenix, Arizona 85027

(Address of principal executive offices and zip code)

(602) 269-2000

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock $0.01 Par Value

KNX

New York Stock Exchange

_________________________________________________________________________________________________________________________________________________________

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

There were approximately 161,893,000 shares of the registrant's common stock outstanding as of October 23, 2024.

Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION			PAGE
Item 1. Financial Statements			4

Condensed Consolidated Balance Sheets (Unaudited) — September 30, 2024 and December 31, 2023			4

Condensed Consolidated Statements of Comprehensive Income (Unaudited) — Quarter and year-to-date ended September 30, 2024 and 2023			5

Condensed Consolidated Statements of Cash Flows (Unaudited) — Quarter and year-to-date ended September 30, 2024 and 2023			6

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — Quarter and year-to-date ended September 30, 2024 and 2023			8

Note 1 — Introduction and Basis of Presentation			10



Note 2 — Recently Issued Accounting Pronouncements			11

Note 3 — Acquisitions			11







Note 4 — Income Taxes			14



Note 5 — Accounts Receivable Securitization			15

Note 6 — Debt and Financing			16

Note 7 — Defined Benefit Pension Plan			18

Note 8 — Purchase Commitments			18

Note 9 — Contingencies and Legal Proceedings			19

Note 10 — Share Repurchase Plans			19

Note 11 — Weighted Average Shares Outstanding			20

Note 12 — Fair Value Measurement			21

Note 13 — Related Party Transactions			23

Note 14 — Financial Information by Segment and Geography			24

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			25

Item 3. Quantitative and Qualitative Disclosures About Market Risk			58

Item 4. Controls and Procedures			59
PART II OTHER INFORMATION
Item 1. Legal Proceedings			60

Item 1A. Risk Factors			60

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			60

Item 3. Defaults Upon Senior Securities			60

Item 4. Mine Safety Disclosures			60

Item 5. Other Information			60

Item 6. Exhibits			61

Signatures			62

Table of Contents

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.




GLOSSARY OF TERMS
The following glossary defines certain acronyms and terms used in this Quarterly Report on Form 10-Q. These acronyms and terms are specific to our company, commonly used in our industry, or are otherwise frequently used throughout our document.
Term			Definition
Knight-Swift/the Company/Management/We/Us/Our			Unless otherwise indicated or the context otherwise requires, these terms represent Knight-Swift Transportation Holdings Inc. and its subsidiaries.

2017 Merger			The September 8, 2017 merger of Knight Transportation, Inc. and its subsidiaries and Swift Transportation Company and its subsidiaries, pursuant to which we became Knight-Swift Transportation Holdings Inc.




2021 Debt Agreement			The Company's unsecured credit agreement, entered into on September 3, 2021, consisting of the 2021 Revolver and 2021 Term Loans, which are defined below
2021 Prudential Notes			Third amended and restated note purchase and private shelf agreement, entered into on September 3, 2021 by ACT with unrelated financial entities
2021 Revolver			Revolving line of credit under the 2021 Debt Agreement, maturing on September 3, 2026
2021 Term Loans			The Company's term loans under the 2021 Debt Agreement, collectively consisting of the 2021 Term Loan A-1, 2021 Term Loan A-2 and 2021 Term Loan A-3
2021 Term Loan A-1			The Company's term loan under the 2021 Debt Agreement, which matured on December 3, 2022
2021 Term Loan A-2			The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2026, as amended by the 2024 Amendment
2021 Term Loan A-3			The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2026

2023 Term Loan			The Company's term loan entered into on June 22, 2023, maturing on September 3, 2026

2022 RSA			Sixth Amendment to the Amended and Restated Receivables Sales Agreement, entered into on October 3, 2022 by Swift Receivables Company II, LLC with unrelated financial entities
2023 RSA			Seventh Amendment to the Amended and Restated Receivables Sales Agreement, entered into on October 23, 2023 by Swift Receivables Company II, LLC with unrelated financial entities
2024 Amendment			First Amendment to the Company's 2021 Debt Agreement, entered into on August 6, 2024

ACT			AAA Cooper Transportation, and its affiliated entity
ACT Acquisition			The Company's acquisition of 100% of the securities of ACT on July 5, 2021
Annual Report			Annual Report on Form 10-K
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
Board			Knight-Swift's Board of Directors
BSBY			Bloomberg Short-Term Bank Yield Index

DHE			The non-union regional LTL division of Dependable Highway Express, Inc.
DHE Acquisition			The acquisition by one of the Company's wholly owned subsidiaries of the operating assets and assumption of certain liabilities of DHE on July 30, 2024
EPS			Earnings Per Share

ESPP			Knight-Swift Transportation Holdings Inc. Amended and Restated 2012 Employee Stock Purchase Plan



GAAP			United States Generally Accepted Accounting Principles
IRS			Internal Revenue Service




NYSE			New York Stock Exchange
LTL			Less-than-truckload
MME			MME, Inc. and its subsidiary, Midwest Motor Express, Inc.
Quarterly Report			Quarterly Report on Form 10-Q

RSU			Restricted Stock Unit
SEC			United States Securities and Exchange Commission
SOFR			Secured overnight financing rate as administered by the Federal Reserve Bank of New York



US			The United States of America
U.S. Xpress			U.S. Xpress Enterprises, Inc. and its subsidiaries
U.S. Xpress Acquisition			The Company's acquisition of 100% of the securities of U.S. Xpress on July 1, 2023
UTXL			UTXL Enterprises, Inc.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

PART I FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS


Condensed Consolidated Balance Sheets (Unaudited)


	September 30, 2024		December 31, 2023
	(In thousands, except per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	166,348	$	168,545
Cash and cash equivalents – restricted	150,870		297,275
Restricted investments, held-to-maturity, amortized cost	—		530
Trade receivables, net of allowance for doubtful accounts of $39,298 and $39,458, respectively	835,248		888,603
Contract balance – revenue in transit	11,056		12,246
Prepaid expenses	114,793		148,696
Assets held for sale	74,787		83,366
Income tax receivable	46,191		65,815

Other current assets	38,330		43,939
Total current assets	1,437,623		1,709,015
Gross property and equipment	7,081,485		6,720,610
Less: accumulated depreciation and amortization	(2,322,511)		(2,104,211)
Property and equipment, net	4,758,974		4,616,399
Operating lease right-of-use-assets	415,856		484,821
Goodwill	3,963,142		3,848,798
Intangible assets, net	2,075,315		2,058,882
Other long-term assets	173,871		152,850
Total assets	$	12,824,781	$	12,870,765
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	293,244	$	355,173
Accrued payroll and purchased transportation	190,830		164,884
Accrued liabilities	207,143		220,350
Claims accruals – current portion	336,010		480,200
Finance lease liabilities and long-term debt – current portion	272,355		459,759
Operating lease liabilities – current portion	129,938		144,921

Total current liabilities	1,429,520		1,825,287
Revolving line of credit	227,000		67,000
Long-term debt – less current portion	1,501,565		1,223,021
Finance lease liabilities – less current portion	466,863		407,150
Operating lease liabilities – less current portion	310,584		371,407
Accounts receivable securitization	458,911		526,508
Claims accruals – less current portion	328,968		315,476
Deferred tax liabilities	920,685		951,749
Other long-term liabilities	114,469		79,086
Total liabilities	5,758,565		5,766,684
Commitments and contingencies (Notes 7, 8, and 9)
Stockholders’ equity:
Preferred stock, par value $0.01 per share; 10,000 shares authorized; none issued	—		—
Common stock, par value $0.01 per share; 500,000 shares authorized; 161,871 and 161,385 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively.	1,619		1,613
Additional paid-in capital	4,439,029		4,426,852
Accumulated other comprehensive income (loss)	168		(830)
Retained earnings	2,617,880		2,659,755
Total Knight-Swift stockholders' equity	7,058,696		7,087,390
Noncontrolling interest	7,520		16,691
Total stockholders’ equity	7,066,216		7,104,081
Total liabilities and stockholders’ equity	$	12,824,781	$	12,870,765

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
	(In thousands, except per share data)
Revenue:
Revenue, excluding truckload and LTL fuel surcharge	$	1,680,893	$	1,775,249	$	4,935,408	$	4,615,990
Truckload and LTL fuel surcharge	195,783		244,687		610,389		593,857
Total revenue	1,876,676		2,019,936		5,545,797		5,209,847
Operating expenses:
Salaries, wages, and benefits	726,358		710,543		2,111,143		1,780,522
Fuel	213,489		272,376		670,651		628,435
Operations and maintenance	142,418		142,913		415,302		343,604
Insurance and claims	86,510		148,865		314,394		424,210
Operating taxes and licenses	32,220		30,506		93,923		84,728
Communications	8,411		8,411		24,208		20,344
Depreciation and amortization of property and equipment	178,598		176,613		539,313		488,960
Amortization of intangibles	18,922		18,907		56,009		51,595
Rental expense	42,322		50,401		129,248		81,542
Purchased transportation	295,261		330,683		859,286		869,671
Impairments	1,008		—		10,867		—
Miscellaneous operating expenses	49,739		48,662		156,018		116,363
Total operating expenses	1,795,256		1,938,880		5,380,362		4,889,974
Operating income	81,420		81,056		165,435		319,873
Other (expenses) income:
Interest income	4,005		5,542		12,844		16,099
Interest expense	(44,398)		(39,354)		(126,116)		(86,799)
Other income, net	3,169		11,433		17,049		30,815
Total other (expenses) income, net	(37,224)		(22,379)		(96,223)		(39,885)
Income before income taxes	44,196		58,677		69,212		279,988
Income tax expense (benefit)	14,137		(1,220)		22,253		53,474
Net income	30,059		59,897		46,959		226,514
Net loss attributable to noncontrolling interest	405		297		1,170		1,290
Net income attributable to Knight-Swift	30,464		60,194		48,129		227,804
Other comprehensive income	995		152		998		1,772
Comprehensive income	$	31,459	$	60,346	$	49,127	$	229,576

Earnings per share:
Basic	$	0.19	$	0.37	$	0.30	$	1.41
Diluted	$	0.19	$	0.37	$	0.30	$	1.41

Dividends declared per share:	$	0.16	$	0.14	$	0.48	$	0.42

Weighted average shares outstanding:
Basic	161,861		161,332		161,687		161,124
Diluted	162,233		161,888		162,120		161,782

See accompanying notes to the condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Cash Flows (Unaudited)


	Year-to-Date September 30,
	2024		2023
	(In thousands)
Cash flows from operating activities:
Net income	$	46,959	$	226,514
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment, and intangibles	595,322		540,555
Gain on sale of property and equipment	(21,839)		(46,628)
Impairments	10,867		—
Deferred income taxes	(21,569)		9,587
Non-cash lease expense	137,768		68,778
Loss (gain) on equity securities	11,562		(2,100)

Other adjustments to reconcile net income to net cash provided by operating activities	(3,684)		46,224
Increase (decrease) in cash resulting from changes in:
Trade receivables	39,612		84,149
Income tax receivable	19,624		(1,237)
Accounts payable	(57,066)		(10,495)
Accrued liabilities and claims accrual	(135,189)		26,599
Operating lease liabilities	(146,973)		(68,140)
Other assets and liabilities	49,347		(304)
Net cash provided by operating activities	524,741		873,502
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity investments	530		3,620
Purchases of held-to-maturity investments	—		(30)
Proceeds from sale of property and equipment, including assets held for sale	183,589		214,234
Purchases of property and equipment	(592,081)		(852,677)
Expenditures on assets held for sale	(312)		(785)
Net cash, restricted cash, and equivalents invested in acquisitions	(185,491)		(458,288)


Other cash flows from investing activities	(25,255)		5,896
Net cash used in investing activities	(619,020)		(1,088,030)
Cash flows from financing activities:
Repayments of finance leases and long-term debt	(214,881)		(81,354)
Proceeds from long-term debt	150,000		250,000
Borrowings on revolving lines of credit, net	160,000		257,000
Borrowings under accounts receivable securitization	28,800		25,000
Repayments of accounts receivable securitization	(96,600)		(82,000)

Proceeds from common stock issued	4,177		4,200

Dividends paid	(78,256)		(68,550)
Other cash flows from financing activities	(7,735)		(18,206)
Net cash (used in) provided by financing activities	(54,495)		286,090
Net (decrease) increase in cash, restricted cash, and equivalents	(148,774)		71,562
Cash, restricted cash, and equivalents at beginning of period	469,686		385,345
Cash, restricted cash, and equivalents at end of period	$	320,912	$	456,907

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued


	Year-to-Date September 30,
	2024		2023
	(In thousands)
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	130,680	$	84,361
Income taxes	10,382		38,455
Non-cash investing and financing activities:
Equipment acquired included in accounts payable	$	39,522	$	19,639
Financing provided to independent contractors for equipment sold	1,715		4,285
Transfers from property and equipment to assets held for sale	89,794		136,453
Noncontrolling interest associated with acquisitions	—		5,178

Contingent consideration associated with acquisitions and investments	—		174,107
U.S. Xpress assumed equity awards	—		1,462
Conversion of note receivable to equity investment	—		12,107
Right-of-use assets obtained in exchange for operating lease liabilities	58,767		41,888
Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions	12,400		—
Property and equipment obtained in exchange for finance lease liabilities	190,298		70,051
Property and equipment obtained in exchange for debt and finance lease liabilities reclassified from operating lease liabilities	20,025		—


Reconciliation of Cash, Restricted Cash, and Equivalents:	September 30, 2024		December 31, 2023		September 30, 2023		December 31, 2022
	(In thousands)
Consolidated Balance Sheets
Cash and cash equivalents	$	166,348	$	168,545	$	193,372	$	196,770
Cash and cash equivalents – restricted 1	150,870		297,275		259,979		185,792

Other long-term assets 1	3,694		3,866		3,556		2,783
Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents	$	320,912	$	469,686	$	456,907	$	385,345

________

1 Reflects cash and cash equivalents that are primarily restricted for claims payments.

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Stockholders' Equity (Unaudited)


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)


































Balances – December 31, 2023	161,385	$	1,613	$	4,426,852	$	2,659,755	$	(830)	$	7,087,390	$	16,691	$	7,104,081

Common stock issued to employees	403	4		—						4				4
Common stock issued to the Board	24	—		1,206						1,206				1,206

Common stock issued under ESPP	59	2		2,965						2,967				2,967

Shares withheld – RSU settlement						(11,839)				(11,839)				(11,839)
Employee stock-based compensation expense				17,011						17,011				17,011
Cash dividends paid and dividends accrued ($0.48 per share)						(78,165)				(78,165)				(78,165)
Net income (loss)						48,129				48,129		(1,170)		46,959
Other comprehensive income								998		998				998
Investment in noncontrolling interest												2,212		2,212
Distribution to noncontrolling interest				(9,005)						(9,005)		(10,213)		(19,218)


Balances – September 30, 2024	161,871	$	1,619	$	4,439,029	$	2,617,880	$	168	$	7,058,696	$	7,520	$	7,066,216


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)


































Balances – December 31, 2022	160,706	$	1,607	$	4,392,266	$	2,553,567	$	(2,436)	$	6,945,004	$	10,277	$	6,955,281

Common stock issued to employees	565	5		158						163				163
Common stock issued to the Board	18	—		977						977				977
U.S. Xpress assumed equity awards				1,462						1,462				1,462
Common stock issued under ESPP	58	1		3,059						3,060				3,060

Shares withheld – RSU settlement						(19,548)				(19,548)				(19,548)
Employee stock-based compensation expense				21,059						21,059				21,059
Cash dividends paid and dividends accrued ($0.42 per share)						(68,255)				(68,255)				(68,255)
Net income (loss)						227,804				227,804		(1,290)		226,514
Other comprehensive income								1,772		1,772				1,772
Investment in noncontrolling interest												7,555		7,555
Distribution to noncontrolling interest												(239)		(239)


Balances – September 30, 2023	161,347	$	1,613	$	4,418,981	$	2,693,568	$	(664)	$	7,113,498	$	16,303	$	7,129,801

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — Continued


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)
















Balances – June 30, 2024	161,836	$	1,618	$	4,439,489	$	2,613,684	$	(827)	$	7,053,964	$	16,389	$	7,070,353

Common stock issued to employees	10	—		—						—				—


Common stock issued under ESPP	25	1		1,068						1,069				1,069

Shares withheld – RSU settlement						(188)				(188)				(188)
Employee stock-based compensation expense				6,430						6,430				6,430
Cash dividends paid and dividends accrued ($0.16 per share)						(26,080)				(26,080)				(26,080)
Net income (loss)						30,464				30,464		(405)		30,059
Other comprehensive income								995		995				995
Investment in noncontrolling interest												739		739
Distribution to noncontrolling interest				(7,958)						(7,958)		(9,203)		(17,161)


Balances – September 30, 2024	161,871	$	1,619	$	4,439,029	$	2,617,880	$	168	$	7,058,696	$	7,520	$	7,066,216


	Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
	Shares	Par Value
	(In thousands, except per share data)
















Balances – June 30, 2023	161,276	$	1,613	$	4,412,069	$	2,657,415	$	(815)	$	7,070,282	$	10,761	$	7,081,043

Common stock issued to employees	53	—		—						—				—

U.S. Xpress assumed equity awards				1,462						1,462				1,462
Common stock issued under ESPP	18	—		978						978				978

Shares withheld – RSU settlement						(1,277)				(1,277)				(1,277)
Employee stock-based compensation expense				4,472						4,472				4,472
Cash dividends paid and dividends accrued ($0.14 per share)						(22,764)				(22,764)				(22,764)
Net income (loss)						60,194				60,194		(297)		59,897
Other comprehensive income								151		151				151
Investment in noncontrolling interest												5,839		5,839



Balances – September 30, 2023	161,347	$	1,613	$	4,418,981	$	2,693,568	$	(664)	$	7,113,498	$	16,303	$	7,129,801

See accompanying notes to condensed consolidated financial statements (unaudited).

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Notes to Condensed Consolidated Financial Statements (Unaudited)

Note 1 — Introduction and Basis of Presentation

Certain acronyms and terms used throughout this Quarterly Report are specific to the Company, commonly used in the trucking industry, or are otherwise frequently used throughout this document. Definitions for these acronyms and terms are provided in the "Glossary of Terms," available in the front of this document.

Description of Business

Knight-Swift is a transportation solutions provider, headquartered in Phoenix, Arizona. During the year-to-date period ended September 30, 2024, the Company operated an average of 22,986 tractors (comprised of 20,838 company tractors and 2,148 independent contractor tractors) and 92,642 trailers within the Truckload segment and leasing activities within the All Other Segments. The LTL segment operated an average of 3,505 tractors and 9,160 trailers. Additionally, the Intermodal segment operated an average of 615 tractors and 12,577 intermodal containers. As of September 30, 2024, the Company's four reportable segments were Truckload, LTL, Logistics, and Intermodal.

Basis of Presentation

The condensed consolidated financial statements and footnotes included in this Quarterly Report include the accounts of Knight-Swift Transportation Holdings Inc. and its subsidiaries and should be read in conjunction with the consolidated financial statements and footnotes included in Knight-Swift's 2023 Annual Report. In management's opinion, these condensed consolidated financial statements were prepared in accordance with GAAP and include all adjustments necessary (consisting of normal recurring adjustments) for the fair statement of the periods presented.

With respect to transactional/durational data, references to years pertain to calendar years. Similarly, references to quarters pertain to calendar quarters.

Note regarding comparability — The reported results do not include U.S. Xpress' operating results prior to its acquisition by the Company on July 1, 2023 in accordance with the accounting treatment applicable to the transaction. The reported results do not include the LTL operations of DHE prior to its acquisition by the Company on July 30, 2024 in accordance with the accounting treatment applicable to the transaction. Accordingly, comparisons between the Company's current and prior period results may not be meaningful.

Seasonality

In the full truckload transportation industry, results of operations generally follow a seasonal pattern. Freight volumes in the first quarter are typically lower due to less consumer demand, customers reducing shipments following the holiday season, and inclement weather. At the same time, operating expenses generally increase, and tractor productivity of the Company's Truckload fleet, independent contractors and third-party carriers decreases during the winter months due to decreased fuel efficiency, increased cold weather-related equipment maintenance and repairs, and increased insurance claims and costs attributed to higher accident frequency from harsh weather. These factors typically lead to lower operating profitability, as compared to other parts of the year. Additionally, beginning in the latter half of the third quarter and continuing into the fourth quarter, the Company typically experiences surges pertaining to holiday shopping trends toward delivery of gifts purchased over the Internet, as well as the length of the holiday season (consumer shopping days between Thanksgiving and Christmas). However, as the Company continues to diversify its business through expansion into the LTL industry, warehousing, and other activities, seasonal volatility is becoming more tempered. Additionally, macroeconomic trends and cyclical changes in the trucking industry, including imbalances in supply and demand, can override the seasonality faced in the industry.

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Note 2 — Recently Issued Accounting Pronouncements

Date Issued

Reference

Description

Expected Adoption Date and Method

Financial Statement Impact

March 2024

ASU No. 2024-02: Codification Improvements - Amendments to Remove References to the Concepts Statements

The amendments in this ASU contain amendments to the Codification that remove references to various Concepts Statements. In most cases, the references are extraneous and not required to understand or apply the guidance. In other instances, the references were used in prior Statements to provide guidance in certain topical areas.

January 2025, Prospective or retrospective

Currently under evaluation, but not expected to be material

March 2024

ASU No. 2024-01: Compensation - Stock Compensation (Topic 718)

The amendments in this ASU improve GAAP by adding an illustrative example that includes four fact patterns to demonstrate how an entity should apply the scope guidance in paragraph 718-10-15-3 to determine whether a profits interest award should be accounted for in accordance with Topic 718.

January 2025, Prospective or retrospective

Currently under evaluation, but not expected to be material

November 2023

ASU 2023-07: Segment Reporting (ASC 280) — Improvements to Reportable Segment Disclosures

The amendments in this ASU update reportable segment disclosure requirements by requiring that an entity disclose significant segment expenses, disclose other segment items by reportable segments, provide annual disclosures about a reportable segment's profit and loss, the title of the chief operating decision maker, and other items.

January 2024

Currently under evaluation, but not expected to be

material 1

1 ASC Topic 280, Segment Reporting — The Company has evaluated the segment reporting disclosure changes required by ASU 2023-07. Management has created a quantitative mock-up of our segments disclosure under ASC Topic 280.

Since management is continuing to evaluate the impact of ASU 2023-07, the above disclosures are tentative and subject to change.

Note 3 — Acquisitions and Investments

DHE

On July 30, 2024, the Company, through a wholly owned subsidiary, acquired the operating assets and assumed certain liabilities of the regional less-than-truckload division of Dependable Highway Express, Inc. based in Los Angeles, California.

The total purchase price consideration of $185.0 million, including net working capital adjustments, was funded through borrowing on the 2021 Revolver on the transaction date. At closing, $1.5 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and remains subject to further adjustments.

The goodwill recognized represents expected synergies from combining the operations of DHE with the Company, including enhanced service offerings, as well as other intangible assets that did not meet the criteria for separate recognition. The goodwill is expected to be deductible for tax purposes.

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Purchase Price Allocation

The purchase price allocation for DHE is preliminary and has been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date, and among other things may be pending the completion of the valuation of acquired tangible assets, an independent valuation of certain acquired intangible assets, assessment of lease agreements, assessment of certain liabilities, the calculation of deferred taxes based upon the underlying tax basis of assets acquired and liabilities assumed, and assessment of other tax related items as applicable. As the Company obtains more information, the preliminary purchase price allocations disclosed above are subject to change. Any future adjustments to the preliminary purchase price allocations, including changes within identifiable intangible assets or estimation uncertainty impacted by market conditions, may impact future net earnings. The purchase price allocation adjustments can be made through the end of the measurement period, which is not to exceed one year from the acquisition date.



	July 30, 2024 Opening Balance Sheet as Reported at September 30, 2024

Fair value of the consideration transferred	$	184,986





Other current assets	445
Property and equipment	29,796
Operating lease right-of-use assets	15,448
Identifiable intangible assets 1	72,400

Other noncurrent assets	98
Total assets	118,187




Claims accruals – current and noncurrent portions	(4,000)
Operating lease liabilities – current and noncurrent portions	(12,400)



Total liabilities	(16,400)




Goodwill	$	83,199

1 Includes $57.0 million in customer relationships and $15.4 million in trade names.

Eleos

On July 17, 2024, the Company acquired the remaining 18.5% non-controlling interest of Eleos.

U.S. Xpress

On July 1, 2023, the Company acquired Chattanooga, Tennessee-based U.S. Xpress Enterprises, Inc. ("U.S. Xpress"), one of the largest asset-based truckload carriers in the United States. The purchase price was allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the July 1, 2023 acquisition date.

During the quarter ended September 30, 2024, the Company's condensed consolidated operating results included U.S. Xpress' total revenue of $409.6 million and a net loss of $10.1 million. U.S. Xpress' net loss during the quarter ended September 30, 2024 included $2.3 million related to the amortization of intangible assets acquired in the U.S. Xpress Acquisition.

During the year-to-date period ended September 30, 2024, the Company's condensed consolidated operating results included U.S. Xpress' total revenue of $1.2 billion and a net loss of $29.4 million. U.S. Xpress' net loss during the year-to-date period ended September 30, 2024 included $6.9 million related to the amortization of intangible assets acquired in the U.S. Xpress Acquisition.

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Purchase Price Allocation

The purchase price was allocated based on estimated fair values of the assets and liabilities acquired as of the acquisition date. The purchase price allocation was open for adjustments through the end of the measurement period, which closed one year from the July 1, 2023 acquisition date.



	July 1, 2023 Opening Balance Sheet as Reported at December 31, 2023		Adjustments		July 1, 2023 Opening Balance Sheet as Reported at June 30, 2024

Fair value of the consideration transferred	$	632,109	$	—	$	632,109

Cash and cash equivalents	3,321		—		3,321

Receivables	216,659		345		217,004
Prepaid expenses	21,347		—		21,347
Other current assets	47,317		—		47,317
Property and equipment	433,210		—		433,210
Operating lease right-of-use assets	337,055		—		337,055
Identifiable intangible assets 1	348,000		—		348,000

Other noncurrent assets	28,457		—		28,457
Total assets	1,435,366		345		1,435,711

Accounts payable	(115,494)		(1,600)		(117,094)
Accrued payroll and payroll-related expenses	(27,485)		—		(27,485)
Accrued liabilities	(19,966)		(809)		(20,775)
Claims accruals – current and noncurrent portions	(180,251)		(11,650)		(191,901)
Operating lease liabilities – current and noncurrent portions	(376,763)		—		(376,763)
Long-term debt and finance leases – current and noncurrent portions	(337,949)		—		(337,949)
Deferred tax liabilities	(33,072)		9,942		(23,130)
Other long-term liabilities	(34,230)		(26,872)		(61,102)
Total liabilities	(1,125,210)		(30,989)		(1,156,199)

Noncontrolling interest	(391)		—		(391)
Total stockholders' equity	(391)		—		(391)

Goodwill	$	322,344	$	30,644	$	352,988

1 Includes $184.5 million in customer relationships and $163.5 million in trade names.

Pro Forma Information — The following unaudited pro forma information combines the historical operations of the Company and U.S. Xpress giving effect to the U.S. Xpress Acquisition, and related transactions as if consummated on January 1, 2023.


	Quarter Ended September 30,		Year-to-Date September 30,
	2023		2023
	(In thousands, except per share data)
Total revenue	$	2,019,936	$	6,165,131
Net income attributable to Knight-Swift	33,584		146,522
Earnings per share – diluted	0.21		0.91

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The unaudited pro forma condensed combined financial information has been presented for comparative purposes only and includes certain adjustments such as recognition of assets acquired at estimated fair values and related depreciation and amortization, elimination of transaction costs incurred by Knight-Swift and U.S. Xpress during the periods presented that were directly related to the U.S. Xpress Acquisition, and related income tax effects of these items. As a result of the U.S. Xpress Acquisition, both Knight-Swift and U.S. Xpress incurred certain acquisition-related expenses, including professional legal and advisory fees, acceleration of share-based compensation, bonus incentives, severance payments, filing fees and other miscellaneous expenses. These acquisition-related expenses totaled $6.5 million and $31.8 million during the quarter and year-to-date periods ended September 30, 2023, respectively. These expenses were eliminated in the presentation of the unaudited pro forma "Net income attributable to Knight-Swift" presented above.

The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Knight-Swift and U.S. Xpress would have achieved had the companies been combined during the periods presented in the unaudited pro forma condensed combined financial statements and is not intended to project the future results of operations that the combined company may achieve after the identified transactions. The unaudited pro forma condensed combined financial information does not reflect any cost savings that may be realized as a result of the U.S. Xpress Acquisition and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

Equity Method Investments

During the quarter and year-to-date periods ended September 30, 2024, the Company recognized a $12.1 million realized loss on a minority investment in a transportation-adjacent technology venture which ceased operations in the third quarter of 2024, which is recorded in "Other income, net" in the condensed consolidated statements of comprehensive income.

The Company did not complete any other material acquisitions during the quarter ended September 30, 2024.

Note 4 — Income Taxes

Effective Tax Rate — The effective tax rates for the quarters ended September 30, 2024 and September 30, 2023 were 32.0% and (2.1)%, respectively. The effective tax rates for the year-to-date periods ended September 30, 2024 and September 30, 2023 were 32.2% and 19.1% respectively. The current quarter effective tax rate was primarily impacted by a reduction in pre-tax income.

Valuation Allowance — Valuation allowances are provided if, based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. As of September 30, 2024 and December 31, 2023, the Company has $10.4 million in valuation allowance associated with the capital loss and state operating loss carryforwards which may not be utilized in the future.

Unrecognized Tax Benefits — The Company has unrecognized tax benefits associated with tax credit carryforwards. Management does not expect a decrease in unrecognized tax benefits relating to credits to be necessary within the next twelve months.

Interest and Penalties — The Company did not have accrued interest and penalties related to unrecognized tax benefits as of September 30, 2024 and December 31, 2023.

Tax Examinations — Certain of the Company's subsidiaries are currently under examination by various Federal and state jurisdictions for tax years ranging from 2009 to 2022. At the completion of these examinations, management does not expect any adjustments which would have a material impact on the Company's effective tax rate. Years subsequent to 2018 remain subject to examination.

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Note 5 — Accounts Receivable Securitization

On October 23, 2023, the Company entered into the 2023 RSA, which further amended the 2022 RSA. The 2023 RSA is a secured borrowing that is collateralized by the Company's eligible receivables, for which the Company is the servicing agent. The Company's receivable originator subsidiaries sell, on a revolving basis, undivided interests in all of their eligible accounts receivable to Swift Receivables Company II, LLC ("SRCII") who in turn sells a variable percentage ownership in those receivables to the various purchasers. The Company's eligible receivables are included in "Trade receivables, net of allowance for doubtful accounts" in the consolidated balance sheets. As of September 30, 2024, the Company's eligible receivables generally have high credit quality, as determined by the obligor's corporate credit rating.

The 2023 RSA is subject to fees, various affirmative and negative covenants, representations and warranties, and default and termination provisions customary for facilities of this type. The Company was in compliance with these covenants as of September 30, 2024. Collections on the underlying receivables by the Company are held for the benefit of SRCII and the various purchasers and are unavailable to satisfy claims of the Company and its subsidiaries.

The following table summarizes the key terms of the 2023 RSA (dollars in thousands):


			2023 RSA
			(Dollars in thousands)
Effective date			October 23, 2023
Final maturity date			October 1, 2025
Borrowing capacity			$575,000
Accordion option 1			$100,000
Unused commitment fee rate 2			20 to 40 basis points
Program fees on outstanding balances 3			one month SOFR + credit spread adjustment 10 basis points + 82.5 basis points

1The accordion option increases the maximum borrowing capacity, subject to participation of the purchasers.

2The commitment fee rates are based on the percentage of the maximum borrowing capacity utilized.

3As identified within the 2023 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement index for SOFR.

Availability under the 2023 RSA is calculated as follows:




	September 30, 2024		December 31, 2023
	(In thousands)
Borrowing base, based on eligible receivables	$	492,400	$	527,600
Less: outstanding borrowings 1	(459,200)		(527,000)
Less: outstanding letters of credit	(27,167)		—
Availability under accounts receivable securitization facilities	$	6,033	$	600

1Outstanding borrowings are included in "Accounts receivable securitization" in the condensed consolidated balance sheets and are offset by deferred loan costs of $0.3 million and $0.5 million as of September 30, 2024 and December 31, 2023, respectively. Interest accrued on the aggregate principal balance at a rate of 6.1% and 6.3% as of September 30, 2024 and December 31, 2023, respectively.

Refer to Note 12 for information regarding the fair value of the 2023 RSA.

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Note 6 — Debt and Financing

Other than the Company's accounts receivable securitization as discussed in Note 5, the Company's long-term debt consisted of the following:


	September 30, 2024		December 31, 2023
	(In thousands)
2021 Term Loan A-2, due September 3, 2026, net 1 2	349,021		199,902
2021 Term Loan A-3, due September 3, 2026, net 1 2	789,323		799,058
2023 Term Loan, due September 3, 2026, net 1 3	249,378		249,135
Revenue equipment installment notes 1 4	219,510		279,339
Prudential Notes, net 1	16,787		25,078
Other	6,952		8,567
Total long-term debt, including current portion	1,630,971		1,561,079
Less: current portion of long-term debt	(129,406)		(338,058)
Long-term debt, less current portion	$	1,501,565	$	1,223,021


	September 30, 2024		December 31, 2023
	(In thousands)
Total long-term debt, including current portion	$	1,630,971	$	1,561,079
2021 Revolver, due September 3, 2026 1 5	227,000		67,000
Long-term debt, including revolving line of credit	$	1,857,971	$	1,628,079

1Refer to Note 12 for information regarding the fair value of debt.

2As of September 30, 2024, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of $1.0 million and $0.7 million in deferred loan costs, respectively. As of December 31, 2023, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of $0.1 million and $0.9 million in deferred loan costs, respectively.

3As of September 30, 2024, the carrying amount of the 2023 Term Loan was net of $0.6 million in deferred loan costs. As of December 31, 2023, the carrying amounts of the 2023 Term Loan was net of $0.9 million in deferred loan costs.

4The revenue equipment installment loans were assumed at the close of the U.S. Xpress Acquisition and have a weighted average interest rate of 4.8% and 4.7% as of September 30, 2024 and December 31, 2023, respectively.

5The Company also had outstanding letters of credit of $18.1 million and $18.0 million under the 2021 Revolver, primarily related to workers' compensation and self-insurance liabilities for both September 30, 2024 and December 31, 2023, respectively. The Company also had outstanding letters of credit of $248.0 million and $264.3 million under a separate bilateral agreement which do not impact the availability of the 2021 Revolver as of September 30, 2024 and December 31, 2023, respectively.

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Credit Agreements

2021 Debt Agreement — On September 3, 2021, the Company entered into the $2.3 billion 2021 Debt Agreement (an unsecured credit facility) with a group of banks, replacing the Company's prior debt agreements. The 2021 Debt Agreement included the 2021 Term Loan A-1 which was paid off on December 3, 2022. On August 6, 2024, the Company entered into the 2024 Amendment which, among other things, extended the maturity of the Company's 2021 Term Loan A-2 from September 3, 2024 to September 3, 2026, increased the size of the 2021 Term Loan A-2 from $200 million to $350 million, aligned the applicable margin for the 2021 Term Loan A-2 with that of the rest of the credit facility, transitioned the reference rate for the credit facility from BSBY to SOFR, and made other conforming changes. The following table presents the key terms of the 2021 Debt Agreement as amended by the 2024 Amendment:

2021 Term Loan A-2

2021 Term Loan A-3

2021 Revolver 2

2021 Debt Agreement Terms

(Dollars in thousands)

Maximum borrowing capacity

$350,000

$800,000

$1,100,000

Final maturity date

September 3, 2026

Interest rate margin reference rate

SOFR + credit spread adjustment 10 basis points

Interest rate minimum margin 1

0.88%

Interest rate maximum margin 1

1.50%

Minimum principal payment — amount

$—

$10,000

$—

Minimum principal payment — frequency

Once

Quarterly

Once

Minimum principal payment — commencement date

September 3, 2026

September 30, 2024

September 3, 2026

1The interest rate margin for the 2021 Term Loans and 2021 Revolver is based on the Company's consolidated leverage ratio. As of September 30, 2024, interest accrued at 6.46% on the 2021 Term Loan A-2, 6.46% on the 2021 Term Loan A-3, and 6.46% on the 2021 Revolver.

2The commitment fee for the unused portion of the 2021 Revolver is based on the Company's consolidated leverage ratio, and ranges from 0.1% to 0.2%. As of September 30, 2024, commitment fees on the unused portion of the 2021 Revolver accrued at 0.2% and outstanding letter of credit fees accrued at 1.5%.

Pursuant to the 2021 Debt Agreement, the 2021 Revolver and the 2021 Term Loans contain certain financial covenants with respect to a maximum net leverage ratio and a minimum consolidated interest coverage ratio. The 2021 Debt Agreement provides flexibility regarding the use of proceeds from asset sales, payment of dividends, stock repurchases, and equipment financing. In addition to the financial covenants, the 2021 Debt Agreement includes usual and customary events of default for a facility of this nature and provides that, upon the occurrence and continuation of an event of default, payment of all amounts payable under the 2021 Debt Agreement may be accelerated, and the lenders' commitments may be terminated. The 2021 Debt Agreement contains certain usual and customary restrictions and covenants relating to, among other things, dividends (which are restricted only if a default or event of default occurs and is continuing or would result therefrom), liens, affiliate transactions, and other indebtedness. As of September 30, 2024, the Company was in compliance with the covenants under the 2021 Debt Agreement.

Borrowings under the 2021 Debt Agreement are made by Knight-Swift Transportation Holdings Inc. and are guaranteed by certain of the Company's material domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

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2023 Term Loan — On June 22, 2023, the Company entered into the $250.0 million 2023 Term Loan (an unsecured credit facility) with a group of banks. The 2023 Term Loan matures on September 3, 2026. There are no scheduled principal payments due until maturity. The 2023 Term Loan contains terms similar to the 2021 Debt Agreement. The proceeds received from the 2023 Term Loan were used to pay fees, commissions and expenses in connection with the Company's acquisition of U.S. Xpress. The interest rate applicable to the 2023 Term Loan is subject to a leverage-based grid and as of September 30, 2024 is equal to SOFR plus the 0.1% SOFR adjustment plus 1.75%. As of September 30, 2024, interest accrued at 6.71% on the 2023 Term Loan.

U.S. Xpress' Revenue Equipment Installment Notes — In connection with the U.S. Xpress Acquisition, the Company assumed revenue equipment installment notes with various lenders to finance tractors and trailers. Payments are due in monthly installments with final maturities at various dates through March 15, 2028, and the notes are secured by related revenue equipment with a net book value of $190.2 million as of September 30, 2024. Terms generally range from 48 months to 84 months. The interest rates as of September 30, 2024 range from 2.0% to 7.2%.

2021 Prudential Notes — The 2021 Prudential Notes previously allowed ACT to borrow up to $125 million, less amounts currently outstanding with Prudential Capital Group, provided that certain financial ratios are maintained. The 2021 Prudential Notes have interest rates ranging from 4.05% to 4.40% and various maturity dates ranging from January 2025 through January 2028. The 2021 Prudential Notes are unsecured and contain usual and customary restrictions on, among other things, the ability to make certain payments to stockholders, similar to the provisions of the Company's 2021 Debt Agreement. As of September 30, 2024, the Company was in compliance with the covenants under the 2021 Prudential Notes.

Fair Value Measurement — See Note 12 for fair value disclosures regarding the Company's debt instruments.

Note 7 — Defined Benefit Pension Plan

Net periodic pension income and benefits paid during the quarter ended September 30, 2024 and 2023 were immaterial.

Assumptions

A weighted-average discount rate of 4.73% was used to determine benefit obligations as of September 30, 2024.

The following weighted-average assumptions were used to determine net periodic pension cost:


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
Discount rate	5.25	%	4.86	%	4.96	%	4.79	%
Expected long-term rate of return on pension plan assets	6.00	%	6.00	%	6.00	%	6.00	%

Refer to Note 12 for additional information regarding fair value measurements of the Company's investments.

Note 8 — Purchase Commitments

As of September 30, 2024, the Company had outstanding commitments to purchase revenue equipment of $203.8 million in the remainder of 2024 ($163.8 million of which were tractor commitments), and none thereafter. These purchases may be financed through any combination of finance leases, operating leases, debt, proceeds from sales of existing equipment, and cash flows from operations.

As of September 30, 2024, the Company had outstanding commitments to purchase facilities and non-revenue equipment of $50.3 million in the remainder of 2024, $65.0 million from 2025 through 2026, $5.3 million from 2027 through 2028, and $0.2 million thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

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Note 9 — Contingencies and Legal Proceedings

Legal Proceedings

The Company is party to certain legal proceedings incidental to its business. The majority of these claims relate to bodily injury, property damage, cargo and workers' compensation incurred in the transportation of freight, as well as certain class action litigation related to personnel and employment matters. We record a liability when we believe that it is probable that a loss has been incurred and the amount can be reasonably estimated.

Based on our present knowledge of the facts and, in certain cases, advice of outside counsel, management believes the resolution of open claims and pending litigation, taking into account existing reserves, is not likely to have a materially adverse impact on our condensed consolidated financial statements. However, any future claims or adverse developments in existing claims could impact this analysis. There are inherent uncertainties in these legal matters, some of which are beyond management's control, making the ultimate outcomes difficult to predict. Moreover, management's views and estimates related to these matters may change in the future, as new events and circumstances arise and the matters continue to develop. Cash flows or results of operations could be materially affected in any particular period by the resolution of one or more of these contingencies.

The Company has made accruals with respect to its legal matters where appropriate, as well as legal fees which are included in "Accrued liabilities" in the condensed consolidated balance sheets. The Company has recorded an aggregate accrual of approximately $6.9 million, relating to the Company's outstanding legal proceedings as of September 30, 2024.

Commutation of Third-Party Carrier Insurance Risk

On February 14, 2024, the Company finalized the terms of a transaction with the insurer under the third-party reinsurance agreement covering auto liability associated with the Company's third-party carrier insurance business. The agreement effectively transferred $161.1 million in third-party auto liability insurance claim liabilities to the insurer for policy periods from October 1, 2020 through March 31, 2023 funded by transferring the corresponding restricted cash held in trust for payment of the third-party insurance claims.

Note 10 — Share Repurchase Plans

In April 2022, the Company announced that the Board approved the repurchase of up to $350.0 million of the Company's outstanding common stock (the "2022 Knight-Swift Share Repurchase Plan"). With the adoption of the 2022 Knight-Swift Share Repurchase Plan, the Company terminated the 2020 Knight-Swift Share Repurchase Plan, which had approximately $42.8 million of authorized purchases remaining upon termination.

The Company made no share repurchases during the quarter and year-to-date periods ended September 30, 2024 and 2023.no

As of September 30, 2024 and December 31, 2023, the Company had $200.0 million remaining under the 2022 Knight-Swift Share Repurchase Plan.

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Note 11 — Weighted Average Shares Outstanding

Earnings per share, basic and diluted, as presented in the condensed consolidated statements of comprehensive income, are calculated by dividing net income attributable to Knight-Swift by the respective weighted average common shares outstanding during the period.

The following table reconciles basic weighted average shares outstanding to diluted weighted average shares outstanding:


	Quarter Ended September 30,		Year-to-Date September 30,
	2024	2023	2024	2023
	(In thousands)
Basic weighted average common shares outstanding	161,861	161,332	161,687	161,124
Dilutive effect of equity awards	372	556	433	658
Diluted weighted average common shares outstanding	162,233	161,888	162,120	161,782
Anti-dilutive shares excluded from earnings per diluted share 1	232	57	426	141

1 Shares were excluded from the dilutive-effect calculation because the outstanding awards' exercise prices were greater than the average market price of the Company's common stock for the periods presented.

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Note 12 — Fair Value Measurement

The following table presents the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:


		September 30, 2024				December 31, 2023
	Condensed Consolidated Balance Sheets Caption	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
		(In thousands)
Financial Assets:

Equity method investments	Other long-term assets	$	122,781	$	122,781	$	102,252	$	102,252



Financial Liabilities:
2021 Term Loan A-2, due September 2026 1	Finance lease liabilities and long-term debt – current portion	349,021		350,000		199,902		200,000
2021 Term Loan A-3, due September 2026 1	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	789,323		790,000		799,058		800,000
2023 Term Loan, due September 2026 2	Long-term debt – less current portion	249,378		250,000		249,135		250,000
2021 Revolver, due September 2026	Revolving line of credit	227,000		227,000		67,000		67,000
Revenue equipment installment notes 3	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	219,510		219,510		279,339		279,339
2021 Prudential Notes 4	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	16,787		16,800		25,078		25,100

2023 RSA, due October 2025 5	Accounts receivable securitization -less current portion	458,911		459,200		526,508		527,000
Mandatorily redeemable contingent consideration 6	Accrued liabilities	134,107		134,107		134,107		134,107
Contingent consideration 6	Accrued liabilities, Other long-term liabilities	40,000		40,000		40,859		40,859

1As of September 30, 2024, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of $1.0 million and $0.7 million in deferred loan costs, respectively. As of December 31, 2023, the carrying amounts of the 2021 Term Loan A-2 and 2021 Term Loan A-3 were net of $0.1 million and $0.9 million in deferred loan costs, respectively.

2As of September 30, 2024, the carrying amount of the 2023 Term Loan was net of $0.6 million in deferred loan costs. As of December 31, 2023, the carrying amount of the 2023 Term Loan was net of $0.9 million in deferred loan costs.

3As of September 30, 2024, the carrying amount of the revenue equipment installment notes included $0.8 million in fair value adjustments. As of December 31, 2023, the carrying amount of the revenue equipment installment notes included $1.3 million in fair value adjustments.

4As of September 30, 2024, the carrying amount of the 2021 Prudential Notes was net of approximately $13,000 in deferred loan costs and included $0.7 million in fair value adjustments. As of December 31, 2023, the carrying amount of the 2021 Prudential Notes was net of $22,000 in deferred loan costs and included $1.1 million in fair value adjustments.

5The carrying amount of the 2023 RSA was net of $0.3 million and $0.5 million in deferred loan costs as of September 30, 2024 and December 31, 2023, respectively.

6The contingent consideration is primarily related to the U.S. Xpress Acquisition.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Recurring Fair Value Measurements (Assets) — As of September 30, 2024 and December 31, 2023, there were no major categories of assets estimated at fair value that were measured on a recurring basis.

Recurring Fair Value Measurements (Liabilities) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of liabilities measured on a recurring basis as of September 30, 2024 and December 31, 2023:


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Gain (Loss)
	(In thousands)
As of September 30, 2024
Mandatorily redeemable contingent consideration 1 2	$	134,107	$	—	$	—	$	134,107	$	—
Contingent consideration 1	$	40,000	$	—	$	—	$	40,000	$	859
As of December 31, 2023
Mandatorily redeemable contingent consideration 1	$	134,107	$	—	$	—	$	134,107	$	—
Contingent consideration 1	$	40,859	$	—	$	—	$	40,859	$	3,359

1Contingent consideration is associated with the U.S. Xpress Acquisition and certain other investments. The Company recognized a gain of $0.9 million during the quarter and year-to-date periods ended September 30, 2024. The Company recognized a gain of $0.9 million during the quarter ended September 30, 2023 and a gain of $3.4 million during the year-to-date period ended September 30, 2023.

2As of September 30, 2024, the call option has expired and the mandatorily redeemable contingent consideration is now in the put option period.

Nonrecurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate fair value of assets measured on a nonrecurring basis as of September 30, 2024 and December 31, 2023:


			Fair Value Measurements at Reporting Date Using
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Total Loss
	(In thousands)
As of September 30, 2024
Buildings 1	$	—	$	—	$	—	$	—	$	(288)
Operating lease right-of-use assets 2	$	—	$	—	$	—	$	—	$	(5,300)
Equipment 3	$	—	$	—	$	—	$	—	$	(5,279)

As of December 31, 2023
Buildings 1	$	—	$	—	$	—	$	—	$	(187)

Equipment 3	$	—	$	—	$	—	$	—	$	(469)
Software 4	$	—	$	—	$	—	$	—	$	(1,580)

1 Reflects the non-cash impairment of building improvements (within the Truckload segment and the All Other Segments).

2 Reflects the non-cash impairment related to the market value of a facility lease (within the Truckload Segment).

3 Reflects the non-cash impairment of certain revenue equipment held for sale and other equipment (within the Truckload segment and the All Other Segments).

4 Reflects the non-cash impairment of software (within the All Other Segments).

Nonrecurring Fair Value Measurements (Liabilities) — As of September 30, 2024 and December 31, 2023, the Company had no major categories of liabilities estimated at fair value that were measured on a nonrecurring basis.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Gain on Sale of Revenue Equipment — Net gains on disposals, including disposals of property and equipment classified as assets held for sale, are reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income. The Company recorded net gains on disposals of:

•$9.2 million and $11.4 million for the quarters ended September 30, 2024 and 2023, respectively.

•$21.8 million and $46.6 million for the year-to-date periods ended September 30, 2024 and 2023, respectively.

Fair Value of Pension Plan Assets — The following table sets forth by level the fair value hierarchy of ACT's pension plan financial assets accounted for at fair value on a recurring basis. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. ACT's assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of fair value assets and their placement within the fair value hierarchy levels.


			Fair Value Measurements at Reporting Date Using:
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs
	(In thousands)
As of September 30, 2024


Fixed income funds	34,528		34,528		—		—
Cash and cash equivalents	1,379		1,379		—		—
Total pension plan assets	$	35,907	$	35,907	$	—	$	—

As of December 31, 2023


Fixed income funds	34,536		34,536		—		—
Cash and cash equivalents	887		887		—		—
Total pension plan assets	$	35,423	$	35,423	$	—	$	—

Note 13 — Related Party Transactions


	Quarter Ended September 30,								Year-to-Date September 30,
	2024				2023				2024				2023
	Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift
	(In thousands)







Facility and Equipment Leases	$	250	$	145	$	—	$	21	$	697	$	436	$	—	$	67







Other Services	$	—	$	9	$	—	$	9	$	—	$	26	$	27	$	402


	September 30, 2024				December 31, 2023
	Receivable		Payable		Receivable		Payable
	(In thousands)



Certain affiliates 1	$	—	$	58	$	23	$	37

1"Certain affiliates" includes entities that are associated with various board members and executives and require approval by the Audit Committee of the Board prior to completing transactions. Transactions with these entities generally include facility and equipment leases and other services.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 14 — Financial Information by Segment and Geography

Segment Information


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
Revenue:	(In thousands)
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
Subtotal	$	1,829,828	$	1,925,657	$	5,389,622	$	4,887,095
All Other Segments	68,438		119,677		221,796		391,773
Intersegment eliminations	(21,590)		(25,398)		(65,621)		(69,021)
Total revenue	$	1,876,676	$	2,019,936	$	5,545,797	$	5,209,847


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
Operating income (loss):	(In thousands)
Truckload	$	45,356	$	48,361	$	91,986	$	232,171
LTL	24,556		32,275		77,892		89,095
Logistics	6,684		10,364		13,916		32,750
Intermodal	(1,387)		(4,524)		(8,012)		(6,054)
Subtotal	$	75,209	$	86,476	$	175,782	$	347,962
All Other Segments 1	6,211		(5,420)		(10,347)		(28,089)
Operating income	$	81,420	$	81,056	$	165,435	$	319,873


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
Depreciation and amortization of property and equipment:	(In thousands)
Truckload	$	135,376	$	135,774	$	412,321	$	369,006
LTL	20,872		17,069		57,966		50,077
Logistics	778		1,048		2,708		3,078
Intermodal	5,641		5,194		16,651		14,403
Subtotal	$	162,667	$	159,085	$	489,646	$	436,564
All Other Segments	15,931		17,528		49,667		52,396
Depreciation and amortization of property and equipment	$	178,598	$	176,613	$	539,313	$	488,960

1The year-to-date $10.3 million operating loss within our All Other Segments is primarily driven by the $17.1 million operating loss in the third-party insurance business.

Geographical Information

In the aggregate, total revenue from the Company's international operations was less than 5.0% of consolidated total revenue for the quarter and year-to-date periods ended September 30, 2024 and 2023. Additionally, long-lived assets on the Company's international subsidiary balance sheets were less than 5.0% of consolidated total assets as of September 30, 2024 and December 31, 2023.

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ITEM 2.			MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report contains certain statements that may be considered "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and Section 27A of the Securities Act of 1933, as amended. All statements, other than statements of historical or current fact, are statements that could be deemed forward-looking statements, including without limitation:

•any projections of or guidance regarding earnings, earnings per share, revenues, cash flows, dividends, capital expenditures, or other financial items,

•any statement of plans, strategies, and objectives of management for future operations,

•any statements concerning proposed acquisition plans, new services, or developments,

•any statements regarding future economic conditions or performance, and

•any statements of belief and any statements of assumptions underlying any of the foregoing.

In this Quarterly Report, forward-looking statements include, but are not limited to, statements we make concerning:

•our ability to gain market share and adapt to market conditions, the ability of our infrastructure to support future growth, future market position, and the ability, desire, and effects of expanding our service offerings (including expansion of our LTL network), whether we grow organically or through potential acquisitions,

•our ability to recruit and retain qualified driving associates,

•future safety performance,

•future performance of our segments or businesses,

•future capital expenditures, equipment prices (including used equipment) and availability, our equipment purchasing or leasing plans, and mix of our owned versus leased revenue equipment, and our equipment turnover,

•the impact of pending legal proceedings,

•future insurance claims, coverage, coverage limits, premiums, and retention limits,

•the expected freight environment, including freight demand, capacity, seasonality, and volumes,

•economic conditions and growth, including future inflation, consumer spending, supply chain conditions, labor supply and relations, and US Gross Domestic Product ("GDP") changes,

•expected liquidity and methods for achieving sufficient liquidity, including our expected need or desire to incur indebtedness and our ability to comply with debt covenants,

•future fuel prices and availability and the expected impact of fuel efficiency initiatives,

•future expenses, including depreciation and amortization, purchased transportation, impairments, interest rates, cost structure, and our ability to control costs,

•future rates, operating profitability and margin, load count, asset utilization, and return on capital,

•future third-party service provider relationships and availability, including pricing terms,

•future contracted pay rates with independent contractors, ability to lease equipment to independent contractors, and compensation arrangements with driving associates,

•future capital allocation, capital structure, capital requirements, and growth strategies and opportunities,

•future share repurchases and dividends,

•future tax rates,

•expected tractor and trailer fleet age, fleet size, and demand for trailer fleet,

•future investment in and deployment of new or updated technology or services,

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•future classification of our independent contractors, including the impact of new laws and regulations regarding classification,

•political conditions and regulations, including conflicts, trade regulation, quotas, duties, or tariffs, and any future changes to the foregoing,

•the U.S. Xpress transaction, including integration efforts and any future effects of the acquisition, and

•others.

Such statements may be identified by their use of terms or phrases such as "believe," "may," "could," "will," "would," "should," "expects," "estimates," "designed," "likely," "foresee," "goals," "seek," "target," "forecast," "projects," "anticipates," "plans," "intends," "hopes," "strategy," "potential," "objective," "mission," "continue," "outlook," "feel," and similar terms and phrases. Forward-looking statements are based on currently available operating, financial, and competitive information. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause future events and actual results to materially differ from those set forth in, contemplated by, or underlying the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in Part I, Item 1A "Risk Factors" in our 2023 Annual Report, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.

All such forward-looking statements speak only as of the date of this Quarterly Report. You are cautioned not to place undue reliance on such forward-looking statements. We expressly disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statements contained herein, to reflect any change in our expectations with regard thereto, or any change in the events, conditions, or circumstances on which any such statement is based.


Reference to Glossary of Terms

Certain acronyms and terms used throughout this Quarterly Report are specific to our company, commonly used in our industry, or are otherwise frequently used throughout our document. Definitions for these acronyms and terms are provided in the "Glossary of Terms," available in the front of this document.


Reference to Annual Report

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the condensed consolidated financial statements (unaudited) and footnotes included in this Quarterly Report, as well as the consolidated financial statements and footnotes included in our 2023 Annual Report.

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Executive Summary

Company Overview

Knight-Swift Transportation Holdings Inc. is one of North America's largest and most diversified freight transportation companies, providing multiple full truckload, LTL, intermodal, and other complementary services. Our objective is to operate our business with industry-leading margins and continued organic growth and growth through acquisitions while providing safe, high-quality, cost-effective solutions for our customers. Knight-Swift uses a nationwide network of business units and terminals in the US and Mexico to serve customers throughout North America. In addition to operating the country's largest truckload fleet, Knight-Swift also contracts with third-party equipment providers to provide a broad range of transportation services to our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors. Our four reportable segments are Truckload, LTL, Logistics, and Intermodal. Additionally, we have various non-reportable segments.

Key Financial Highlights — Year-to-Date September 30, 2024

Consolidated operating income decreased 48.3% to $165.4 million during the year-to-date period ended September 30, 2024, as compared to the same period last year. Net income attributable to Knight-Swift decreased 78.9% to $48.1 million.

•Truckload — 97.6% operating ratio during the year-to-date period ended September 30, 2024. The Adjusted Operating Ratio1 was 96.7%, with a 14.9% year-over-year increase in revenue, excluding fuel surcharge and intersegment transactions, as a result of the inclusion of the truckload business of U.S. Xpress. Adjusted Operating Ratio worsened by 520 basis points year-over-year primarily due to the 4.8% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and the 1.3% increase in cost per mile largely due to inflationary prices.

•LTL — 91.5% operating ratio during the year-to-date period ended September 30, 2024. The Adjusted Operating Ratio1 increased 330 basis points year-over-year to 88.5%, primarily as a result of incremental operating, maintenance, and labor costs as we expand. We opened 34 new locations during the year-to-date period of 2024, and we acquired the assets of DHE effective July 30,2024, as we continue to grow our network.

•Logistics — 96.5% operating ratio during the year-to-date period ended September 30, 2024. The Adjusted Operating Ratio1 was 95.7% with a gross margin of 17.5% while revenue, excluding intersegment transactions, decreased 2.7%, including the U.S. Xpress logistics business. Load count decreased 11.5% due to the soft demand environment.

•Intermodal — 102.8% operating ratio during the year-to-date period ended September 30, 2024, as revenue per load declined 10.0% year-over-year and load count increased 1.3%.

•All Other Segments — Operating loss decreased to $10.3 million during the year-to-date period ended September 30, 2024 from $28.1 million during the comparable period of 2023, largely as a result of exiting the third-party insurance business.

•Liquidity and Capital — During the year-to-date period ended September 30, 2024, we generated $524.7 million in operating cash flows and Free Cash Flow1 of $116.2 million, which was negatively impacted by our decision to transfer $161.1 million of third-party insurance claim liabilities to another insurance company as discussed during the previous quarter, funded by transferring the corresponding restricted cash held in trust for payment of the third-party insurance claims. The use of restricted cash in this transaction does not impact the availability of operating cash for the needs of our ongoing businesses. We paid down $112.3 million in finance lease liabilities, $147.0 million in operating lease liabilities, and made $92.2 million of net repayments on our 2021 Revolver and 2023 RSA. As of September 30, 2024, we had a balance of $166.3 million in unrestricted cash and cash equivalents, $1.4 billion face value outstanding on the 2021 Term Loans and 2023 Term Loan, and $7.1 billion of stockholders' equity. We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants. See discussion under "Liquidity and Capital Resources" for additional information.

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________

1Refer to "Non-GAAP Financial Measures" below.

Key Financial Data and Operating Metrics


	Quarter Ended September 30,						Year-to-Date September 30,
	2024			2023			2024			2023
GAAP financial data:	(Dollars in thousands, except per share data)
Total revenue	$	1,876,676		$	2,019,936		$	5,545,797		$	5,209,847
Revenue, excluding truckload and LTL fuel surcharge	$	1,680,893		$	1,775,249		$	4,935,408		$	4,615,990
Net income attributable to Knight-Swift	$	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		%

Non-GAAP financial data:
Adjusted Net Income Attributable to Knight-Swift 1	$	54,447		$	67,162		$	113,596		$	264,271
Adjusted EPS 1	$	0.34		$	0.41		$	0.70		$	1.63
Adjusted Operating Ratio 1	93.9		%	93.8		%	95.1		%	91.6		%

Revenue equipment statistics by segment:
Truckload
Average tractors 2	22,814			24,159			22,986			20,054
Average trailers 3	90,935			95,976			92,642			85,125
LTL
Average tractors 4	3,730			3,206			3,505			3,177
Average trailers 5	9,888			8,496			9,160			8,445
Intermodal
Average tractors	622			677			615			647
Average containers	12,569			12,669			12,577			12,780

1Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are non-GAAP financial measures and should not be considered alternatives, or superior to, the most directly comparable GAAP financial measures. However, management believes that presentation of these non-GAAP financial measures provides useful information to investors regarding the Company's results of operations. Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, and Adjusted Operating Ratio are reconciled to the most directly comparable GAAP financial measures under "Non-GAAP Financial Measures," below.

2Our tractor fleet within the Truckload segment had a weighted average age of 2.6 years and 2.5 years as of September 30, 2024 and 2023, respectively.

3Our average trailers includes 8,510 and 8,432 trailers related to leasing activities recorded within our All Other Segments for the quarters ended September 30, 2024 and 2023, respectively. Our trailer fleet within the Truckload segment had a weighted average age of 9.1 years and 9.1 years as of September 30, 2024 and 2023, respectively. Our average trailers includes 8,718 and 8,599 trailers related to leasing activities recorded within our All Other Segments for the year-to-date periods September 30, 2024 and 2023, respectively.

4Our LTL tractor fleet had a weighted average age of 4.2 years and 4.3 years as of September 30, 2024 and 2023, respectively. Our LTL tractor fleet includes 615 and 609 tractors from ACT's and MME's dedicated and other businesses for the quarters ended September 30, 2024 and 2023, respectively. Our LTL tractor fleet includes 613 and 610 tractors from ACT's and MME's dedicated and other businesses for the year-to-date period September 30, 2024 and 2023, respectively.

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5Our LTL trailer fleet had a weighted average age of 8.5 years as of September 30, 2024 and 2023. Our LTL trailer fleet includes 843 and 777 trailers from ACT's and MME's dedicated and other businesses for the quarters ended September 30, 2024 and 2023, respectively. Our LTL trailer fleet includes 831 and 778 trailers from ACT's and MME's dedicated and other businesses for the year-to-date periods September 30, 2024 and 2023, respectively.

Market Trends and Outlook

The national unemployment rate was 4.1%1 as of September 30, 2024, as compared to 3.8% as of September 30, 2023. The US gross domestic product, which is the broadest measure of goods and services produced across the economy, increased by 3.0%2 on a quarter-over-quarter basis, per the most recent third-party forecasts. The increase, compared to the prior quarter increase of 1.6%, primarily reflected increases in consumer spending, private inventory investment, and nonresidential fixed investments. These were partially offset by increased imports. The most recent US employment cost index indicates a quarter-over-quarter increase of 4.1%1 and a sequential increase of 0.9%1.

Our Company outlook for the fourth quarter of 2024 and the first quarter of 2025 includes the following:

Truckload

•Truckload Segment revenue up slightly sequentially in the fourth quarter and down low-to-mid single-digit percent sequentially into the first quarter with operating margins improving modestly sequentially in the fourth quarter and declining modestly sequentially into the first quarter,

•Tractor count down low single-digit percent sequentially in the fourth and first quarters.

LTL

•LTL Segment with high-teens percent growth in revenue, excluding fuel surcharge, year-over-year in both fourth and first quarters driven by shipment count growth from our expanding network, the inclusion of DHE, and yield improvement,

•Adjusted operating ratios in the high 80's as we continue to absorb costs from our network expansion.

Logistics

•Logistics Segment revenue up high single-digit percent sequentially in the fourth quarter and declining high-teens percent sequentially in the first quarter, with Adjusted Operating Ratios in the mid-90’s.

Intermodal

•Intermodal Segment load count down mid-to-high single-digit percent sequentially in the fourth quarter before growing low single-digit percent sequentially in the first quarter with approximately break-even operating margins.

All Other

•All Other Segment operating income, before including the $11.7 million quarterly intangible asset amortization, approximately break-even for the fourth quarter as some of these services experience their typical seasonal slowdown, and $16 million to $21 million for the first quarter.

Additional

•Equipment gains to be in the range of $5 million to $10 million per quarter,

•Net interest expense down modestly sequentially in the fourth quarter and first quarter,

•Net cash capital expenditures for the full year 2024 expected range of $525 million - $575 million,

•Expected effective tax rate on adjusted income before taxes of approximately 26% to 27% for fourth quarter 2024 and approximately 26% to 28% for full year 2025.

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In addition to the above, we expect the Truckload segment will continue to pursue opportunities, as we implement a decentralized operating model within our new U.S. Xpress locations, and the Logistics segment will continue to provide value to our customers through our power-only and traditional brokerage service offerings. Our ACT and MME teams are working together to further build out a super-regional network, which we expanded in the third quarter of 2024 with the DHE Acquisition, that we expect will provide additional yield and revenue opportunities. The Intermodal segment continues to build out its network that aligns with our new rail partners as we pursue a more diversified portfolio of customers. Our All Other Segments are further expanding to complement our other service offerings.

We anticipate that depreciation and amortization expense will increase, as a percentage of revenue, excluding truckload and LTL fuel surcharge, as we intend to purchase, rather than enter into operating leases, for a majority of our revenue equipment, terminal improvements, or terminal expansions during 2024. With significant tightening in the insurance markets, we may also experience changes in premiums, retention limits, and excess coverage limits in the remainder of 2024. While fuel expense is generally offset by fuel surcharge revenue, our fuel expense, net of truckload and LTL fuel surcharge revenue, may increase in the future, particularly during periods of sharply rising fuel prices. In periods of declining prices the opposite is true. Overall, we remain committed to long-term profitability as we continue to leverage opportunities across the Knight-Swift brands, and efficiently deploy our assets, while maintaining a relentless focus on cost control. This includes seeking acquisition opportunities to improve earnings, gain customers, and reach more professional drivers, as illustrated by the acquisition of U.S. Xpress and our intention to expand the geographic footprint of our LTL network, as illustrated by the DHE Acquisition.

________

1Source: bls.gov

2Source: bea.gov


Results of Operations — Summary

Note: The reported results do not include U.S. Xpress' operating results prior to its acquisition by the Company on July 1, 2023 in accordance with the accounting treatment applicable to the transaction. The reported results do not include the LTL operations of DHE prior to its acquisition by the Company on July 30, 2024 in accordance with the accounting treatment applicable to the transaction. Accordingly, comparisons between the Company's current and prior period results may not be meaningful.

Operating Results: Third Quarter 2024 compared to Third Quarter 2023

The $29.7 million decrease in net income attributable to Knight-Swift to $30.5 million during the third quarter of 2024 from $60.2 million during the same period last year includes the following:

•Contributor — $3.0 million decrease in operating income within our Truckload segment primarily due to a 5.7% decline in loaded miles, partially offset by a 1.3% decrease in cost per mile.

•Contributor — $7.7 million decrease in operating income within our LTL segment primarily due to start-up costs and early stage operations at the recently opened facilities.

•Contributor — $3.7 million decrease in operating income within our Logistics segment due to the 21.1% decrease in load count, partially offset by a 13.6% increase in revenue per load.

•Contributor — $5.0 million increase in consolidated interest expense primarily driven by higher debt balances related to the DHE acquisition and higher interest rates.

•Contributor — $8.3 million decrease in other income, net, primarily due the $12.1 million loss on investment as a result of the write-off of a minority investment in a transportation-adjacent technology venture which ceased operations in the third quarter of 2024.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

•Contributor — $15.4 million increase in consolidated income tax expense, primarily due to a partial release in the third quarter of 2023 of the valuation allowance associated with the U.S. Xpress net operating loss and tax credit carryforward benefits. Our effective tax rate for the third quarter of 2024 was 32.0%, compared to (2.1)% for the third quarter of 2023.

•Offset — $3.1 million decrease in operating loss within our Intermodal segment, driven by a 7.2% increase in load count, partially offset by a 5.3% decrease in revenue per load.

•Offset — $11.6 million increase in operating income within the All Other Segments, largely as a result of exiting the third-party insurance business at the end of the first quarter of 2024.

Operating Results: Year-To-Date September 30, 2024 Compared to Year-To-Date September 30, 2023

The $179.7 million decrease in net income attributable to Knight-Swift to $48.1 million during the year-to-date period ended September 30, 2024 from $227.8 million during the same period last year includes the following:

•Contributor — $140.2 million decrease in operating income within our Truckload segment primarily due to a 4.8% decline in revenue per loaded mile, excluding fuel surcharge and intersegment transactions, and a 1.3% increase in cost per mile.

•Contributor — $11.2 million decrease in operating income within our LTL segment due to severe winter weather experienced during the first quarter of 2024 and start-up costs and early stage operations at our recently opened facilities.

•Contributor — $18.8 million decrease in operating income within our Logistics segment due to an 11.5% decline in load count.

•Contributor — $2.0 million increase in operating loss within our Intermodal segment, driven by a 10.0% decrease in revenue per load, partially offset by a 1.3% increase in load count.

•Contributor — $39.3 million increase in consolidated interest expense primarily driven by higher debt balances related to the U.S. Xpress and DHE acquisitions and higher interest rates.

•Contributor — $13.8 million decrease in other income, net, primarily due the $12.1 million loss on investment as a result of the write-off of a minority investment in a transportation-adjacent technology venture which ceased operations in the third quarter of 2024.

•Offset — $17.7 million decrease in operating loss within the All Other Segments, largely as a result of exiting the third-party insurance business at the end of the first quarter.

•Offset — $31.2 million decrease in consolidated income tax expense, primarily due to a reduction of pre-tax income which was partially offset by the partial release in the third quarter of 2023 of the valuation allowance associated with the U.S. Xpress net operating loss and tax credit carryforward benefits. This resulted in an effective tax rate of 32.2% for the year-to-date period ended September 30, 2024, and 19.1% for the year-to-date period ended September 30, 2023.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


Results of Operations — Segment Review

The Company has four reportable segments: Truckload, LTL, Logistics, and Intermodal, as well as certain other operating segments included within our All Other Segments.

Consolidating Tables for Total Revenue and Operating Income (Loss)


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
Revenue:	(In thousands)
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
Subtotal	$	1,829,828	$	1,925,657	$	5,389,622	$	4,887,095
All Other Segments	68,438		119,677		221,796		391,773
Intersegment eliminations	(21,590)		(25,398)		(65,621)		(69,021)
Total revenue	$	1,876,676	$	2,019,936	$	5,545,797	$	5,209,847


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
Operating income (loss):	(In thousands)
Truckload	$	45,356	$	48,361	$	91,986	$	232,171
LTL	24,556		32,275		77,892		89,095
Logistics	6,684		10,364		13,916		32,750
Intermodal	(1,387)		(4,524)		(8,012)		(6,054)
Subtotal	$	75,209	$	86,476	$	175,782	$	347,962
All Other Segments	6,211		(5,420)		(10,347)		(28,089)
Operating income	$	81,420	$	81,056	$	165,435	$	319,873

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Revenue

•Our truckload services include irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border transportation of various products, goods, and materials for our diverse customer base with approximately 16,300 irregular route and 6,500 dedicated tractors.

•Our LTL business, which was initially established in 2021 through the ACT Acquisition and later the acquisitions of MME and the LTL division of DHE, provides our customers with regional LTL transportation service through our growing network of over 160 facilities and a door count of approximately 6,000. Our LTL segment operates approximately 3,700 tractors and approximately 9,900 trailers and also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.

•Our Logistics and Intermodal segments provide a multitude of shipping solutions, including additional sources of truckload capacity and alternative transportation modes, by utilizing our vast network of third-party capacity providers and rail providers, as well as certain logistics and freight management services. We offer power-only services through our Logistics segment leveraging our fleet of nearly 91,000 trailers.

•Our All Other Segments include support services provided to our customers and third-party carriers including equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services, as well as insurance prior to the first quarter of 2024. Our All Other Segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

•In addition to the revenues earned from our customers for the trucking and non-trucking services discussed above, we also earn fuel surcharge revenue from our customers through our fuel surcharge programs, which serve to recover a majority of our fuel costs. This generally applies only to loaded miles for our Truckload and LTL segments and typically does not offset non-paid empty miles, idle time, and out-of-route miles driven. Fuel surcharge programs involve a computation based on the change in national or regional fuel prices. These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue. Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue for our Truckload and LTL segments.

Expenses

Our most significant expenses typically vary with miles traveled and include fuel, driving associate-related expenses (such as wages and benefits), and services purchased from third-party service providers (including other trucking companies, railroad and drayage providers, and independent contractors). Maintenance and tire expenses, as well as the cost of insurance and claims generally vary with the miles we travel, but also have a controllable component based on safety performance, fleet age, operating efficiency, and other factors. Our primary fixed costs are depreciation and lease expense for revenue equipment and terminals, non-driver employee compensation, amortization of intangible assets, and interest expenses.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Operating Statistics

We measure our consolidated and segment results through the operating statistics listed in the table below. Our chief operating decision makers monitor the GAAP results of our reportable segments, supplemented by certain non-GAAP information. Refer to "Non-GAAP Financial Measures" for more details. Additionally, we use a number of primary indicators to monitor our revenue and expense performance and efficiency.

Operating Statistic

Relevant Segment(s)

Description

Average Revenue per Tractor

Truckload

Measures productivity and represents revenue (excluding fuel surcharge and intersegment transactions) divided by average tractor count

Total Miles per Tractor

Truckload

Total miles (including loaded and empty miles) a tractor travels on average

Average Length of Haul

Truckload, LTL

For our Truckload segment this is calculated as average miles traveled with loaded trailer cargo per order.
For our LTL segment this is calculated as average miles traveled from the origin service center to the destination service center.

Non-paid Empty Miles Percentage

Truckload

Percentage of miles without trailer cargo

Shipments per Day

LTL

Average number of shipments completed each business day

Weight per Shipment

LTL

Total weight (in pounds) divided by total shipments

Revenue per shipment

LTL

Total revenue divided by total shipments

Revenue xFSC per shipment

LTL

Total revenue, excluding fuel surcharge, divided by total shipments

Revenue per hundredweight

LTL

Measures yield and is calculated as total revenue divided by total weight (in pounds) times 100

Revenue xFSC per hundredweight

LTL

Total revenue, excluding fuel surcharge, divided by total weight (in pounds) times 100

Average Tractors

Truckload, LTL, Intermodal

Average tractors in operation during the period including company tractors and tractors provided by independent contractors

Average Trailers

Truckload, LTL

Average trailers in operation during the period

Average Revenue per Load

Logistics, Intermodal

Total revenue (excluding intersegment transactions) divided by load count

Gross Margin Percentage

Logistics

Logistics gross margin (revenue, excluding intersegment transactions, less purchased transportation expense, excluding intersegment transactions) as a percentage of logistics revenue, excluding intersegment transactions

Average Containers

Intermodal

Average containers in operation during the period

GAAP Operating Ratio

Truckload,
LTL, Logistics, Intermodal

Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses. Calculated as operating expenses as a percentage of total revenue, or the inverse of operating margin.

Non-GAAP Adjusted Operating Ratio

Truckload,
LTL, Logistics, Intermodal

Measures operating efficiency and is widely used in our industry as an assessment of management's effectiveness in controlling all categories of operating expenses. Consolidated and segment Adjusted Operating Ratios are reconciled to their corresponding GAAP operating ratios under "Non-GAAP Financial Measures," below.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Segment Review

Truckload Segment

We generate revenue in the Truckload segment primarily through irregular route, dedicated, refrigerated, expedited, flatbed, and cross-border service operations across our brands. We operated approximately 16,300 irregular route tractors and approximately 6,500 dedicated route tractors in use during the quarter ended September 30, 2024. Generally, we are paid a predetermined rate per mile or per load for our truckload services. Additional revenues are generated by charging for tractor and trailer detention, loading and unloading activities, dedicated services, and other specialized services, as well as through the collection of fuel surcharge revenue to mitigate the impact of increases in the cost of fuel. The main factors that affect the revenue generated by our Truckload segment are rate per mile from our customers, the percentage of miles for which we are compensated, and the number of loaded miles we generate with our equipment.

The most significant expenses in the Truckload segment are primarily variable and include fuel and fuel taxes, driving associate-related expenses (such as wages, benefits, training, and recruitment), and costs associated with independent contractors primarily included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. Maintenance expense (which includes costs for replacement tires for our revenue equipment) and insurance and claims expenses have both fixed and variable components. These expenses generally vary with the miles we travel, but also have a controllable component based on safety, fleet age, efficiency, and other factors. The main fixed costs in the Truckload segment are depreciation and rent expense from tractors, trailers, and terminals, as well as compensating our non-driver employees.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands, except per tractor data)												Increase (Decrease)



Total revenue	$	1,258,156		$	1,380,781		$	3,785,408		$	3,346,685		(8.9	%)	13.1	%
Revenue, excluding fuel surcharge and intersegment transactions	$	1,107,461		$	1,179,978		$	3,304,302		$	2,875,331		(6.1	%)	14.9	%
GAAP: Operating income	$	45,356		$	48,361		$	91,986		$	232,171		(6.2	%)	(60.4	%)
Non-GAAP: Adjusted Operating Income 1	$	48,505		$	60,148		$	108,775		$	244,600		(19.4	%)	(55.5	%)
Average revenue per tractor 2	$	48,543		$	48,842		$	143,753		$	155,081		(0.6	%)	(7.3	%)
GAAP: Operating ratio 2	96.4		%	96.5		%	97.6		%	93.1		%	(10	bps)	450	bps
Non-GAAP: Adjusted Operating Ratio 1 2	95.6		%	94.9		%	96.7		%	91.5		%	70	bps	520	bps
Non-paid empty miles percentage 2	14.1		%	13.6		%	14.1		%	14.5		%	50	bps	(40	bps)
Average length of haul (miles) 2	378			400			386			393			(5.5	%)	(1.8	%)
Total miles per tractor 2	20,469			20,384			60,870			62,781			0.4	%	(3.0	%)
Average tractors 2 3	22,814			24,159			22,986			20,054			(5.6	%)	14.6	%
Average trailers 2 4	90,935			95,976			92,642			85,125			(5.3	%)	8.8	%

1 Refer to "Non-GAAP Financial Measures" below.

2 Defined under "Operating Statistics," above. In order to improve comparability, average tractors of 18,541 is used as the denominator in the average revenue per tractor and total miles per tractor calculations for year-to-date 2023, reflecting the pro-rata portion of the year for which U.S. Xpress' results of operations were reported following the close of the U.S. Xpress Acquisition.

3 Includes 20,688 and 21,676 average company-owned tractors for the third quarter of 2024 and 2023, respectively. Includes 20,838 and 17,977 average company-owned tractors for the year-to date periods September 30, 2024 and 2023, respectively.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

4 Our average trailers includes 8,510 and 8,432 trailers related to leasing activities recorded within our All Other Segments for the quarters ended September 30, 2024 and 2023, respectively. Our average trailers includes 8,718 and 8,599 trailers related to leasing activities recorded within our All Other Segments for the year-to-date periods September 30, 2024 and 2023, respectively.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — Truckload segment revenue, excluding fuel surcharge and intersegment transactions, declined 6.1% year-over-year, driven by a 5.7% decrease in loaded miles as we lapped the acquisition of U.S. Xpress at the beginning of the quarter. The third quarter Adjusted Operating Ratio was 95.6% in an environment that remained challenging. On a sequential basis, the Adjusted Operating Ratio of our legacy trucking businesses improved 250 basis points over the second quarter, while stable margins at U.S. Xpress negatively impacted this segment's Adjusted Operating Ratio by 220 basis points for the quarter. Third quarter revenue per loaded mile, excluding fuel surcharge and intersegment transactions, was flat year-over-year and increased slightly over the second quarter. The sequential improvement in revenue per loaded mile was achieved through positive rate changes in bid awards and our spot activity which continues to be at a premium to our average contractual revenue per loaded mile.

Cost per mile improved 1.3% year-over-year as we continue to focus on what we can control. We are working diligently to improve our cost structure and equipment utilization to mitigate pressure on margins through this prolonged freight cycle while remaining disciplined on pricing and capacity commitments to position our business to respond when market conditions improve.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Truckload segment revenue, excluding fuel surcharge and intersegment transactions, was $3.3 billion, an increase of 14.9% year-over-year, reflecting a 7.1% decline in the legacy truckload business prior to the inclusion of U.S. Xpress. Adjusted Operating Ratio was 96.7%, largely driven by a 4.8% decrease in revenue per loaded mile, excluding fuel surcharge and intersegment transactions and a 1.3% increase in cost per mile, net of fuel surcharge recovery.

LTL Segment

Dothan, Alabama-based ACT and Bismarck, North Dakota-based MME, both acquired in 2021, and the LTL division of DHE, acquired in 2024, comprise our LTL segment. We provide regional direct service and serve our customers' national transportation needs by utilizing key partner carriers for coverage areas outside of our network. We primarily generate revenue by transporting freight for our customers through our core LTL services.

Our revenues are impacted by shipment volume and tonnage levels that flow through our network. Additional revenues are generated through fuel surcharges and accessorial services provided during transit from shipment origin to destination. We focus on the following multiple revenue generation factors when reviewing revenue yield: revenue per hundredweight, revenue per shipment, weight per shipment, and length of haul. Fluctuations within each of these metrics are analyzed when determining the revenue quality of our customers' shipment density.

Our most significant expense is related to direct costs associated with the transportation of our freight moves including direct salary, wage and benefit costs, fuel expense, and depreciation expense associated with revenue equipment costs. Other expenses associated with revenue generation that can fluctuate and impact operating results are insurance and claims expenses, as well as maintenance costs of our revenue equipment. These expenses can be influenced by multiple factors including our safety performance, equipment age, and other factors. A key component of lowering our operating costs is labor efficiency within our network. We continue to focus on technological advances to improve the customer experience and reduce our operating costs.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands, except per tractor data)												Increase (Decrease)



Total revenue	$	325,412		$	284,168		$	914,012		$	806,577		14.5	%	13.3	%
Revenue, excluding fuel surcharge	$	280,181		$	239,984		$	784,266		$	682,491		16.7	%	14.9	%
GAAP: Operating income	$	24,556		$	32,275		$	77,892		$	89,095		(23.9	%)	(12.6	%)
Non-GAAP: Adjusted Operating Income 1	$	29,119		$	36,195		$	90,295		$	100,855		(19.5	%)	(10.5	%)
GAAP: Operating ratio 2	92.5		%	88.6		%	91.5		%	89.0		%	390	bps	250	bps
Non-GAAP: Adjusted Operating Ratio 1 2	89.6		%	84.9		%	88.5		%	85.2		%	470	bps	330	bps

LTL shipments per day 2	21,907			19,712			20,397			18,771			11.1	%	8.7	%
LTL weight per shipment 2	1,001			1,042			1,005			1,053			(3.9	%)	(4.6	%)
LTL average length of haul (miles) 2	592			562			584			548			5.3	%	6.6	%
LTL revenue per shipment 2	$	202.20		$	196.59		$	201.56		$	191.36		2.9	%	5.3	%
LTL revenue xFSC per shipment 2	$	173.83		$	165.80		$	172.67		$	161.74		4.8	%	6.8	%
LTL revenue per hundredweight 2	$	20.21		$	18.86		$	20.05		$	18.17		7.2	%	10.3	%
LTL revenue xFSC per hundredweight 2	$	17.37		$	15.91		$	17.18		$	15.36		9.2	%	11.8	%
LTL average tractors 2 3	3,730			3,206			3,505			3,177			16.3	%	10.3	%
LTL average trailers 2 4	9,888			8,496			9,160			8,445			16.4	%	8.5	%

1Refer to "Non-GAAP Financial Measures" below.

2Defined under "Operating Statistics," above.

3Our LTL tractor fleet includes 615 and 609 tractors from ACT's and MME's dedicated and other businesses for the third quarter of 2024 and 2023, respectively. Our LTL tractor fleet includes 613 and 610 tractors from ACT's and MME's dedicated and other businesses for the year-to-date periods September 30, 2024 and 2023, respectively.

4Our LTL trailer fleet includes 843 and 777 trailers from ACT's and MME's dedicated and other businesses for the third quarter of 2024 and 2023, respectively. Our LTL trailer fleet includes 831 and 778 trailers from ACT's and MME's dedicated and other businesses for the year-to-date periods September 30, 2024 and 2023, respectively.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Comparison Between the Quarters Ended September 30, 2024 and 2023 — Our LTL segment grew revenue, excluding fuel surcharge, 16.7% as shipments per day increased 11.1% year-over-year. Our previously announced acquisition of DHE on July 30, 2024 contributed approximately 7.5% to each of these improvements and added the key Southwest markets of California, Arizona, and Nevada to our network. Revenue per hundredweight, excluding fuel surcharge, increased 9.2%, while revenue per shipment, excluding fuel surcharge, increased by 4.8%, reflecting a 3.9% decrease in weight per shipment. This segment produced an 89.6% Adjusted Operating Ratio during the third quarter, and Adjusted Operating Income decreased 19.5% year-over-year due to start-up costs and sub-scale operations at our recently opened facilities.

During the quarter, we opened 16 additional service centers following 18 openings in the first half of the year. We expect to open 4 more service centers by the end of 2024. Also, our DHE acquisition represents approximately 10% growth in both service centers and door count for our LTL network. Overall, our organic and inorganic expansion activities in 2024 should add nearly 1,500 doors, representing a 32.2% increase to our door count from the beginning of the year. We believe this meaningfully impacts the reach of our service offering and increases the density of our network. We believe the investments we are making in our network during 2024 bring opportunities to service additional freight and customers, though the associated set-up costs and initial operational inefficiencies are near-term headwinds to improving margins. Our focus for 2025 will be to have these locations continue to scale, particularly as they participate in the next bid cycle, to help drive growth and margin expansion in the business. We continue to look for both organic and inorganic opportunities to geographically expand our footprint within the LTL market.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The LTL segment produced an 88.5% Adjusted Operating Ratio during the year-to-date period ending September 30, 2024, as revenue, excluding fuel surcharge, increased 14.9%. Adjusted Operating Income decreased 10.5% due to severe winter weather experienced during the first quarter of 2024 and start-up costs and early stage operations at our recently opened facilities. Average shipments per day increased 8.7%. Revenue per hundredweight, excluding fuel surcharge, increased 11.8%, while revenue per shipment, excluding fuel surcharge, increased 6.8%, reflecting a 4.6% decrease in weight per shipment.

Logistics Segment

The Logistics segment is less asset-intensive than the Truckload and LTL segments and is dependent upon capable non-driver employees, modern and effective information technology, and third-party capacity providers. Logistics revenue is generated by its brokerage operations. We generate additional revenue by offering specialized logistics solutions (including, but not limited to, trailing equipment, origin management, surge volume, disaster relief, special projects, and other logistics needs). Logistics revenue is mainly affected by the rates we obtain from customers, the freight volumes we ship through third-party capacity providers, and our ability to secure third-party capacity providers to transport customer freight.

The most significant expense in the Logistics segment is purchased transportation that we pay to third-party capacity providers, which is primarily a variable cost and is included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. Variability in this expense depends on truckload capacity, availability of third-party capacity providers, rates charged to customers, current freight demand, and customer shipping needs. Fixed Logistics operating expenses primarily include non-driver employee compensation and benefits recorded in "Salaries, wages, and benefits" and depreciation and amortization expense recorded in "Depreciation and amortization of property and equipment" in the condensed consolidated statements of comprehensive income.

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands, except per load data)												Increase (Decrease)



Total revenue	$	143,581		$	159,489		$	402,010		$	417,715		(10.0	%)	(3.8	%)
Revenue, excluding intersegment transactions	$	143,581		$	158,601		$	402,010		$	413,160		(9.5	%)	(2.7	%)
GAAP: Operating income	$	6,684		$	10,364		$	13,916		$	32,750		(35.5	%)	(57.5	%)
Non-GAAP: Adjusted Operating Income 1 2	$	7,848		$	10,699		$	17,408		$	33,753		(26.6	%)	(48.4	%)
Revenue per load - Brokerage only 2	$	1,898		$	1,671		$	1,828		$	1,680		13.6	%	8.8	%
Gross margin percentage - Brokerage only 2	17.8		%	18.0		%	17.5		%	19.0		%	(20	bps)	(150	bps)
GAAP: Operating ratio 2	95.3		%	93.5		%	96.5		%	92.2		%	180	bps	430	bps
Non-GAAP: Adjusted Operating Ratio 1 2	94.5		%	93.3		%	95.7		%	91.8		%	120	bps	390	bps

1 Refer to "Non-GAAP Financial Measures" below.

2 Defined under "Operating Statistics," above.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The Logistics segment Adjusted Operating Ratio was 94.5%, with a gross margin of 17.8% in the third quarter of 2024. Logistics load count was down 21.1% year-over-year as we lapped the acquisition of the U.S. Xpress logistics business at the beginning of the quarter, though load count improved 5.5% over the second quarter. Revenue per load increased year-over-year by 13.6% in the third quarter. We remain disciplined on price and diligent in carrier qualification to provide value to customers while maintaining profitability. We continue to leverage our power-only capabilities to complement our asset business, build a broader and more diversified freight portfolio, and to enhance the returns on our capital assets.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The Logistics segment Adjusted Operating Ratio was 95.7%, with a gross margin of 17.5% in the year-to-date period ending September 30, 2024, down from 19.0% in the same period of the prior year. Logistics load count decreased 11.5%, reflecting the inclusion of U.S. Xpress logistics volumes. Revenue per load increased by 8.8% year-over-year, largely driven by the inclusion of U.S. Xpress logistics in the current period, as it has a different business mix.

Intermodal Segment

The Intermodal segment complements our regional operating model, allows us to better serve customers in longer haul lanes, and reduces our investment in fixed assets. Through the Intermodal segment, we generate revenue by moving freight over the rail in our containers and other trailing equipment, combined with revenue for drayage to transport loads between railheads and customer locations. The most significant expense in the Intermodal segment is the cost of purchased transportation that we pay to third-party capacity providers (including rail providers), which is primarily variable and included in "Purchased transportation" in the condensed consolidated statements of comprehensive income. While rail pricing is determined on an annual basis, purchased transportation varies as it relates to rail capacity, freight demand, and customer shipping needs. The main fixed costs in the Intermodal segment are depreciation of our company tractors related to drayage, containers, and chassis, as well as non-driver employee compensation and benefits.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands, except per load data)												Increase (Decrease)



Total revenue	$	102,679		$	101,219		$	288,192		$	316,118		1.4	%	(8.8	%)

GAAP: Operating loss	$	(1,387)		$	(4,524)		$	(8,012)		$	(6,054)		69.3	%	(32.3	%)

Average revenue per load 1	$	2,569		$	2,714		$	2,599		$	2,889		(5.3	%)	(10.0	%)
GAAP: Operating ratio 1	101.4		%	104.5		%	102.8		%	101.9		%	(310	bps)	90	bps

Load count	39,968			37,292			110,905			109,430			7.2	%	1.3	%
Average tractors 1 2	622			677			615			647			(8.1	%)	(4.9	%)
Average containers 1	12,569			12,669			12,577			12,780			(0.8	%)	(1.6	%)

1 Defined under "Operating Statistics," above.

2 Includes 566 and 612 company-owned tractors for the third quarter of 2024 and 2023, respectively.

Includes 558 and 583 company-owned tractors for the year-to-date periods ended September 30, 2024 and 2023, respectively.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The Intermodal segment improved its operating ratio to 101.4% while growing total revenue 1.4% year-over-year. This is the first year-over-year revenue increase in six quarters and was driven by a 7.2% increase in load count, partially offset by a 5.3% decline in revenue per load. We remain focused on growing our load count with disciplined pricing across a diverse group of customers.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The Intermodal segment operated with a 102.8% operating ratio, while total revenue decreased 8.8% year-over-year to $288.2 million. The drop in revenue was driven by a 10.0% decline in revenue per load, offset by a 1.3% increase in load count year-over-year.

All Other Segments

Our All Other Segments include support services provided to our customers and third-party carriers including equipment maintenance, equipment leasing, warehousing, trailer parts manufacturing, and warranty services, as well as insurance prior to the first quarter of 2024. Our All Other Segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and $11.7 million in quarterly amortization of intangibles related to the 2017 Merger and various acquisitions).


	Quarter Ended September 30,				Year-to-Date September 30,				QTD 2024 vs.		YTD 2024 vs.
	2024		2023		2024		2023		QTD 2023		YTD 2023
	(Dollars in thousands)								Increase (Decrease)



Total revenue	$	68,438	$	119,677	$	221,796	$	391,773	(42.8	%)	(43.4	%)
Operating income (loss)	$	6,211	$	(5,420)	$	(10,347)	$	(28,089)	214.6	%	63.2	%

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The $6.2 million operating income within our All Other Segments is primarily driven by the warehousing and equipment leasing businesses. Revenue within our All Other Segments declined 42.8% year-over-year, largely as a result of winding down our third-party insurance program, which ceased operation at the end of the first quarter of 2024.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Revenue declined 43.4% year-over-year, largely as a result of winding down our third-party insurance program, ultimately ceasing operations at the end of the first quarter. The $10.3 million operating loss within our All Other Segments is primarily driven by the $17.1 million operating loss in our third-party insurance business.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


Results of Operations — Consolidated Operating and Other Expenses

Consolidated Operating Expenses

The following tables present certain operating expenses from our condensed consolidated statements of comprehensive income, including each operating expense as a percentage of total revenue and as a percentage of revenue, excluding truckload and LTL fuel surcharge. Truckload and LTL fuel surcharge revenue can be volatile and is primarily dependent upon the cost of fuel, rather than operating expenses unrelated to fuel. Therefore, we believe that revenue, excluding truckload and LTL fuel surcharge is a better measure for analyzing many of our expenses and operating metrics.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Salaries, wages, and benefits	$	726,358		$	710,543		$	2,111,143		$	1,780,522		2.2	%	18.6	%
% of total revenue	38.7		%	35.2		%	38.1		%	34.2		%	350	bps	390	bps
% of revenue, excluding truckload and LTL fuel surcharge	43.2		%	40.0		%	42.8		%	38.6		%	320	bps	420	bps

Salaries, wages, and benefits expense is primarily affected by the total number of miles driven by and rates we pay to our company driving associates, and employee benefits including healthcare, workers' compensation, and other benefits. To a lesser extent, non-driver employee headcount, compensation, and benefits affect this expense. Driving associate wages represent the largest component of salaries, wages, and benefits expense.

Several ongoing market factors have reduced the pool of available driving associates, contributing to a challenging driver sourcing market, which we believe will continue. Having a sufficient number of qualified driving associates is a significant headwind, although we continue to seek ways to attract and retain qualified driving associates, including heavily investing in our recruiting efforts, our driving academies, technology, our equipment, and our terminals that improve the experience of driving associates. We expect labor costs (related to both driving associates and non-driver employees) to remain inflationary, which we expect will result in additional pay increases in the future, thereby increasing our salaries, wages, and benefits expense.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The $15.8 million increase in consolidated salaries, wages, and benefits for the third quarter of 2024, as compared to the third quarter of 2023, is primarily due to a $24.6 million increase in LTL wages as a result of service center expansion, the DHE Acquisition, and labor to support increased shipment count from expansion efforts. This was partially offset by a $12.8 million decrease in Truckload driver mileage pay primarily due to the 5.7% decrease in loaded miles.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $330.6 million increase in consolidated salaries, wages, and benefits for the year-to-date period ended September 30, 2024, as compared to the year-to-date period ended September 30, 2023, includes a $276.8 million increase from the results of U.S. Xpress and a $56.0 million increase in LTL wages as a result of shipment count growth facilitated by new service centers.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Fuel	$	213,489		$	272,376		$	670,651		$	628,435		(21.6	%)	6.7	%
% of total revenue	11.4		%	13.5		%	12.1		%	12.1		%	(210	bps)	—	bps
% of revenue, excluding truckload and LTL fuel surcharge	12.7		%	15.3		%	13.6		%	13.6		%	(260	bps)	—	bps

Fuel expense consists primarily of diesel fuel expense for our company-owned tractors. The primary factors affecting our fuel expense are the cost of diesel fuel, the fuel economy of our equipment, and the miles driven by company driving associates.

Our fuel surcharge programs help to offset increases in fuel prices, but generally apply only to loaded miles for our Truckload and LTL segments and typically do not offset non-paid empty miles, idle time, or out-of-route miles driven. Typical fuel surcharge programs involve a computation based on the change in national or regional fuel prices. These programs may update as often as weekly, but typically require a specified minimum change in fuel cost to prompt a change in fuel surcharge revenue for our Truckload and LTL segments. Therefore, many of these programs have a time lag between when fuel costs change and when the change is reflected in fuel surcharge revenue. Due to this time lag, our fuel expense, net of fuel surcharge, negatively impacts our operating income during periods of sharply rising fuel costs and positively impacts our operating income during periods of falling fuel costs. We continue to utilize our fuel efficiency initiatives such as trailer blades, idle-control, management of tractor speeds, fleet updates for more fuel-efficient engines, management of fuel procurement, and driving associate training programs that we believe contribute to controlling our fuel expense.

Comparison Between Quarters Ended September 30, 2024 and 2023 — The $58.9 million decrease in consolidated fuel expense for the third quarter of 2024 is primarily driven by the 5.2% decrease in Truckload total miles and the decrease in the average weekly DOE fuel prices for the third quarter of 2024, as compared to the third quarter of 2023. Average weekly DOE fuel prices were $3.69 per gallon for the third quarter of 2024 and $4.27 per gallon for the third quarter of 2023.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $42.2 million increase in consolidated fuel expense for the year-to-date period ended September 30, 2024 includes a $95.1 million increase from the results of U.S. Xpress. The increase was partially offset by the decrease in the average weekly DOE fuel prices for the year-to-date period ended September 30, 2024, as compared to the year-to-date period ended September 30, 2023. Average weekly DOE fuel prices were $3.83 per gallon for the year-to-date period ended September 30, 2024 and $4.20 per gallon for the year-to-date period ended September 30, 2023.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Operations and maintenance	$	142,418		$	142,913		$	415,302		$	343,604		(0.3	%)	20.9	%
% of total revenue	7.6		%	7.1		%	7.5		%	6.6		%	50	bps	90	bps
% of revenue, excluding truckload and LTL fuel surcharge	8.5		%	8.1		%	8.4		%	7.4		%	40	bps	100	bps

Operations and maintenance expense consists of direct operating expenses, such as driving associate hiring and recruiting expenses, equipment maintenance, and tire expense. Operations and maintenance expenses are typically affected by the age of our company-owned fleet of tractors and trailers and the miles driven. We expect the driver market to remain competitive throughout 2024, which could increase future driving associate development and recruiting costs and negatively affect our operations and maintenance expense. We expect to prudently decrease our idle tractor and trailer capacity, in the coming quarters, to reduce operations and maintenance expense while remaining well positioned for potential market inflection.

Comparison Between Quarters Ended September 30, 2024 and 2023 — Operations and maintenance expense remained relatively flat for the third quarter of 2024, as compared to the same period last year.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Operations and maintenance expense increased $71.7 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The increase for the year-to-date period ended September 30, 2024 includes $65.0 million increase from the results of U.S. Xpress.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Insurance and claims	$	86,510		$	148,865		$	314,394		$	424,210		(41.9	%)	(25.9	%)
% of total revenue	4.6		%	7.4		%	5.7		%	8.1		%	(280	bps)	(240	bps)
% of revenue, excluding truckload and LTL fuel surcharge	5.1		%	8.4		%	6.4		%	9.2		%	(330	bps)	(280	bps)

Insurance and claims expense consists of premiums for liability, physical damage, and cargo, and will vary based upon the frequency and severity of claims, our level of self-insurance, and premium expense. In recent years, insurance carriers have raised premiums for many businesses, including transportation companies, and as a result, our insurance and claims expense could increase in the future, or we could raise our self-insured retention limits or reduce excess coverage limits when our policies are renewed or replaced. Insurance and claims expense also varies based on the number of miles driven by company driving associates and independent contractors, the frequency and severity of accidents, trends in development factors used in actuarial accruals, and developments in large, prior-year claims. In future periods, our higher self-insured retention limits and lower excess coverage limits, may cause increased volatility in our consolidated insurance and claims expense.

In the first quarter of 2024, we exited our third-party insurance business, which offered insurance products to third-party carriers, earning premium revenues, which were partially offset by increased insurance reserves, and which exposed us to claims and inability to collect premiums. We ceased operating this business in the first quarter of 2024, which we expect will result in some reduction of volatility as we will no longer be exposed to new claims from the third-party insurance business.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Comparison Between Quarters Ended September 30, 2024 and 2023 — Consolidated insurance and claims expense decreased by $62.4 million for the third quarter of 2024, as compared to the same period last year primarily due to the Company exiting the third-party insurance business at the end of the first quarter of 2024.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Consolidated insurance and claims expense decreased by $109.8 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The decrease for the year-to-date period ended September 30, 2024 is primarily related to the Company exiting the third-party insurance business at the end of the first quarter of 2024. This was partially offset by an increase of $38.8 million from the results of U.S. Xpress and an increase of $12.5 million for the settlement of an auto liability claim from 2020.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Operating taxes and licenses	$	32,220		$	30,506		$	93,923		$	84,728		5.6	%	10.9	%
% of total revenue	1.7		%	1.5		%	1.7		%	1.6		%	20	bps	10	bps
% of revenue, excluding truckload and LTL fuel surcharge	1.9		%	1.7		%	1.9		%	1.8		%	20	bps	10	bps

Operating taxes and licenses include state franchise taxes, state and federal highway use taxes, property taxes, vehicle license and registration fees, and fuel and mileage taxes, among others. The expense is impacted by changes in the tax rates and registration fees associated with our tractor fleet and regional operating facilities.

Comparison Between Quarters Ended September 30, 2024 and 2023 — Operating taxes and licenses expenses increased by $1.7 million for the third quarter of 2024, as compared to the same period last year primarily as a result of expanding the LTL network. It remained relatively flat as a percentage of revenue, excluding truckload and LTL fuel surcharge, as compared to the same period last year.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Operating taxes and licenses expenses increased by $9.2 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The change includes a $7.9 million increase from the results of U.S. Xpress. However, it remained relatively flat as a percentage of revenue, excluding truckload and LTL fuel surcharge, as compared to the same period last year.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Communications	$	8,411		$	8,411		$	24,208		$	20,344		—	%	19.0	%
% of total revenue	0.4		%	0.4		%	0.4		%	0.4		%	—	bps	—	bps
% of revenue, excluding truckload and LTL fuel surcharge	0.5		%	0.5		%	0.5		%	0.4		%	—	bps	10	bps

Communications expense is comprised of costs associated with our tractor and trailer tracking systems, information technology systems, and phone systems.

Comparison Between Quarters Ended September 30, 2024 and 2023 — Communications expense remained flat for the third quarter of 2024, as compared to the same period last year.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Communications expense increased $3.9 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The change includes a $3.3 million increase from the results of U.S. Xpress. However, it remained relatively flat as a percentage of revenue, excluding truckload and LTL fuel surcharge, as compared to the same period last year.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Depreciation and amortization of property and equipment	$	178,598		$	176,613		$	539,313		$	488,960		1.1	%	10.3	%
% of total revenue	9.5		%	8.7		%	9.7		%	9.4		%	80	bps	30	bps
% of revenue, excluding truckload and LTL fuel surcharge	10.6		%	9.9		%	10.9		%	10.6		%	70	bps	30	bps

Depreciation relates primarily to our owned tractors, trailers, buildings, electronic logging devices, other communication units, and other similar assets. Changes to this fixed cost are generally attributed to increases or decreases to company-owned equipment, the relative percentage of owned versus leased equipment, and fluctuations in new equipment purchase prices. Depreciation can also be affected by the cost of used equipment that we sell or trade and the replacement of older used equipment. Management periodically reviews the condition, average age, and reasonableness of estimated useful lives and salvage values of our equipment and considers such factors in light of our experience with similar assets, used equipment market conditions, and prevailing industry practices.

Comparison Between Quarters Ended September 30, 2024 and 2023 — Consolidated depreciation and amortization of property and equipment remained relatively flat for the third quarter of 2024, as compared to the same period last year.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Consolidated depreciation and amortization of property and equipment increased by $50.4 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The increase includes a $60.1 million increase from the results of U.S. Xpress, partially offset by a decrease in our legacy Truckload tractor depreciation due to a decrease in its tractor count. With the inclusion of U.S. Xpress, tractor count increased year-over-year.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Amortization of intangibles	$	18,922		$	18,907		$	56,009		$	51,595		0.1	%	8.6	%
% of total revenue	1.0		%	0.9		%	1.0		%	1.0		%	10	bps	—	bps
% of revenue, excluding truckload and LTL fuel surcharge	1.1		%	1.1		%	1.1		%	1.1		%	—	bps	—	bps

Amortization of intangibles relates to intangible assets identified with the 2017 Merger, ACT Acquisition, U.S. Xpress Acquisition, and various other acquisitions. See Note 3 in Part I, Item 1, of this Quarterly Report for more details regarding details of our acquisitions.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Rental expense	$	42,322		$	50,401		$	129,248		$	81,542		(16.0	%)	58.5	%
% of total revenue	2.3		%	2.5		%	2.3		%	1.6		%	(20	bps)	70	bps
% of revenue, excluding truckload and LTL fuel surcharge	2.5		%	2.8		%	2.6		%	1.8		%	(30	bps)	80	bps

Rental expense consists primarily of payments for revenue equipment assumed in the U.S. Xpress Acquisition, as well as our terminals and other real estate leases.

Comparison Between Quarters Ended September 30, 2024 and 2023 — Consolidated rental expense decreased $8.1 million for the third quarter of 2024, as compared to the same period last year. The decrease is primarily related to an increase in our owned versus leased equipment.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Consolidated rental expense increased $47.7 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The increase is primarily related to the increase of $46.8 million from the results of U.S. Xpress. Additional increases relate to the incorporation of new facilities as we expand our LTL network and were partially offset by a decrease in the rental expense for revenue equipment.

We anticipate that rental expense will decrease, as a percentage of revenue, excluding truckload and LTL fuel surcharge, as we intend to purchase, rather than enter into operating leases, a majority of our revenue equipment, terminal improvements, or terminal expansions in the remainder of 2024.


	Quarter Ended September 30,						Year-to-Date September 30,						QTD 2024 vs.		YTD 2024 vs.
	2024			2023			2024			2023			QTD 2023		YTD 2023
	(Dollars in thousands)												Increase (Decrease)



Purchased transportation	$	295,261		$	330,683		$	859,286		$	869,671		(10.7	%)	(1.2	%)
% of total revenue	15.7		%	16.4		%	15.5		%	16.7		%	(70	bps)	(120	bps)
% of revenue, excluding truckload and LTL fuel surcharge	17.6		%	18.6		%	17.4		%	18.8		%	(100	bps)	(140	bps)

Purchased transportation expense is comprised of payments to independent contractors in our trucking operations, as well as payments to third-party capacity providers related to logistics, freight management, and non-trucking services in our logistics and intermodal businesses. Purchased transportation is generally affected by capacity in the market as well as changes in fuel prices. As capacity tightens, our payments to third-party capacity providers and to independent contractors tend to increase. Additionally, as fuel prices increase, payments to third-party capacity providers and independent contractors increase. Purchased transportation expense may also fluctuate as a percentage of revenue based on the relative growth of our logistics and intermodal businesses as compared to our full truckload and LTL businesses.

Comparison Between Quarters Ended September 30, 2024 and 2023 — Consolidated purchased transportation expense decreased $35.4 million for the third quarter of 2024, as compared to the same period last year. The decrease is primarily driven by the decrease in load volume within our logistics business.

Comparison Between Year-to-Date September 30, 2024 and 2023 — Consolidated purchased transportation expense decreased $10.4 million for the year-to-date period ended September 30, 2024, as compared to the same period last year. The decrease is primarily due to decreased load volume within our logistics business, partially offset by the increase of $143.1 million from the results of U.S. Xpress.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED


	Quarter Ended September 30,				Year-to-Date September 30,				QTD 2024 vs.		YTD 2024 vs.
	2024		2023		2024		2023		QTD 2023		YTD 2023
	(Dollars in thousands)								Increase (Decrease)



Impairments	$	1,008	$	—	$	10,867	$	—	100.0	%	100.0	%

In 2024, we incurred impairment charges associated with building improvements certain revenue equipment held for sale, leases, and other equipment (within the Truckload segment and All Other Segments).


	Quarter Ended September 30,				Year-to-Date September 30,				QTD 2024 vs.		YTD 2024 vs.
	2024		2023		2024		2023		QTD 2023		YTD 2023
	(Dollars in thousands)								Increase (Decrease)



Miscellaneous operating expenses	$	49,739	$	48,662	$	156,018	$	116,363	2.2	%	34.1	%

Miscellaneous operating expenses primarily consist of legal and professional services fees, general and administrative expenses, other costs, as well as net gain on sales of equipment.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The $1.1 million increase in net consolidated miscellaneous operating expenses is primarily due to a $2.2 million decrease in gain on sales of equipment.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $39.7 million increase in net consolidated miscellaneous operating expenses is primarily due to the $18.9 million increase from the results of U.S. Xpress as well as a $22.9 million decrease in gain on sales of equipment.

Consolidated Other Expenses (Income)


	Quarter Ended September 30,				Year-to-Date September 30,				QTD 2024 vs.		YTD 2024 vs.
	2024		2023		2024		2023		QTD 2023		YTD 2023
	(Dollars in thousands)								Increase (Decrease)




Interest expense	$	44,398	$	39,354	$	126,116	$	86,799	12.8	%	45.3	%
Other (income) expenses, net	(3,169)		(11,433)		(17,049)		(30,815)		(72.3	%)	(44.7	%)
Income tax expense (benefit)	14,137		(1,220)		22,253		53,474		1,258.8	%	(58.4	%)

Interest expense — Interest expense is comprised of debt and finance lease interest expense as well as amortization of deferred loan costs. The increase in interest expense during the third quarter and the year-to-date period ended of 2024 was primarily due to higher debt balances related to the acquisitions of U.S. Xpress and DHE. Additional details regarding our debt are discussed in Note 6 in Part I, Item 1 of this Quarterly Report.

Other (income) expenses, net — Other (income) expenses, net is primarily comprised of losses and (gains) from our various equity investments, as well as certain other non-operating income and expense items that may arise outside of the normal course of business.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The $8.3 million decrease in other (income) expenses, net is primarily driven by a $12.1 million write-off of a minority investment in a transportation-adjacent technology venture which ceased operations in the third quarter. This was partially offset by an increase in the net gain recorded within our remaining portfolio of investments during the third quarter of 2024.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $13.8 million decrease in other (income) expenses, net is primarily driven by a $12.1 million write-off of a minority investment in a transportation-adjacent technology venture which ceased operations in the third quarter. The remaining decrease is a result of the net loss recorded within our remaining portfolio of investments during the year-to-date period ended September 30, 2024.

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Income tax expense (benefit) — In addition to the discussion below, Note 4 in Part I, Item 1 of this Quarterly Report provides further analysis related to income taxes.

Comparison Between the Quarters Ended September 30, 2024 and 2023 — The $15.4 million increase in consolidated income tax expense (benefit) was primarily due to the partial release in the third quarter of 2023 of the valuation allowance associated with the U.S. Xpress net operating loss and tax credit carryforward benefits. Our effective tax rate for the third quarter of 2024 was 32.0%, compared to (2.1)% for the third quarter of 2023.

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $31.2 million decrease in consolidated income tax expense (benefit) was primarily due to a reduction of pre-tax income which was partially offset by the partial release in the third quarter of 2023 of the valuation allowance associated with the U.S. Xpress net operating loss and tax credit carryforward benefits. This resulted in an effective tax rate of 32.2% for the year-to-date period ended September 30, 2024, and 19.1% for the year-to-date period ending September 30, 2023.

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Non-GAAP Financial Measures

The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted EPS," "Adjusted Operating Income," "Adjusted Operating Ratio," and "Free Cash Flow," as we define them, are not presented in accordance with GAAP. These financial measures supplement our GAAP results in evaluating certain aspects of our business. We believe that using these measures improves comparability in analyzing our performance because they remove the impact of items from our operating results that, in our opinion, do not reflect our core operating performance. Management and the Board focus on Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, and Adjusted Operating Ratio as key measures of our performance, all of which are reconciled to the most comparable GAAP financial measures and further discussed below. Management and the Board use Free Cash Flow as a key measure of our liquidity. Free Cash Flow does not represent residual cash flow available for discretionary expenditures. We believe our presentation of these non-GAAP financial measures is useful because it provides investors and securities analysts the same information that we use internally for purposes of assessing our core operating performance.

Adjusted Net Income Attributable to Knight-Swift, Adjusted EPS, Adjusted Operating Income, Adjusted Operating Ratio, and Free Cash Flow are not substitutes for their comparable GAAP financial measures, such as net income, cash flows from operating activities, operating income, or other measures prescribed by GAAP. There are limitations to using non-GAAP financial measures. Although we believe that they improve comparability in analyzing our period to period performance, they could limit comparability to other companies in our industry if those companies define these measures differently. Because of these limitations, our non-GAAP financial measures should not be considered measures of income generated by our business or discretionary cash available to us to invest in the growth of our business. Management compensates for these limitations by primarily relying on GAAP results and using non-GAAP financial measures on a supplemental basis.

Pursuant to the requirements of Regulation G, the following tables reconcile GAAP consolidated net income attributable to Knight-Swift to non-GAAP consolidated Adjusted Net Income attributable to Knight-Swift, GAAP consolidated earnings per diluted share to non-GAAP consolidated Adjusted EPS, GAAP consolidated operating ratio to non-GAAP consolidated Adjusted Operating Ratio, GAAP reportable segment operating income to non-GAAP reportable segment Adjusted Operating Income, GAAP reportable segment operating ratio to non-GAAP reportable segment Adjusted Operating Ratio, and GAAP cash flow from operations to non-GAAP Free Cash Flow.

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Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
	(In thousands)
GAAP: Net income attributable to Knight-Swift	$	30,464	$	60,194	$	48,129	$	227,804
Adjusted for:
Income tax expense (benefit) attributable to Knight-Swift	14,137		(1,220)		22,253		53,474
Income before income taxes attributable to Knight-Swift	44,601		58,974		70,382		281,278
Amortization of intangibles 1	19,189		18,907		56,276		51,595
Impairments 2	1,008		—		10,867		—
Legal accruals 3	366		150		2,194		1,150
Transaction fees 4	602		—		602		6,868
Other acquisition related expenses 5	—		6,546		—		6,546
Severance expense 6	—		3,699		7,219		5,151
Change in fair value of deferred earnout 7	(859)		(859)		(859)		(3,359)

Loss on investment 8	12,107		—		12,107		—
Adjusted income before income taxes	77,014		87,417		158,788		349,229
Provision for income tax expense at effective rate 9	(22,567)		(20,255)		(45,192)		(84,958)
Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	$	54,447	$	67,162	$	113,596	$	264,271

Note: Since the numbers reflected in the table below are calculated on a per share basis, they may not foot due to rounding.


	Quarter Ended September 30,				Year-to-Date September 30,
	2024		2023		2024		2023
GAAP: Earnings per diluted share	$	0.19	$	0.37	$	0.30	$	1.41
Adjusted for:
Income tax expense (benefit) attributable to Knight-Swift	0.09		(0.01)		0.14		0.33
Income before income taxes attributable to Knight-Swift	0.27		0.36		0.43		1.74
Amortization of intangibles 1	0.12		0.12		0.35		0.32

Impairments 2	0.01		—		0.07		—
Legal accruals 3	—		—		0.01		0.01
Transaction fees 4	—		—		—		0.04
Other acquisition related expenses 5	—		0.04		—		0.04
Severance expense 6	—		0.02		0.04		0.03
Change in fair value of deferred earnout 7	(0.01)		(0.01)		(0.01)		(0.02)

Loss on investment 8	0.07		—		0.07		—
Adjusted income before income taxes	0.47		0.54		0.98		2.16
Provision for income tax expense at effective rate 9	(0.14)		(0.13)		(0.28)		(0.53)
Non-GAAP: Adjusted EPS	$	0.34	$	0.41	$	0.70	$	1.63

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1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the ACT Acquisition, the U.S. Xpress Acquisition, and other acquisition, as well as the non-cash amortization expense related to the fair value of favorable leases assumed in the DHE acquisition included within "Rental expense" in the condensed consolidated statements of comprehensive income. Refer to Note 3 in Part I, Item 1 of this Quarterly Report for additional details regarding our acquisitions.

2 "Impairments" reflects the non-cash impairments of building improvements, certain revenue equipment held for sale, leases, and other equipment (within the Truckload segment and All Other Segments).

3 "Legal accruals" are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income and reflect the following:

•Year-to-date 2024 legal expense reflects the increased estimated exposures for accrued legal matters based on recent settlement agreements.

•During the second and third quarters of 2023, legal expense reflects the increased estimated exposure for various accrued legal matters based on recent settlement agreements. First quarter 2023 legal expense reflects a decrease in the estimated exposure related to an accrued legal matter previously identified as probable and estimable in prior periods based on a recent settlement agreement.

4 "Transaction fees" reflects certain legal and professional fees associated with the July 1, 2023 and July 30, 2024 acquisitions of U.S. Xpress and DHE, respectively. The transaction fees are primarily included within "Miscellaneous operating expenses" and "Salaries, wages, and benefits" and with smaller amounts included in other line items in the condensed statements of comprehensive income.

5 "Other acquisition related expenses" represents one-time expenses associated with the U.S. Xpress acquisition, including certain severance expense, including the acceleration of stock compensation as well as other operating expenses. These are primarily included within "Salaries, wages, and benefits" in the condensed statements of comprehensive income.

6 "Severance expense" is included within "Salaries, wages, and benefits" in the condensed statements of comprehensive income.

7 "Change in fair value of deferred earnout" reflects the expense for the change in fair value of a deferred earnout related to various acquisitions, which is recorded in "Miscellaneous operating expenses."

8 "Loss on investment" reflects the write-off of a minority investment in a transportation-adjacent technology venture which ceased operations in the third quarter of 2024.

9 For the third quarter of 2024, an adjusted effective tax rate of 29.3% was applied in our Adjusted EPS calculation to exclude certain discrete items. For the year-to-date period ended September 30, 2024, an adjusted effective tax rate of 28.5% was applied in our Adjusted EPS calculation to exclude certain discrete items.

For the third quarter and year-to-date of 2023, an effective tax rate of 23.2% and 24.3%, respectively was applied in our Adjusted EPS calculation to exclude the tax benefit from the partial release of the pre-acquisition allowance associated with the U.S. Xpress net operating loss and tax credit carryforward benefits.

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Non-GAAP Reconciliation: Consolidated Adjusted Operating Income and Adjusted Operating Ratio


	Quarter Ended September 30,						Year-to-Date September 30,
	2024			2023			2024			2023
GAAP Presentation	(Dollars in thousands)
Total revenue	$	1,876,676		$	2,019,936		$	5,545,797		$	5,209,847
Total operating expenses	(1,795,256)			(1,938,880)			(5,380,362)			(4,889,974)
Operating income	$	81,420		$	81,056		$	165,435		$	319,873
Operating ratio	95.7		%	96.0		%	97.0		%	93.9		%

Non-GAAP Presentation
Total revenue	$	1,876,676		$	2,019,936		$	5,545,797		$	5,209,847
Truckload and LTL fuel surcharge	(195,783)			(244,687)			(610,389)			(593,857)
Revenue, excluding truckload and LTL fuel surcharge	1,680,893			1,775,249			4,935,408			4,615,990

Total operating expenses	1,795,256			1,938,880			5,380,362			4,889,974
Adjusted for:
Truckload and LTL fuel surcharge	(195,783)			(244,687)			(610,389)			(593,857)
Amortization of intangibles 1	(19,189)			(18,907)			(56,276)			(51,595)

Impairments 2	(1,008)			—			(10,867)			—
Legal accruals 3	(366)			(150)			(2,194)			(1,150)
Transaction fees 4	(602)			—			(602)			(6,868)
Other acquisition related expenses 5	—			(6,546)			—			(6,546)
Severance expense 6	—			(3,699)			(7,219)			(5,151)
Change in fair value of deferred earnout 7	859			859			859			3,359
Adjusted Operating Expenses	1,579,167			1,665,750			4,693,674			4,228,166
Adjusted Operating Income	$	101,726		$	109,499		$	241,734		$	387,824
Adjusted Operating Ratio	93.9		%	93.8		%	95.1		%	91.6		%

1 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 1.

2 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 2.

3 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 3.

4 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 4.

5 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

6 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 6.

7 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 7.

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Non-GAAP Reconciliation: Reportable Segment Adjusted Operating Income and Adjusted Operating Ratio

Truckload Segment


	Quarter Ended September 30,						Year-to-Date September 30,
	2024			2023			2024			2023
GAAP Presentation	(Dollars in thousands)
Total revenue	$	1,258,156		$	1,380,781		$	3,785,408		$	3,346,685
Total operating expenses	(1,212,800)			(1,332,420)			(3,693,422)			(3,114,514)
Operating income	$	45,356		$	48,361		$	91,986		$	232,171
Operating ratio	96.4		%	96.5		%	97.6		%	93.1		%

Non-GAAP Presentation
Total revenue	$	1,258,156		$	1,380,781		$	3,785,408		$	3,346,685
Fuel surcharge	(150,552)			(200,503)			(480,643)			(469,771)
Intersegment transactions	(143)			(300)			(463)			(1,583)
Revenue, excluding fuel surcharge and intersegment transactions	1,107,461			1,179,978			3,304,302			2,875,331

Total operating expenses	1,212,800			1,332,420			3,693,422			3,114,514
Adjusted for:
Fuel surcharge	(150,552)			(200,503)			(480,643)			(469,771)
Intersegment transactions	(143)			(300)			(463)			(1,583)
Amortization of intangibles 1	(1,775)			(2,605)			(5,325)			(3,247)
Impairments 2	(1,008)			—			(9,662)			—
Legal accruals 3	(366)			—			(336)			—
Other acquisition related expenses 4	—			(6,546)			—			(6,546)
Severance expense 5	—			(2,636)			(1,466)			(2,636)
Adjusted Operating Expenses	1,058,956			1,119,830			3,195,527			2,630,731
Adjusted Operating Income	$	48,505		$	60,148		$	108,775		$	244,600
Adjusted Operating Ratio	95.6		%	94.9		%	96.7		%	91.5		%

1"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in historical Knight acquisitions and the U.S. Xpress Acquisition.

2See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 2.

3See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 3.

4See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 5.

5See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS footnote 6.

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LTL Segment


	Quarter Ended September 30,						Year-to-Date September 30,
	2024			2023			2024			2023
GAAP Presentation	(Dollars in thousands)
Total revenue	$	325,412		$	284,168		$	914,012		$	806,577
Total operating expenses	(300,856)			(251,893)			(836,120)			(717,482)
Operating income	$	24,556		$	32,275		$	77,892		$	89,095
Operating ratio	92.5		%	88.6		%	91.5		%	89.0		%

Non-GAAP Presentation
Total revenue	$	325,412		$	284,168		$	914,012		$	806,577
Fuel surcharge	(45,231)			(44,184)			(129,746)			(124,086)

Revenue, excluding fuel surcharge	280,181			239,984			784,266			682,491

Total operating expenses	300,856			251,893			836,120			717,482
Adjusted for:
Fuel surcharge	(45,231)			(44,184)			(129,746)			(124,086)

Amortization of intangibles 1	(4,563)			(3,920)			(12,403)			(11,760)


Adjusted Operating Expenses	251,062			203,789			693,971			581,636
Adjusted Operating Income	$	29,119		$	36,195		$	90,295		$	100,855
Adjusted Operating Ratio	89.6		%	84.9		%	88.5		%	85.2		%

1"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified with the ACT, MME, and DHE acquisitions, as well as the non-cash amortization expense related to the fair value of favorable leases assumed in the DHE acquisition.

Logistics Segment


	Quarter Ended September 30,						Year-to-Date September 30,
	2024			2023			2024			2023
GAAP Presentation	(Dollars in thousands)
Total revenue	$	143,581		$	159,489		$	402,010		$	417,715
Total operating expenses	(136,897)			(149,125)			(388,094)			(384,965)
Operating income	$	6,684		$	10,364		$	13,916		$	32,750
Operating ratio	95.3		%	93.5		%	96.5		%	92.2		%

Non-GAAP Presentation
Total revenue	$	143,581		$	159,489		$	402,010		$	417,715

Intersegment transactions	—			(888)			—			(4,555)
Revenue, excluding intersegment transactions	143,581			158,601			402,010			413,160

Total operating expenses	136,897			149,125			388,094			384,965
Adjusted for:

Intersegment transactions	—			(888)			—			(4,555)
Amortization of intangibles 1	(1,164)			(335)			(3,492)			(1,003)

Adjusted Operating Expenses	135,733			147,902			384,602			379,407
Adjusted Operating Income	$	7,848		$	10,699		$	17,408		$	33,753
Adjusted Operating Ratio	94.5		%	93.3		%	95.7		%	91.8		%

1"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the U.S. Xpress and UTXL acquisitions.

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Intermodal Segment


	Quarter Ended September 30,						Year-to-Date September 30,
	2024			2023			2024			2023
GAAP Presentation	(Dollars in thousands)
Total revenue	$	102,679		$	101,219		$	288,192		$	316,118
Total operating expenses	(104,066)			(105,743)			(296,204)			(322,172)
Operating loss	$	(1,387)		$	(4,524)		$	(8,012)		$	(6,054)
Operating ratio	101.4		%	104.5		%	102.8		%	101.9		%

Non-GAAP Reconciliation: Free Cash Flow


	Year-to-Date September 30, 2024

GAAP: Cash flows from operations	$	524,741
Adjusted for:
Proceeds from sale of property and equipment, including assets held for sale	183,589
Purchases of property and equipment	(592,081)
Non-GAAP: Free Cash Flow	$	116,249


Liquidity and Capital Resources

Sources of Liquidity

Our primary sources of liquidity are funds provided by operations and the following:


Source	September 30, 2024
	(In thousands)
Cash and cash equivalents, excluding restricted cash	$	166,348
Availability under 2021 Revolver, due September 2026 1	854,899
Availability under 2023 RSA, due October 2025 2	6,033

Total unrestricted liquidity	$	1,027,280
Cash and cash equivalents – restricted 3	154,564

Total liquidity, including restricted cash	$	1,181,844

1 As of September 30, 2024, we had $227.0 million borrowings under our $1.1 billion 2021 Revolver. We additionally had $18.1 million in outstanding letters of credit (discussed below) issued under the 2021 Revolver, leaving $854.9 million available under the 2021 Revolver.

2 Based on eligible receivables at September 30, 2024, our borrowing base for the 2023 RSA was $492.4 million, while outstanding borrowings were $459.2 million, along with $27.2 million in outstanding letters of credit, leaving $6.0 million available under the 2023 RSA. Refer to Note 5 in Part I, Item 1 of this Quarterly Report for more information regarding the 2023 RSA.

3 Restricted cash is primarily held by our captive insurance companies for claims payments. "Cash and cash equivalents – restricted" consists of $150.9 million included in "Cash and cash equivalents – restricted" on the condensed consolidated balance sheet held by Mohave and Red Rock for claims payments. The remaining $3.7 million is included in "Other long-term assets" and is held in escrow accounts to meet statutory requirements.

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Uses of Liquidity

Our business requires substantial amounts of cash for operating activities, including salaries and wages paid to our employees, contract payments to independent contractors, insurance and claims payments, tax payments, and others. We also use large amounts of cash and credit for the following activities:

Capital Expenditures — When justified by customer demand, as well as our liquidity and our ability to generate acceptable returns, we make substantial cash capital expenditures to maintain a modern company tractor fleet, refresh and expand our trailer fleet, expand our network of LTL service centers, and, to a lesser extent, fund upgrades to our terminals and technology in our various service offerings. In connection with our business strategy, we regularly evaluate acquisition and strategic partnership opportunities. We expect net cash capital expenditures, will be in the range of $525.0 – $575.0 million for full-year 2024. Our expected net cash capital expenditures primarily represent replacements of existing tractors and trailers and investments in our terminal network, driver amenities, and technology, and excludes acquisitions. We believe we have ample flexibility in our trade cycle and purchase agreements to alter our current plans if economic and other conditions warrant.

Over the long-term, we will continue to have significant capital requirements, which may require us to seek additional borrowing, lease financing, or equity capital. The availability of financing or equity capital will depend upon our financial condition and results of operations as well as prevailing market conditions. If such additional borrowing, lease financing, or equity capital is not available at the time we need it, then we may need to borrow more under the 2021 Revolver (if not then fully drawn), extend the maturity of then-outstanding debt, rely on alternative financing arrangements, engage in asset sales, limit our fleet size, or operate our revenue equipment for longer periods.

There can be no assurance that we will be able to obtain additional debt under our existing financial arrangements to satisfy our ongoing capital requirements. However, we believe the combination of our expected cash flows, financing available through operating and finance leases, available funds under our accounts receivable securitization, and availability under the 2021 Revolver will be sufficient to fund our expected capital expenditures for at least the next twelve months.

Principal and Interest Payments — As of September 30, 2024, we had debt, accounts receivable securitization, and finance lease obligations of $2.9 billion, which are discussed under "Material Debt Agreements," below. Certain cash flows from operations are committed to minimum payments of principal and interest on our debt and lease obligations. Additionally, when our financial position allows, we periodically make voluntary prepayments on our outstanding debt balances.

Letters of Credit — Pursuant to the terms of the 2021 Debt Agreement and the 2023 RSA, our lenders may issue standby letters of credit on our behalf. When we have certain letters of credit outstanding, the availability under the 2021 Revolver or 2023 RSA is reduced accordingly. As of September 30, 2024, we also had outstanding letters of credit of $248.0 million pursuant to a bilateral agreement which do not impact the availability of the 2021 Revolver and 2023 RSA. Standby letters of credit are typically issued for the benefit of regulatory authorities, insurance companies and state departments of insurance for the purpose of satisfying certain collateral requirements, primarily related to our automobile, workers' compensation, and general insurance liabilities.

Share Repurchases — From time to time, and depending on Free Cash Flow1 availability, debt levels, common stock prices, general economic and market conditions, as well as internal approval requirements, we may repurchase shares of our outstanding common stock. As of September 30, 2024, the Company had $200.0 million remaining under the 2022 Knight-Swift Share Repurchase Plan. Additional details regarding our share repurchase plans are discussed in Note 10 in Part I, Item 1 of this Quarterly Report.

________

1Refer to "Non-GAAP Financial Measures."

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Working Capital

We had a working capital surplus of $8.1 million as of September 30, 2024 and a working capital deficit of $116.3 million as of December 31, 2023. The change in our working capital is primarily attributed to the 2024 Amendment which extended the maturity related to the 2021 Term Loan A-2 from September 2024 to September 2026.

Material Debt Agreements

As of September 30, 2024, we had $2.9 billion in material debt obligations at the following carrying values:

•$349.0 million: 2021 Term Loan A-2, due September 2026, net of $1.0 million in deferred loan costs

•$789.3 million: 2021 Term Loan A-3, due September 2026, net of $0.7 million in deferred loan costs

•$249.4 million: 2023 Term Loan, due September 2026, net of $0.6 million in deferred loan costs

•$458.9 million: 2023 RSA outstanding borrowings, net of $0.3 million in deferred loan costs

•$609.8 million: Finance lease obligations

•$227.0 million: 2021 Revolver, due September 2026

•$219.5 million: Revenue equipment installment notes

•$23.7 million: Other, net of approximately $13,000 in deferred loan costs

As of December 31, 2023, we had $2.7 billion in material debt obligations at the following carrying values:

•$199.9 million: 2021 Term Loan A-2, due September 2024, net of $0.1 million in deferred loan costs

•$799.1 million: 2021 Term Loan A-3, due September 2026, net of $0.9 million in deferred loan costs

•$249.1 million: 2023 Term Loan, due September 2026, net of $0.9 million in deferred loan costs

•$526.5 million: 2023 RSA outstanding borrowings, net of $0.5 million in deferred loan costs

•$528.9 million: Finance lease obligations

•$67.0 million: 2021 Revolver, due September 2026

•$279.3 million: Revenue equipment installment notes

•$33.6 million: Other, net of $22,000 in deferred loan costs


Cash Flow Analysis


	Year-to-Date September 30,				Change
	2024		2023
	(In thousands)
Net cash provided by operating activities	$	524,741	$	873,502	$	(348,761)
Net cash used in investing activities	(619,020)		(1,088,030)		469,010
Net cash (used in) provided by financing activities	(54,495)		286,090		(340,585)

Net Cash Provided by Operating Activities

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $348.8 million decrease in net cash provided by operating activities included a $154.4 million decrease in operating income for year-to-date September 30, 2024, a $161.1 million cash payment for a commutation agreement to transfer certain outstanding insurance reserves to a third party, and a $46.3 million increase in cash paid for interest. This was partially offset by a $28.1 million decrease in cash paid for income taxes. Note: Factors affecting the increase in operating income are discussed in "Results of Operations — Consolidated Operating and Other Expenses."

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

Net Cash Used in Investing Activities

Comparison Between Year-to-Date September 30, 2024 and 2023 — The $469.0 million decrease in net cash used in investing activities was primarily due to a $230.0 million decrease in net cash capital expenditures and a $272.8 million decrease in cash used on acquisitions.

Net Cash Used in Financing Activities

Comparison Between Year-to-Date September 30, 2024 and 2023 — Net cash used in financing activities increased by $340.6 million, primarily due to a $133.5 million increase in repayments on our finance leases and long-term debt, $100.0 million decrease in proceeds from our long-term debt, and $97.0 million decrease in net proceeds from our 2021 Revolver.


Seasonality

Discussion regarding the impact of seasonality on our business is included in Note 1 in the notes to the condensed consolidated financial statements, included in Part I, Item 1 of this Quarterly Report, incorporated by reference herein.


Inflation

Most of our operating expenses are inflation-sensitive, with inflation generally leading to increased costs of operations. Price increases in manufactured revenue equipment has impacted the cost for us to acquire new equipment. Cost increases have also impacted the cost of parts for equipment repairs and maintenance. The qualified driver shortage experienced by the trucking industry overall has had the effect of increasing compensation paid to our driving associates. We have also experienced inflation in insurance and claims cost related to health insurance and claims as well as auto liability insurance and claims. Prolonged periods of inflation have recently and could continue to cause interest rates, fuel, wages, and other costs to increase as well. Any of these factors could adversely affect our results of operations unless freight rates correspondingly increase.


Recently Issued Accounting Pronouncements

See Note 2 in Part I, Item 1 of this Quarterly Report, which is incorporated herein by reference, for the impact of recently issued accounting pronouncements on the Company's condensed consolidated financial statements.


ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure from variable interest rates, primarily related to our 2021 Debt Agreement, 2023 Term Loan, and 2023 RSA. These variable interest rates are impacted by changes in short-term interest rates. We primarily manage interest rate exposure through a mix of variable rate debt (weighted average rate of 6.6% as of September 30, 2024) and fixed rate equipment lease financing. Assuming the level of borrowings as of September 30, 2024, a hypothetical one percentage point increase in interest rates would increase our annual interest expense by $20.9 million.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

Commodity Price Risk

We have commodity exposure with respect to fuel used in company-owned tractors. Increases in fuel prices would continue to raise our operating costs, even after applying fuel surcharge revenue. Historically, we have been able to recover a majority of fuel price increases from our customers in the form of fuel surcharges. The weekly average diesel price per gallon in the US decreased to $3.69 for the third quarter of 2024 from an average of $4.27 in the third quarter of 2023. The weekly average diesel price per gallon decreased to $3.83 for year-to-date September 30, 2024 from an average price of $4.20 for year-to-date September 30, 2023. We cannot predict the extent or speed of potential changes in fuel price levels in the future, the degree to which the lag effect of our fuel surcharge programs will impact us as a result of the timing and magnitude of such changes, or the extent to which effective fuel surcharges can be maintained and collected to offset such increases. We generally have not used derivative financial instruments to hedge our fuel price exposure in the past, but continue to evaluate this possibility. To mitigate the impact of rising fuel costs, we contract with some of our fuel suppliers to buy fuel at a fixed price or within banded pricing for a specified period, usually not exceeding twelve months. However, these purchase commitments only cover a small portion of our fuel consumption. Accordingly, fuel price fluctuations may still negatively impact us.


ITEM 4.			CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

We have established disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) to ensure that material information relating to us, including our consolidated subsidiaries, is made known to the officers who certify our financial reports and to other members of senior management and the Board. Our management, with the participation of our principal executive officer and principal financial officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures. Based on this evaluation, as of the end of the period covered by this Quarterly Report on Form 10-Q our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures are effective to ensure that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms, and (2) accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2024, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We base our internal control over financial reporting on the criteria set forth in the 2013 COSO Internal Control: Integrated Framework.

We have confidence in our disclosure controls and procedures and internal control over financial reporting. Nevertheless, our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and internal control over financial reporting will prevent all errors, misstatements, or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

PART II OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS

Information about our legal proceedings is included in Note 9 of the notes to our condensed consolidated financial statements, included in Part I, Item 1, of this Quarterly Report for the period ended September 30, 2024, and is incorporated by reference herein.


ITEM 1A.			RISK FACTORS

While we attempt to identify, manage, and mitigate risks and uncertainties associated with our business, some level of risk and uncertainty will always be present. Our 2023 Annual Report in the section entitled "Item 1A. Risk Factors," describes some of the risks and uncertainties associated with our business.


ITEM 2.			UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value That May Yet be Purchased Under the Plans or Programs 1
	(in thousands, except per share data)








July 1, 2024 to July 31, 2024	—	$	—	—	$	200,041
August 1, 2024 to August 31, 2024	—	$	—	—	$	200,041
September 1, 2024 to September 30, 2024	—	$	—	—	$	200,041
Total	—	$	—	—	$	200,041

1In April 2022, we announced that the Board had approved the $350.0 million 2022 Knight-Swift Share Repurchase Plan, replacing the 2020 Knight-Swift Share Repurchase Plan. There is no expiration date associated with the 2022 Knight-Swift Share Repurchase Plan. See Note 10 in Part I, Item 1 of this Quarterly Report regarding our share repurchase plans.


ITEM 3.			DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.			MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.			OTHER INFORMATION

During the quarter ended September 30, 2024, no director or officer adopted or terminated a Rule 10b5-1 trading arrangement or a non-Rule 10b5-1 trading arrangement.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


ITEM 6.			EXHIBITS

Exhibit
Number

Description

Page or Method of Filing

3.1

Fourth Amended and Restated Certificate of Incorporation of Knight-Swift Transportation Holdings Inc.

Incorporated by reference to Exhibit 3.1 of Form 10-Q for the quarter ended June 30, 2020

3.2

Fifth Amended and Restated By-laws of Knight-Swift Transportation Holdings Inc.

Incorporated by reference to Exhibit 3.1 of Form 8-K filed on November 12, 2023

10.1*

First Amendment to Credit Agreement, dated as of August 6, 2024, by and among Knight-Swift Transportation Holdings Inc., the lenders thereto, Bank of America, N.A., as Administrative Agent and PNC Bank National Association and Wells Fargo Bank, National Association as Lenders and Co-Syndication Agents

Filed herewith

31.1

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Adam W. Miller, the Company's Chief Executive Officer (principal executive officer).

Filed herewith

31.2

Certification pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Andrew Hess, the Company's Chief Financial Officer (principal financial officer).

Filed herewith

32.1

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Adam W. Miller, the Company's Chief Executive Officer.

Furnished herewith

32.2

Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Andrew Hess, the Company's Chief Financial Officer.

Furnished herewith

101.INS

Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH

XBRL Taxonomy Extension Schema Document

Filed herewith

101.CAL

XBRL Taxonomy Calculation Linkbase Document

Filed herewith

101.LAB

XBRL Taxonomy Label Linkbase Document

Filed herewith

101.PRE

XBRL Taxonomy Presentation Linkbase Document

Filed herewith

101.DEF

XBRL Taxonomy Extension Definition Document

Filed herewith

104

Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101)

Filed herewith

* Schedules and similar attachments have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to supplementally furnish to the SEC a copy of any omitted schedule upon request by the SEC.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

Date:

October 30, 2024

/s/ Adam W. Miller

Adam W. Miller

Chief Executive Officer, in his capacity as such and on

behalf of the registrant

Date:

October 30, 2024

/s/ Andrew Hess

Andrew Hess

Chief Financial Officer, in his capacity as such and on

behalf of the registrant

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Knight-Swift Transportation (KNX) 10-Q2024 Q3 Quarterly report

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