Freight delivery company Knight-Swift Transportation (NYSE: KNX) beat Wall Street’s revenue expectations in Q1 CY2025, but sales were flat year on year at $1.82 billion. Its non-GAAP profit of $0.28 per share was 18.4% above analysts’ consensus estimates.
Is now the time to buy KNX? Find out in our full research report (it’s free).
Knight-Swift Transportation (KNX) Q1 CY2025 Highlights:
- Revenue: $1.82 billion vs analyst estimates of $1.8 billion (flat year on year, 1.6% beat)
- Adjusted EPS: $0.28 vs analyst estimates of $0.24 (18.4% beat)
- Adjusted EBITDA: $264.1 million vs analyst estimates of $261.9 million (14.5% margin, 0.8% beat)
- Adjusted EPS guidance for Q2 CY2025 is $0.34 at the midpoint, below analyst estimates of $0.40
- Operating Margin: 3.7%, up from 1.1% in the same quarter last year
- Free Cash Flow was $69.99 million, up from -$104 million in the same quarter last year
- Sales Volumes fell 5.3% year on year (38.8% in the same quarter last year)
- Market Capitalization: $6.31 billion
StockStory’s Take
Knight-Swift Transportation’s first quarter results reflected a market environment shaped by ongoing uncertainty around U.S. trade policy and shifting shipper behaviors. CEO Adam Miller noted that while early indicators in the quarter were positive, severe weather and growing caution among shippers—sparked by tariff discussions and food trade policy—contributed to lower than expected shipment volumes. Management highlighted that operational adjustments, such as tightening the equipment fleet and cost reductions, helped offset these headwinds and improve margins compared to the prior year.
Looking ahead, the company adopted a notably cautious stance in its forward guidance, reflecting the unpredictability in freight demand tied to both consumer sentiment and potential trade policy changes. As Miller explained, "With all that being said, during April, market conditions have largely been stable with where we exited the first quarter, but there is a wide range of possible paths forward from here." Knight-Swift will only provide quarterly guidance for now, citing the risk of further volume declines if trade policy remains unsettled.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to a mix of operational discipline, network diversification, and external market pressures. The following factors were central to business fundamentals this quarter:
-
Truckload Segment Restructuring: The company reduced underutilized tractors and trailers, aiming to lower depreciation and boost utilization. This tightening of the equipment fleet, combined with moderate increases in contract rates, was cited as a key lever for margin improvement.
-
LTL Network Expansion: The less-than-truckload (LTL) business continued to grow, with seven new facilities opened and daily shipments up 30% year over year in March. However, rapid volume growth led to higher short-term costs and operational inefficiencies, particularly in newly integrated regions.
-
Cost Controls and Claims Management: Management emphasized ongoing efforts to control variable and fixed costs, including reductions in overhead, more efficient maintenance, and improved safety and claims handling. These initiatives supported the company’s ability to lower cost per mile for a third consecutive quarter.
-
Impact of Trade Policy Uncertainty: Shipper activity was mixed, with some customers pausing orders due to tariff concerns. Management reported that about one-third of customers were in "wait-and-see" mode, drawing down inventories rather than placing new orders, which negatively affected shipment volumes.
-
Modest Pricing Environment: Despite a weak spot market, Knight-Swift achieved low to mid-single digit increases in contract rates during annual bid season. However, the expected momentum in rate increases did not materialize, and management warned that continued spot market weakness could limit realized revenue per mile in the near term.
Drivers of Future Performance
Management’s outlook for the next several quarters centers on navigating continued freight demand uncertainty, with trade policy and shipper behavior as primary themes impacting guidance.
-
Tariff and Trade Policy Risks: Management identified ongoing trade policy discussions and potential new tariffs as key risks. These could prompt further shipment delays, inventory drawdowns, and increased cost pressures for shippers, potentially leading to lower freight volumes.
-
Operational Efficiency Initiatives: The company plans to further reduce costs through improved asset utilization, fleet optimization, and stricter overhead controls. Management expects these actions to help maintain margins even if top-line growth remains muted.
-
Growth in LTL and Diversification: Knight-Swift continues to invest in expanding its LTL business, with additional facility openings planned. The company believes this segment, along with logistics and intermodal, will provide a more balanced revenue mix and help offset volatility in the core truckload market.
Top Analyst Questions
-
Jonathan Chappell (Evercore ISI): Asked how management is balancing cost reductions with maintaining flexibility amid market uncertainty; Adam Miller explained that tractor and trailer reductions are targeted to avoid limiting capacity in the event of a demand upswing.
-
Brian Ossenbeck (JPMorgan Chase): Inquired about progress in filling LTL network gaps and potential for further M&A; Miller responded that organic growth remains the focus for 2025, with additional facility openings and continued integration of DHE.
-
Ken Hoexter (Bank of America): Sought details on asset utilization and bid season dynamics; management stated that removing idle assets and focusing on core productivity should drive higher miles per tractor, while contract rate renewals are in the low to mid-single digits.
-
Tom Wadewitz (UBS): Asked about the impact of a possible sharp decline in West Coast container imports; management acknowledged that reduced import volumes could negatively affect both truckload and intermodal segments, and their guidance range reflects this risk.
-
Scott Group (Wolfe Research): Questioned assumptions in the earnings guidance and whether "power only" offerings would be scaled back; Miller stated that power only remains a complementary service and that guidance assumes limited seasonality, reflecting the current risk environment.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will monitor (1) Knight-Swift’s ability to drive further cost reductions and asset utilization gains, (2) developments in U.S. trade and tariff policy and their effects on shipper demand, and (3) progress in building density and operational efficiency within the expanding LTL network. Execution against these signposts will be key to determining how well the company adapts to ongoing volatility in freight markets.
Knight-Swift Transportation currently trades at a forward P/E ratio of 19.8×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.
Our Favorite Stocks Right Now
The market surged in 2024 and reached record highs after Donald Trump’s presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025.
While the crowd speculates what might happen next, we’re homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver’s seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.
Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today.
