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Knight-Swift More Confident in Up Cycle Despite Guidance Cut
Momentum Growing in Key Freight Market Fundamentals, CEO Says
Key Takeaways:
- Knight-Swift Transportation said April 16 it expects a sustained truckload market turnaround but cut first-quarter 2026 adjusted EPS guidance to 8-10 cents ahead of earnings April 22.
- The guidance cut reflects an 8-cent hit from an LTL arbitration award plus weather disruptions, higher diesel prices and tax and warehousing impacts, even as executives cited improving freight fundamentals.
- Knight-Swift expects second-quarter adjusted EPS of 45-49 cents as bid activity progresses, pricing resets take effect and capacity tightens from regulatory enforcement, executives said.
Knight-Swift Transportation is confident the nascent truckload market turnaround will be sustained, noting April 16 that a plethora of key freight market fundamentals point positively enough to the longest sector downturn in industry memory reversing.
Phoenix-based Knight-Swift made the call as the carrier cautioned investors that its first quarter of 2026 adjusted earnings per share is expected to be 8-10 cents, compared with earlier guidance of 28-32 cents.
The carrier’s post-market announcement is intended to reset expectations ahead of the release of earnings for the first quarter on April 22.
Knight-Swift’s expected guidance took its largest hit at a division it is attempting to grow. The carrier took an 8-cents-a-share hit against its less-than-truckload unit, largely as a result of an arbitration award following an unidentified 2022 incident.
Knight-Swift was not immediately available for further comment April 16 and 17.
There was also a 5-6-cent hit to Q1 earnings from severe winter weather disruptions in January and the rise in diesel prices in March.
“While the winter weather negatively impacted volumes and operating costs more than typical for a first quarter, it also exposed the reduction in truckload capacity to all stakeholders, which is very meaningful for ongoing bid activity,” CEO Adam Miller said.
“Similarly, the rapid increase in fuel costs was a headwind to earnings in March, but we believe this will add to the existing downward trend in supply in the truckload industry,” the carrier’s top executive said.
The nationwide average on-highway diesel price rose $1.92 or 55.3% between Jan. 5 and March 30, according to Energy Information Administration data.
EIA diesel prices are published every Tuesday. Fuel surcharge increases for contract shippers typically lag the release of the data by a week, observers say.
Knight-Swift’s warehousing business, meanwhile, is deferring around 5 cents a share of earnings to the second and third quarters due to weather-related delays in Q1.
A further 2-cents-a-share decrease involves an “adverse decision” on Mexican value-added tax reimbursements in previous years.
Knight-Swift ranks No. 7 on the Transport Topics Top 100 list of the largest for-hire carriers in North America and No. 1 in the truckload/dedicated arena. It also ranks No. 31 on the TT Top 100 logistics companies list.
The carrier posted a loss of $6.8 million, or 4 cents per diluted share, in the three months that ended Dec. 31.
But Knight-Swift expects adjusted EPS in the second quarter of 45-49 cents.
Improved freight market fundamentals will include positive trends in volume, spot rates and bid activity, as well as expectations for a continued seasonal build in freight demand for both truckload and less-than-truckload services, the company said.
Supply and demand in the trucking industry is being rebalanced by the ongoing crackdown on noncompliant carriers and driver training schools, Miller told attendees of the conference.
Miller cited work by the Department of Transportation and the Federal Motor Carrier Safety Administration to shut down noncompliant driver training schools, impose stricter rules for non-domiciled commercial driver licenses and enforce English-language proficiency requirements.
The executive is even more positive about where the industry stands after the past 2½ months.
“All things considered, we are more optimistic about the earnings opportunity for our businesses over the next several quarters than we were [when releasing the company’s Q4 earnings],” Miller said in comments accompanying the earnings guidance cut.
“We expect to build momentum in the coming months as more bids run their course and new pricing and volume awards are realized in the operating results, as we continue our cost and operational initiatives, and as we anticipate more spot and project opportunities than we have seen in recent years,” he added.
