Knight-Swift (KNX) Q3 2026 earnings review
Knight-Swift profit more than doubles, while driver shortages limit volume
Knight-Swift, the operator of North America's largest full-truckload fleet, is raising freight rates faster than its costs while a driver shortage limits how much cargo it can haul. Third-quarter revenue excluding fuel surcharges rose 8%, and profit per share excluding one-offs more than doubled to $0.83, beating the company's plan. Chief executive Adam Miller said tight industry truck supply and holiday project bookings are lifting prices, and the fourth-quarter plan has Truckload revenue growth speeding up to above 10%.
| Revenue excluding fuel surcharges | $1.85B +7.7% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $0.83 $0.32 a year ago (plan: $0.71–0.77) |
| Truckload operating ratio, excluding one-offs | 89.2% improved 7.0 percentage points from a year ago |
| Q4 profit per share outlook | $0.78–0.84 middle of the range: +161% from a year ago |
⚖️ Verdict: 🟢 Bullish
The story got better because Truckload rate increases are sticking to the bottom line and the freight brokerage unit reversed its margin squeeze, lifting its gross margin by 3.5 percentage points from last quarter. U.S. Xpress also posted a second straight profitable quarter in its over-the-road division. One caution: the less-than-truckload business missed its revenue growth plan at 0.4%, and nearly half of the company's earnings beat came from extra gains on selling used trucks.
The question now is whether Knight-Swift can seat enough trucks to haul the holiday projects it has booked without giving away its margin gains in higher driver pay. If recruiting holds the fleet steady and pay stays near mid-single-digit growth, Truckload operating ratio will reach the planned mid-80s; if driver turnover rises, unseated trucks and pay hikes will cap the profit recovery. Fourth-quarter tractor counts and Truckload cost per mile will decide it.
🐂 Bull Case
Truckload Pricing Outpaces Cost Growth
Knight-Swift's largest business is full-truckload shipping, where one customer's freight fills a trailer. Chief executive Adam Miller said customers want reliable carriers before the holidays, and Knight-Swift is turning down two to three times as many loads as the broader market. That pricing power is lifting margins because the company kept overhead flat through "fewer non-driver roles, real estate rationalization, AI automation, and lower vendor costs".
- Truckload revenue per loaded mile excluding fuel: up 9.7% from a year ago, with over-the-road rates up mid-teens percent
- Truckload operating ratio excluding one-offs (expenses as a share of revenue): down 7.0 percentage points to 89.2%, or 5.9 points by our math excluding last year's $12 million U.S. Xpress claims charge
- Unpaid empty miles: down 1.7 percentage points to 12.1% of total miles
- Company-wide salaries, wages and benefits: down 2.2 percentage points of revenue excluding fuel, to 41.7%
Because total cost per mile rose 3.8% while revenue per total mile rose 12.2%, the company kept 68% of its rate gains as profit, up from 50% last quarter. The fourth-quarter plan calls for another 6.5 to 7.5 percentage points of operating ratio improvement as holiday project rates take effect.
What to watch: fourth-quarter Truckload cost per mile against revenue per mile. Holding profit retention near two-thirds during peak season would show that higher driver pay is not eating the rate recovery.
U.S. Xpress Narrows the Margin Gap
Knight-Swift bought rival trucker U.S. Xpress in 2023 to fix its margins and bring its customer rates up to the level of Knight-Swift's older brands. Last quarter, U.S. Xpress's over-the-road division — trucks that run irregular long-distance routes rather than fixed customer contracts — earned its first quarterly profit since the deal.
In the third quarter, over-the-road pricing at U.S. Xpress again grew faster than at the older brands. That pushed the division's operating ratio excluding one-offs into the mid-90s and brought total U.S. Xpress trucking into the low 90s, while the older brands reached 88.0%. A second profitable quarter shows the turnaround is holding, and management expects the 2027 contract bidding cycle to close the remaining price gap.
What to watch: the operating ratio gap between U.S. Xpress and the older brands in the fourth quarter. Pushing U.S. Xpress below 90% during the holiday peak would prove the acquired fleet can earn normal cycle margins.
Brokerage Gross Margin Rebounds as Contracts Reset
The Logistics unit acts as a freight broker, matching shippers with outside trucking firms. Earlier this year, stricter carrier vetting and tighter truck supply pushed up what Knight-Swift paid outside carriers faster than what it charged customers, squeezing brokerage gross margin down to 15.4% in the second quarter.
This quarter, brokerage gross margin jumped 3.5 percentage points from the second quarter and 1.1 points from a year ago to 18.9%, because "ongoing progress resetting contractual pricing catches up to the increased capacity costs". Load volume fell 32.6% as the unit walked away from cheap freight, but revenue per load rose 46.7% and operating profit excluding one-offs grew 19.6%. The fourth-quarter plan extends the turnaround, calling for the unit's operating ratio to improve by 3.0 to 4.0 percentage points.
What to watch: fourth-quarter Logistics load volume alongside gross margin. Stabilizing volume while keeping gross margin near 19% would show the unit has finished culling low-priced contracts.
🐻 Bear Case
Tight Driver Supply Caps Truckload Volume
Higher freight rates are coming from a shrinking pool of qualified drivers and carriers across the industry rather than a boom in customer shipping. "The Truckload market was largely consistent with normal seasonality in the third quarter, and contractual volumes remained generally stable," Miller said. He added that "Industry capacity remains under pressure, and sourcing quality drivers is as challenging as it has been in years."
That driver shortage cuts both ways for Knight-Swift. While "targeted investments in recruiting, training, and driver pay helped to stabilize our seated truck count in July, which held through the quarter", average Truckload tractors still fell 4.0% from a year ago and 1.1% from the second quarter to 20,470. Because the company has fewer seated trucks, total loaded miles fell 3.0% even as customers turned over more loads. Driver pay also rose in the mid-single digits, creating a cost headwind.
What to watch: average Truckload tractor count and miles per tractor in the fourth quarter. Miller noted that "We have put more peak season project arrangements in place than at any time since the pandemic", so a falling tractor count would mean unseated trucks prevented the company from hauling that high-margin freight.
LTL Misses Its Revenue Plan and Margin Goal
In less-than-truckload (LTL) shipping, terminals combine smaller loads from many customers onto one truck. Knight-Swift has been expanding its terminal network to "evolve from a regional base to a national profile" and previously targeted an operating ratio below 90% for 2026.
- Third-quarter LTL revenue excluding fuel: up 0.4% from a year ago, missing the company's plan for low-single-digit growth
- Shipments per day: 24,681, up 2.8% from the second quarter, but down 1.4% from a year ago
- Revenue per hundredweight excluding fuel: down 0.7% from a year ago, pulled down by 4.8% heavier shipments
- LTL operating ratio excluding one-offs: worsened by 0.8 percentage points from a year ago to 91.4%, hurt by a $4.6 million drop in equipment sale gains
With the nine-month operating ratio at 94.2% and the fourth-quarter outlook pointing to 93.6% by our math, the full year will land near 94.1%. The sub-90% goal is out of reach for 2026, though fourth-quarter revenue excluding fuel is planned to grow 8% to 11%.
What to watch: fourth-quarter LTL shipments per day against last year's 22,340 base. Delivering the planned 8% to 11% revenue growth will test whether the new national terminals are finally winning volume.
Risks this quarter didn't answer
Three standing financial and cost concerns remained open or helped flatter the third-quarter beat.
- Equipment sale gains: brought in $22.6 million against a $12 million to $17 million plan, adding about $0.04 per share by our math — nearly half of the $0.09 profit beat — before stepping down to a planned $17 million to $21 million in the fourth quarter.
- Insurance and claims expense: fell 12.9% from a year ago (down 1.3 percentage points of revenue excluding fuel) because last year included a $12 million U.S. Xpress claim settlement, but rose from $100.2 million in the second quarter to $101.5 million; one quarter without a large verdict does not remove the risk of higher self-insured claim payouts.
- Share count and buybacks: diluted shares rose 0.4% from a year ago to 163.3 million with no share buybacks reported in the release, and the $1.5 billion of convertible notes issued this year still carry potential share dilution if the stock trades above the $104.75 call-spread cap.
💲 Other KPIs
Intermodal — moving freight containers by rail and truck — grew load volume 13.3% from a year ago to its highest level in over five years. Pricing excluding fuel rose 5.5%, lifting segment revenue 30.6% to $122.9 million and cutting its operating ratio by 2.0 percentage points to 97.8%, a second straight profitable quarter.
Uncollected customer bills rose 10.4% from last quarter and 57.1% from year-end 2025 as freight rates and fuel surcharges climbed. Knight-Swift also increased its investment in its accounts receivable securitization — a program that sells customer bills for cash — by $78.3 million over the first nine months, up from $63.0 million at mid-year.
Gross interest expense dropped 55.6% from a year ago to $18.2 million, and net interest fell $5.2 million from the second quarter, matching the company's plan. Even after accounting for $6.3 million of receivable-program fees moved into operating expenses this year, quarterly interest costs fell $16.5 million from a year ago thanks to refinancing bank debt with 1.0% convertible bonds.
🔮 Guidance
New. The plan calls for $0.81 at the middle of the range, up 161% from $0.31 a year ago and down 2 cents from the third quarter because equipment sale gains and All Other segment profits step down seasonally. By our math, that puts full-year profit per share excluding one-offs at $2.36, up 87% from 2025.
New. The outlook speeds up revenue growth from 6.5% in the third quarter to about 11% in the fourth. By our math, a 7.0 percentage point improvement from last year's 92.9% operating ratio puts the fourth-quarter Truckload operating ratio near 85.9%, the segment's best margin since the post-pandemic peak.
New. The plan projects LTL revenue growth jumping from 0.4% in the third quarter to about 9.5% against an easier year-ago comparison. By our math, improving last year's 95.1% operating ratio by 1.5 percentage points leaves the fourth quarter near 93.6% and the full year near 94.1%.
New. The brokerage outlook has revenue holding even with last year's $160.0 million, which requires a 15% jump from the third quarter during the holiday peak. Improving last year's 95.8% operating ratio by 3.5 percentage points puts the fourth-quarter ratio near 92.3% by our math.
New. Intermodal revenue is planned to grow about 27.5% from last year's $95.7 million, keeping the third quarter's pace. By our math, a 2.0 percentage point improvement from last year's 100.1% operating ratio puts the fourth quarter near 98.1%.
New. After earning $31.0 million before intangible amortization in the third quarter, the segment is planned to swing to a $15 million loss at the middle of the range. Management said the drop reflects seasonal warehousing patterns, facility expansion and about $6.5 million of receivable-program fees.
New. Equipment sale gains are planned to step down by $3.6 million at the middle of the range from the third quarter's $22.6 million. Net interest stays near $16.3 million, other income rises slightly, and the tax rate excluding one-offs edges down from 25.6%.
Cut. The top of the full-year spending range came down by $25 million, lowering the middle of the range by $12.5 million to $612.5 million after a $25 million cut in the first quarter. By our math, with $426.7 million spent in the first nine months, the plan leaves $185.8 million for the fourth quarter, nearly double last year's $96.1 million fourth-quarter spend.
❓ Key Questions
What percentage of the Truckload fleet is currently unseated?
Management said driver recruiting and pay stabilized the seated truck count in July, yet average Truckload tractors still fell by 235 from the second quarter. Knowing the unseated truck percentage would show how much capacity the company can activate for holiday projects without buying trucks.
What replaces the sub-90% LTL operating ratio target?
Earlier in 2026 management targeted a full-year LTL operating ratio below 90%, but the nine-month result of 94.2% and the fourth-quarter plan make that impossible. Investors need to know when the expanded 179-terminal network is now expected to cross below 90%.
Why does All Other swing to a $15 million loss?
All Other operating profit before intangible amortization beat its third-quarter plan at $31.0 million, yet the fourth-quarter outlook calls for a $13 million to $17 million loss. Management cited warehousing seasonality and footprint expansion, but a $46 million quarterly swing needs a breakdown.
How are carrier-liability rules affecting brokerage insurance and vetting costs?
Logistics gross margin jumped 3.5 percentage points from the second quarter to 18.9% even as load volume dropped 32.6%. Because the press release did not discuss broker liability rulings or carrier insurance inflation, the call needs to clarify whether vetting costs have peaked.
Was the defined-benefit pension plan termination completed in Q3?
The second-quarter filing stated that the pension plan termination would be finalized during the third quarter ended September 30, 2026. The earnings release did not mention the pension plan or any final settlement charge, leaving its completion status open until the quarterly filing.