Knight-Swift Closes U.S. Xpress Buyout, Projects Lower-Than-Expected Q2 Results

Knight-Swift Transportation Holdings Inc KNX closed the buyout of U.S. Xpress Enterprises, Inc.

In March, the company priced the buyout at an enterprise value of around $808 million.

The total enterprise value represents Knight-Swift assuming U.S. Xpress' $484 million of outstanding debt and finance leases and purchasing its outstanding equity for $324 million, or $6.15 per share.

The combined revenue run-rate for Knight-Swift after the transaction is expected to be close to $10 billion, and the truckload fleet will consist of about 25,000 tractors and 93,000 trailers.

Upon completion of the transaction, U.S. Xpress was de-listed from the NYSE.

"Our cross-functional synergy teams made up of leaders from Knight, Swift, and U.S. Xpress are off to a great start collaborating on plans to share best practices, improve operations and leverage economies of scale – and now they have the green light to fully engage. While the truckload part of the organization focuses on achieving the goals we have laid out for U.S. Xpress, our LTL and M&A teams remain focused on our strategic priority of continuing to build out a nationwide LTL network," said CEO Dave Jackson.

Q2 Outlook: KNX expects Q2 results to be lower than expected due to weakness in the full truckload market on softer demand.

The company expects costs to remain stable sequentially. 

Overall, the company estimates 1,100 basis points-1,200 basis point degradation in Q2 operating margins Y/Y. 

The company expects to update its annual earnings guidance in conjunction with its scheduled earnings release and presentation on July 20, 2023.

Price Action: KNX shares are trading lower by 2.80% at $54.35 on the last check Wednesday.