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 ~~June 30, 2021~~March 31, 2022

☐ 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 ~~165,975,952~~163,568,435 shares of the registrant's common stock outstanding as of ~~July 28, 2021.~~April 27, 2022.

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			45

Condensed Consolidated Balance Sheets (Unaudited) — ~~June~~ 3 0 ~~, 2021~~March 31, 2022 and December 31, ~~2020~~			4

~~Condensed Consolidated Statements of Comprehensive Income (Unaudited) — Quarter~~ ~~and Year-to-Date~~ ~~June 30,~~ 2021 ~~and 2020~~			5

Condensed Consolidated Statements of ~~Cash Flows~~Comprehensive Income (Unaudited) — ~~Quarter~~ ~~And Year-to-Date~~ ~~June 30,~~Quarters Ended March 31, 2022 and 2021 ~~and 2020~~			6

Condensed Consolidated Statements of Cash Flows (Unaudited) — Quarters Ended March 31, 2022 and 2021			7

Condensed Consolidated Statements of Stockholders' Equity (Unaudited) — ~~Quarter~~Quarters Ended March 31, 2022 and ~~Year-to-Date~~ ~~June 30,~~ 2021 ~~and 2020~~			89

Note 1 — Introduction and Basis of Presentation			10



Note 2 — Recently Issued Accounting Pronouncements			11

Note 3 — Acquisitions			11

~~Note 4 — Investments~~			14





Note ~~5 — Assets Held for Sale~~			14

~~Note 6 — Goodwill and Other Intangible Assets~~			15

~~Note 7~~4 — Income Taxes			1613



Note 85 — Accounts Receivable Securitization			13

Note 6 — Debt and Financing			14

Note 7 — Defined Benefit Pension Plan			16

Note 8 — Commitments			16

Note 9 — ~~Commitments~~Contingencies and Legal Proceedings			1816

Note 10 — ~~Contingencies and Legal Proceedings~~Share Repurchase Plans			18

Note 11 — ~~Share Repurchase Plan~~Weighted Average Shares Outstanding			2018

Note 12 — ~~Weighted Average Shares Outstanding~~Fair Value Measurement			2119

Note 13 — Related Party Transactions			2122

Note 14 — Financial Information by Segment and Geography			22

~~Note 15 — Fair Value Measurement~~			24

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			2824

Item 3. Quantitative and Qualitative Disclosures About Market Risk			5552

Item 4. Controls and Procedures			5553
PART II OTHER INFORMATION
Item 1. Legal Proceedings			5654

Item 1A. Risk Factors			5654

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			5754

Item 3. Defaults Upon Senior Securities			5754

Item 4. Mine Safety Disclosures			5754

Item 5. Other Information			5754

Item 6. Exhibits			5855

Signatures			5956

Table of Contents

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


QUARTERLY REPORT ON FORM 10-Q




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.
2017 Debt Agreement						The Company's ~~Credit Agreement,~~unsecured credit agreement, entered into on September 29, 2017, as amended on October 2, 2020



2021 Debt Agreement						The Company's unsecured credit agreement, entered into on September 3, 2021, consisting of the 2021 Revolver and ~~2017~~2021 Term ~~Loan,~~Loans, which are defined ~~below.~~below
~~2017~~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
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 ~~2017~~2021 Debt ~~Agreement.~~Agreement, maturing on December 3, 2022
~~2018 RSA~~2021 Term Loan A-2						~~Fourth Amendment to~~The Company's term loan under the ~~Amended and Restated Receivables Sales~~2021 Debt Agreement, ~~entered into~~maturing on ~~July 11, 2018 by Swift Receivables Company II, LLC with unrelated financial entities.~~September 3, 2024
2021 Term Loan A-3						The Company's term loan under the 2021 Debt Agreement, maturing on September 3, 2026
2021 RSA						Fifth Amendment to the Amended and Restated Receivables Sales Agreement, entered into on April 23, 2021 by Swift Receivables Company II, LLC with unrelated financial entities.


July 2021 Term Loan						The Company's term loan entered into on July 6, ~~2021.~~2021
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
~~COVID-19~~BSBY						~~Viral strain of a coronavirus which led the World Health Organization to declare a global pandemic in March 2020.~~Bloomberg Short-Term Bank Yield Index

DOE						United States Department of Energy
EPS						Earnings Per Share
Embark						Embark Trucks Inc. and its related entities
ESPP						Knight-Swift Transportation Holdings Inc. Amended and Restated 2012 Employee Stock Purchase Plan



GAAP						United States Generally Accepted Accounting Principles
~~Knight~~						~~Unless otherwise indicated or the context otherwise requires, this term represents Knight Transportation, Inc. and its subsidiaries prior to the 2017 Merger.~~
LIBOR						London InterBank Offered Rate


NYSE						New York Stock Exchange
LTL						Less-than-truckload
MME						RAC MME Holdings, LLC. and its subsidiaries, MME, Inc., Midwest Motor Express, Inc., and Midnite Express Inc.
Quarterly Report						Quarterly Report on Form 10-Q
~~QTD~~						~~Quarter-to-date~~
~~Revolver~~						~~Revolving line of credit under the 2017 Debt Agreement~~
RSU						Restricted Stock Unit

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
SEC						United States Securities and Exchange Commission
~~Swift~~						~~Unless otherwise indicated or the context otherwise requires, this term represents Swift Transportation Company and its subsidiaries prior to the 2017 Merger.~~

TRP						Transportation Resource Partners
US						The United States of America
UTXL						UTXL Enterprises, Inc.
~~YTD~~						~~Year-to-date~~

Table of Contents Glossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

PART I FINANCIAL INFORMATION


ITEM 1.			FINANCIAL STATEMENTS


Condensed Consolidated Balance Sheets (Unaudited)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In thousands, except per share data)					(In thousands, except per share data)
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	179,032	$	156,699	Cash and cash equivalents	$	242,860	$	261,001
Cash and cash equivalents – restricted	Cash and cash equivalents – restricted	51,637		39,328		Cash and cash equivalents – restricted	128,774		87,241
Restricted investments, held-to-maturity, amortized cost	Restricted investments, held-to-maturity, amortized cost	8,589		9,001		Restricted investments, held-to-maturity, amortized cost	8,302		5,866
Trade receivables, net of allowance for doubtful accounts of $22,157 and $22,093, respectively		648,435		578,479
Trade receivables, net of allowance for doubtful accounts of $19,883 and $21,663, respectively						Trade receivables, net of allowance for doubtful accounts of $19,883 and $21,663, respectively	939,704		911,336
Contract balance – revenue in transit	Contract balance – revenue in transit	20,913		14,560		Contract balance – revenue in transit	21,185		22,936
Prepaid expenses	Prepaid expenses	58,722		71,649		Prepaid expenses	86,742		90,507
Assets held for sale	Assets held for sale	17,599		29,756		Assets held for sale	11,421		8,166
Income tax receivable	Income tax receivable	29,369		2,903		Income tax receivable	217		909
Other current assets	Other current assets	60,581		20,988		Other current assets	27,064		26,318
Total current assets	Total current assets	1,074,877		923,363		Total current assets	1,466,269		1,414,280
Gross property and equipment	Gross property and equipment	4,401,293		4,223,348		Gross property and equipment	5,235,593		5,118,897
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(1,389,477)		(1,230,696)		Less: accumulated depreciation and amortization	(1,655,908)		(1,563,533)
Property and equipment, net	Property and equipment, net	3,011,816		2,992,652		Property and equipment, net	3,579,685		3,555,364
Operating lease right-of-use-assets	Operating lease right-of-use-assets	91,258		113,296		Operating lease right-of-use-assets	141,363		147,540
Goodwill	Goodwill	2,971,023		2,922,964		Goodwill	3,518,589		3,515,135
Intangible assets, net	Intangible assets, net	1,403,483		1,389,245		Intangible assets, net	1,814,883		1,831,049
Other long-term assets	Other long-term assets	130,002		126,482		Other long-term assets	175,017		192,132
Total assets	Total assets	$	8,682,459	$	8,468,002	Total assets	$	10,695,806	$	10,655,500
LIABILITIES AND STOCKHOLDERS' EQUITY	LIABILITIES AND STOCKHOLDERS' EQUITY					LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	151,704	$	101,001	Accounts payable	$	248,762	$	224,844
Accrued payroll and purchased transportation	Accrued payroll and purchased transportation	191,906		160,888		Accrued payroll and purchased transportation	237,909		217,084
Accrued liabilities	Accrued liabilities	87,637		88,894		Accrued liabilities	188,008		128,536
Claims accruals – current portion	Claims accruals – current portion	169,093		174,928		Claims accruals – current portion	223,382		206,607

Finance lease liabilities and long-term debt – current portion	Finance lease liabilities and long-term debt – current portion	72,423		52,583		Finance lease liabilities and long-term debt – current portion	234,146		262,423
Operating lease liabilities – current portion	Operating lease liabilities – current portion	32,785		47,496		Operating lease liabilities – current portion	33,822		35,322
Accounts receivable securitization – current portion		0		213,918

Total current liabilities	Total current liabilities	705,548		839,708		Total current liabilities	1,166,029		1,074,816
Revolving line of credit	Revolving line of credit	55,000		210,000		Revolving line of credit	165,000		260,000
Long-term debt – less current portion	Long-term debt – less current portion	299,219		298,907		Long-term debt – less current portion	1,029,159		1,037,552
Finance lease liabilities – less current portion	Finance lease liabilities – less current portion	165,644		138,243		Finance lease liabilities – less current portion	277,839		256,166
Operating lease liabilities – less current portion	Operating lease liabilities – less current portion	60,958		69,852		Operating lease liabilities – less current portion	103,161		107,614
Accounts receivable securitization – less current portion	Accounts receivable securitization – less current portion	278,372		0		Accounts receivable securitization – less current portion	278,539		278,483
Claims accruals – less current portion	Claims accruals – less current portion	168,152		174,814		Claims accruals – less current portion	202,737		210,714
Deferred tax liabilities	Deferred tax liabilities	806,398		815,941		Deferred tax liabilities	881,287		874,877
Other long-term liabilities	Other long-term liabilities	45,115		48,497		Other long-term liabilities	11,112		11,828
Total liabilities	Total liabilities	2,584,406		2,595,962		Total liabilities	4,114,863		4,112,050
Commitments and contingencies (Notes 3, 9, and 10)		0		0
Commitments and contingencies (Notes 3, 7, 8, and 9)						Commitments and contingencies (Notes 3, 7, 8, and 9)	0		0
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, par value $0.01 per share; 10,000 shares authorized; 0ne issued		0		0
Common stock, par value $0.01 per share; 500,000 shares authorized; 165,711 and 166,553 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively.		1,657		1,665
Preferred stock, par value $0.01 per share; 10,000 shares authorized; none issued						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; 163,635 and 165,980 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.						Common stock, par value $0.01 per share; 500,000 shares authorized; 163,635 and 165,980 shares issued and outstanding as of March 31, 2022 and December 31, 2021, respectively.	1,636		1,660

Accumulated other comprehensive loss						Accumulated other comprehensive loss	(935)		(563)
Additional paid-in capital	Additional paid-in capital	4,325,915		4,301,424		Additional paid-in capital	4,360,889		4,350,913
Retained earnings	Retained earnings	1,757,689		1,566,759		Retained earnings	2,209,104		2,181,142
Total Knight-Swift stockholders' equity	Total Knight-Swift stockholders' equity	6,085,261		5,869,848		Total Knight-Swift stockholders' equity	6,570,694		6,533,152
Noncontrolling interest	Noncontrolling interest	12,792		2,192		Noncontrolling interest	10,249		10,298
Total stockholders’ equity	Total stockholders’ equity	6,098,053		5,872,040		Total stockholders’ equity	6,580,943		6,543,450
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	8,682,459	$	8,468,002	Total liabilities and stockholders’ equity	$	10,695,806	$	10,655,500

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

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~


~~Condensed Consolidated Statements of Comprehensive Income (Unaudited)~~

Quarter-to-Date June 30, Year-to-Date June 30,
2021 2020 2021 2020
(In thousands, except per share data)
Revenue:
Revenue, excluding trucking fuel surcharge $ 1,212,872 $ 997,597 $ 2,345,977 $ 2,024,692
Trucking fuel surcharge 102,829 63,101 192,738 160,804
Total revenue 1,315,701 1,060,698 2,538,715 2,185,496
Operating expenses:
Salaries, wages, and benefits 377,613 365,311 747,983 720,144
Fuel 126,055 86,381 244,291 208,236
Operations and maintenance 71,313 66,067 139,383 134,471
Insurance and claims 58,776 45,302 114,419 99,582
Operating taxes and licenses 21,717 20,883 43,765 43,052
Communications 4,635 4,902 9,672 9,776
Depreciation and amortization of property and equipment 123,606 114,601 243,521 224,822
Amortization of intangibles 11,984 11,474 23,733 22,948
Rental expense 13,399 22,372 30,263 47,747
Purchased transportation 304,157 200,107 562,387 425,383
Impairments 0 353 0 1,255
Miscellaneous operating expenses 11,331 20,778 25,924 43,794
Total operating expenses 1,124,586 958,531 2,185,341 1,981,210
Operating income 191,115 102,167 353,374 204,286
Other income (expenses):
Interest income 270 437 564 1,269
Interest expense (3,307) (4,021) (6,793) (10,128)
Other income, net 16,840 8,499 32,945 1,992
Total other income (expenses), net 13,803 4,915 26,716 (6,867)
Income before income taxes 204,918 107,082 380,090 197,419
Income tax expense 51,783 26,815 97,112 51,369
Net income 153,135 80,267 282,978 146,050
Net income attributable to noncontrolling interest (331) (78) (384) (435)
Net income attributable to Knight-Swift $ 152,804 $ 80,189 $ 282,594 $ 145,615
Earnings per share:
Basic $ 0.92 $ 0.47 $ 1.70 $ 0.86
Diluted $ 0.92 $ 0.47 $ 1.69 $ 0.85
Dividends declared per share: $ 0.10 $ 0.08 $ 0.18 $ 0.16
Weighted average shares outstanding:
Basic 165,577 169,948 165,751 170,283
Diluted 166,585 170,624 166,750 170,958

~~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 Comprehensive Income (Unaudited)


	Quarter Ended March 31,
		2022		2021
		(In thousands, except per share data)
Revenue:
Revenue, excluding truckload and LTL fuel surcharge		$	1,647,878	$	1,133,105
Truckload and LTL fuel surcharge		179,111		89,909
Total revenue		1,826,989		1,223,014
Operating expenses:
Salaries, wages, and benefits		536,056		370,370
Fuel		190,489		118,236
Operations and maintenance		95,883		68,070
Insurance and claims		98,192		55,643
Operating taxes and licenses		29,037		22,048
Communications		5,870		5,037
Depreciation and amortization of property and equipment		145,044		119,915
Amortization of intangibles		16,166		11,749
Rental expense		13,401		16,864
Purchased transportation		386,446		258,230
Impairments		810		—
Miscellaneous operating expenses		11,509		14,593

Total operating expenses		1,528,903		1,060,755
Operating income		298,086		162,259
Other (expenses) income:
Interest income		461		294
Interest expense		(6,680)		(3,486)
Other (expense) income, net		(14,405)		16,105
Total other (expenses) income, net		(20,624)		12,913
Income before income taxes		277,462		175,172
Income tax expense		69,174		45,329
Net income		208,288		129,843
Net loss (income) attributable to noncontrolling interest		49		(53)
Net income attributable to Knight-Swift		208,337		129,790
Other comprehensive loss		(372)		—
Comprehensive income		$	207,965	$	129,790

Earnings per share:
Basic		$	1.26	$	0.77
Diluted		$	1.25	$	0.77

Dividends declared per share:		$	0.12	$	0.08

Weighted average shares outstanding:
Basic		165,377		167,478
Diluted		166,499		168,374

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

Table of ContentsGlossary of Terms

KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Cash Flows (Unaudited)


		Year-to-Date June 30,					Quarter Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	282,978	$	146,050	Net income	$	208,288	$	129,843
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization of property, equipment, and intangibles	Depreciation and amortization of property, equipment, and intangibles	267,254		247,770		Depreciation and amortization of property, equipment, and intangibles	161,210		131,664
Gain on sale of property and equipment	Gain on sale of property and equipment	(25,592)		(4,724)		Gain on sale of property and equipment	(34,801)		(10,537)

Impairments	Impairments	0		1,255		Impairments	810		—
Deferred income taxes	Deferred income taxes	(9,541)		23,112		Deferred income taxes	4,246		(18,920)
Non-cash lease expense	Non-cash lease expense	26,743		46,493		Non-cash lease expense	9,490		15,589
Non-cash adjustment to fair value of convertible note		(12,631)		0

Other adjustments to reconcile net income to net cash provided by operating activities	Other adjustments to reconcile net income to net cash provided by operating activities	9,347		19,229		Other adjustments to reconcile net income to net cash provided by operating activities	32,229		(6,522)
Increase (decrease) in cash resulting from changes in:	Increase (decrease) in cash resulting from changes in:					Increase (decrease) in cash resulting from changes in:
Trade receivables	Trade receivables	(70,067)		(11,440)		Trade receivables	(28,007)		(11,586)
Income tax receivable	Income tax receivable	(26,466)		11,124		Income tax receivable	692		2,872
Accounts payable	Accounts payable	28,935		8,417		Accounts payable	22,074		12,534
Accrued liabilities and claims accrual	Accrued liabilities and claims accrual	6,512		(75,069)		Accrued liabilities and claims accrual	89,289		70,975
Operating lease liabilities	Operating lease liabilities	(28,311)		(48,243)		Operating lease liabilities	(9,267)		(15,174)
Other assets and liabilities	Other assets and liabilities	10,343		19,386		Other assets and liabilities	607		5,375
Net cash provided by operating activities	Net cash provided by operating activities	459,504		383,360		Net cash provided by operating activities	456,860		306,113
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from maturities of held-to-maturity investments	Proceeds from maturities of held-to-maturity investments	2,850		6,950		Proceeds from maturities of held-to-maturity investments	1,881		500
Purchases of held-to-maturity investments	Purchases of held-to-maturity investments	(2,555)		(7,852)		Purchases of held-to-maturity investments	(4,372)		(512)
Proceeds from sale of property and equipment, including assets held for sale	Proceeds from sale of property and equipment, including assets held for sale	127,068		64,463		Proceeds from sale of property and equipment, including assets held for sale	60,532		67,175
Purchases of property and equipment	Purchases of property and equipment	(247,549)		(259,641)		Purchases of property and equipment	(164,974)		(111,020)
Expenditures on assets held for sale	Expenditures on assets held for sale	(765)		(418)		Expenditures on assets held for sale	(43)		(401)
Net cash, restricted cash, and equivalents invested in acquisitions	Net cash, restricted cash, and equivalents invested in acquisitions	(63,305)		(46,811)		Net cash, restricted cash, and equivalents invested in acquisitions	(1,291)		(39,281)
Investment in convertible note		(25,000)		0

Other cash flows from investing activities	Other cash flows from investing activities	12,340		(9,757)		Other cash flows from investing activities	(1,920)		9,398
Net cash used in investing activities	Net cash used in investing activities	(196,916)		(253,066)		Net cash used in investing activities	(110,187)		(74,141)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayment of finance leases and long-term debt	Repayment of finance leases and long-term debt	(50,428)		(31,893)		Repayment of finance leases and long-term debt	(48,843)		(6,600)

Repayments on revolving lines of credit, net	Repayments on revolving lines of credit, net	(155,000)		(44,000)		Repayments on revolving lines of credit, net	(95,000)		(95,000)
Borrowings under accounts receivable securitization		80,000		0

Repayment of accounts receivable securitization	Repayment of accounts receivable securitization	(15,000)		(40,000)		Repayment of accounts receivable securitization	—		(15,000)

Proceeds from common stock issued	Proceeds from common stock issued	5,302		9,892		Proceeds from common stock issued	1,220		2,709
Repurchases of the Company's common stock	Repurchases of the Company's common stock	(53,661)		(34,630)		Repurchases of the Company's common stock	(144,881)		(53,661)
Dividends paid	Dividends paid	(30,332)		(27,673)		Dividends paid	(20,137)		(13,624)

Other cash flows from financing activities	Other cash flows from financing activities	(8,679)		(5,467)		Other cash flows from financing activities	(15,608)		(4,190)
Net cash used in financing activities	Net cash used in financing activities	(227,798)		(173,771)		Net cash used in financing activities	(323,249)		(185,366)
Net increase (decrease) in cash, restricted cash, and equivalents		34,790		(43,477)
Net increase in cash, restricted cash, and equivalents						Net increase in cash, restricted cash, and equivalents	23,424		46,606
Cash, restricted cash, and equivalents at beginning of period	Cash, restricted cash, and equivalents at beginning of period	197,277		202,228		Cash, restricted cash, and equivalents at beginning of period	350,023		197,277
Cash, restricted cash, and equivalents at end of period	Cash, restricted cash, and equivalents at end of period	$	232,067	$	158,751	Cash, restricted cash, and equivalents at end of period	$	373,447	$	243,883

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

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Condensed Consolidated Statements of Cash Flows (Unaudited) — Continued


		Year-to-Date June 30,					Quarter Ended March 31,
		2021		2020			2022		2021
		(In thousands)					(In thousands)
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid during the period for:	Cash paid during the period for:					Cash paid during the period for:
Interest	Interest	$	5,719	$	10,455	Interest	$	5,928	$	2,505
Income taxes	Income taxes	133,284		3,632		Income taxes	1,778		2,199
Non-cash investing and financing activities:	Non-cash investing and financing activities:					Non-cash investing and financing activities:
Equipment acquired included in accounts payable	Equipment acquired included in accounts payable	$	8,063	$	27,463	Equipment acquired included in accounts payable	$	11,643	$	13,860

Financing provided to independent contractors for equipment sold	Financing provided to independent contractors for equipment sold	776		2,553		Financing provided to independent contractors for equipment sold	1,536		462
Transfer from property and equipment to assets held for sale		51,310		37,779
Transfers from property and equipment to assets held for sale						Transfers from property and equipment to assets held for sale	16,986		29,955
Noncontrolling interest associated with acquisition	Noncontrolling interest associated with acquisition	10,281		0		Noncontrolling interest associated with acquisition	—		10,281
Contingent consideration associated with acquisition		5,000		18,245
Right-of-use assets obtained in exchange for operating lease liabilities		4,146		1,633
Right-of-use assets obtained in exchange for new operating lease liabilities through acquisitions		560		12,356
Property and equipment obtained in exchange for new finance lease liabilities		55,370		0
Purchase price adjustment on acquisition						Purchase price adjustment on acquisition	2,163		—

Right-of-use assets obtained (forfeited) in exchange for operating lease liabilities						Right-of-use assets obtained (forfeited) in exchange for operating lease liabilities	3,314		(2,608)
Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions						Right-of-use assets obtained in exchange for operating lease liabilities through acquisitions	—		560

Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities	Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities	42,298		48,659		Property and equipment obtained in exchange for finance lease liabilities reclassified from operating lease liabilities	—		28,149


Reconciliation of Cash, Restricted Cash, and Equivalents:	Reconciliation of Cash, Restricted Cash, and Equivalents:	June 30, 2021		December 31, 2020		June 30, 2020		December 31, 2019		Reconciliation of Cash, Restricted Cash, and Equivalents:	March 31, 2022		December 31, 2021		March 31, 2021		December 31, 2020
		(In thousands)									(In thousands)
Condensed Consolidated Balance Sheets	Condensed Consolidated Balance Sheets									Condensed Consolidated Balance Sheets
Cash and cash equivalents	Cash and cash equivalents	$	179,032	$	156,699	$	117,760	$	159,722	Cash and cash equivalents	$	242,860	$	261,001	$	194,650	$	156,699
Cash and cash equivalents – restricted 1	Cash and cash equivalents – restricted 1	51,637		39,328		39,583		41,331		Cash and cash equivalents – restricted 1	128,774		87,241		47,867		39,328
Other long-term assets 1	Other long-term assets 1	1,398		1,250		1,408		1,175		Other long-term assets 1	1,813		1,781		1,366		1,250
Condensed Consolidated Statements of Cash Flows	Condensed Consolidated Statements of Cash Flows									Condensed Consolidated Statements of Cash Flows
Cash, restricted cash, and equivalents	Cash, restricted cash, and equivalents	$	232,067	$	197,277	$	158,751	$	202,228	Cash, restricted cash, and equivalents	$	373,447	$	350,023	$	243,883	$	197,277

________

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

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

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.


Condensed Consolidated Statements of Stockholders' Equity (Unaudited)


		Common Stock			Additional Paid-in Capital				Retained Earnings				Total Knight-Swift Stockholders' Equity			Noncontrolling Interest			Total Stockholders’ Equity				Common Stock						Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive Loss			Total Knight-Swift Stockholders' Equity		Noncontrolling Interest		Total Stockholders’ Equity
		Shares	Par Value												Total Stockholders’ Equity			Shares				Par Value			Additional Paid-in Capital		Retained Earnings	Accumulated Other Comprehensive Loss			Total Knight-Swift Stockholders' Equity			Noncontrolling Interest			Total Stockholders’ Equity
		(In thousands, except per share data)																(In thousands, except per share data)
Balances – December 31, 2020		166,553	$	1,665			$	4,301,424			$	1,566,759				$	5,869,848				$	2,192		$						5,872,040
Balances – December 31, 2021																						Balances – December 31, 2021	165,980			$	1,660		$	4,350,913		$	2,181,142		$	(563)		$	6,533,152	$	10,298	$	6,543,450

Common stock issued to employees	Common stock issued to employees	418	5		3,391								3,396						3,396			Common stock issued to employees	364			3			408									411				411
Common stock issued to the Board		12	0		575								575						575

Common stock issued under ESPP	Common stock issued under ESPP	31	0		1,331								1,331						1,331			Common stock issued under ESPP	14			—			809									809				809
Company shares repurchased	Company shares repurchased	(1,303)	(13)						(53,648)				(53,661)						(53,661)			Company shares repurchased	(2,723)			(27)						(144,854)						(144,881)				(144,881)
Shares withheld – RSU settlement	Shares withheld – RSU settlement								(7,947)				(7,947)						(7,947)			Shares withheld – RSU settlement										(15,608)						(15,608)				(15,608)
Employee stock-based compensation expense	Employee stock-based compensation expense				19,194								19,194						19,194			Employee stock-based compensation expense							8,759									8,759				8,759
Cash dividends paid and dividends accrued ($0.18 per share)									(30,069)				(30,069)						(30,069)
Cash dividends paid and dividends accrued ($0.12 per share)																						Cash dividends paid and dividends accrued ($0.12 per share)										(19,913)						(19,913)				(19,913)
Net income attributable to Knight-Swift	Net income attributable to Knight-Swift								282,594				282,594						282,594			Net income attributable to Knight-Swift										208,337						208,337				208,337
Other comprehensive loss																						Other comprehensive loss													(372)			(372)				(372)

Investment in noncontrolling interest																10,281			10,281
Distribution to noncontrolling interest																(65)			(65)

Net income attributable to noncontrolling interest	Net income attributable to noncontrolling interest															384			384			Net income attributable to noncontrolling interest																		(49)		(49)

Balances – June 30, 2021		165,711	$	1,657	$	4,325,915			$	1,757,689			$	6,085,261		$	12,792		$	6,098,053
Balances – March 31, 2022																						Balances – March 31, 2022	163,635			$	1,636		$	4,360,889		$	2,209,104		$	(935)		$	6,570,694	$	10,249	$	6,580,943

Common Stock Additional
Paid-in Capital Retained Earnings Total Knight-Swift Stockholders' Equity Noncontrolling
Interest Total
Stockholders’ Equity
Shares Par Value
(In thousands, except per share data)
Balances – December 31, 2019 170,688 $ 1,707 $ 4,269,043 $ 1,395,465 $ 5,666,215 $ 2,088 $ 5,668,303
Common stock issued to employees 567 5 8,309 8,314 8,314
Common stock issued to the Board 13 0 515 515 515
Common stock issued under ESPP 33 0 1,063 1,063 1,063
Company shares repurchased (1,139) (11) (34,619) (34,630) (34,630)
Shares withheld – RSU settlement (4,500) (4,500) (4,500)
Employee stock-based compensation expense 8,363 8,363 8,363
Cash dividends paid and dividends accrued ($0.16 per share) (27,495) (27,495) (27,495)
Net income attributable to Knight-Swift 145,615 145,615 145,615
Distribution to noncontrolling interest (394) (394)
Net income attributable to noncontrolling interest 435 435
Balances – June 30, 2020 170,162 $ 1,701 $ 4,287,293 $ 1,474,466 $ 5,763,460 $ 2,129 $ 5,765,589

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~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

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


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

Common Stock Additional
Paid-in Capital Retained Earnings Total Knight-Swift Stockholders' Equity Noncontrolling
Interest Total
Stockholders’ Equity
Shares Par Value
(In thousands, except per share data)
Balances – March 31, 2021 165,488 1,655 4,309,792 1,625,397 5,936,844 12,494 5,949,338
Common stock issued to employees 198 2 1,385 1,387 1,387
Common stock issued to the Board 12 0 575 575 575
Common stock issued under ESPP 13 0 631 631 631
Shares withheld – RSU settlement (3,788) (3,788) (3,788)
Employee stock-based compensation expense 13,532 13,532 13,532
Cash dividends paid and dividends accrued ($0.10 per share) (16,724) (16,724) (16,724)
Net income attributable to Knight-Swift 152,804 152,804 152,804
Distribution to noncontrolling interest (33) (33)
Net income attributable to noncontrolling interest 331 331
Balances – June 30, 2021 165,711 $ 1,657 $ 4,325,915 $ 1,757,689 $ 6,085,261 $ 12,792 $ 6,098,053


																		Common Stock				Additional Paid-in Capital				Retained Earnings		Accumulated Other Comprehensive Loss				Total Knight-Swift Stockholders' Equity				Noncontrolling Interest				Total Stockholders’ Equity
																		Shares		Par Value
																		(In thousands, except per share data)
Balances – December 31, 2020																	Balances – December 31, 2020	166,553		$	1,665			$	4,301,424					$	1,566,759			$	—			$	5,869,848			$	2,192	$	5,872,040

Common stock issued to employees																	Common stock issued to employees	220		3		2,006										2,009								2,009

Common stock issued under ESPP																	Common stock issued under ESPP	18		—		700										700								700
Company shares repurchased																	Company shares repurchased	(1,303)		(13)						(53,648)						(53,661)								(53,661)
Shares withheld – RSU settlement																	Shares withheld – RSU settlement									(4,159)						(4,159)								(4,159)
Employee stock-based compensation expense																	Employee stock-based compensation expense					5,662										5,662								5,662
Cash dividends paid and dividends accrued ($0.08 per share)																	Cash dividends paid and dividends accrued ($0.08 per share)									(13,345)						(13,345)								(13,345)
Net income attributable to Knight-Swift																	Net income attributable to Knight-Swift									129,790						129,790								129,790

Investment in noncontrolling interest																	Investment in noncontrolling interest																			10,281				10,281
Distribution to noncontrolling interest																	Distribution to noncontrolling interest																			(32)				(32)
Net income attributable to noncontrolling interest																	Net income attributable to noncontrolling interest																			53				53

Balances – March 31, 2021																	Balances – March 31, 2021	165,488		$	1,655	$	4,309,792			$	1,625,397	$	—			$	5,936,844			$	12,494			$	5,949,338

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

Balances – March 31, 2020	169,776	1,698				4,275,834			1,410,527				5,688,059				2,265		5,690,324

Common stock issued to employees	356	3		5,600						5,603					5,603
Common stock issued to the Board	13	0		515						515					515
Common stock issued under ESPP	17	0		517						517					517

Shares withheld – RSU settlement							(2,529)			(2,529)					(2,529)
Employee stock-based compensation expense				4,827						4,827					4,827
Cash dividends paid and dividends accrued ($0.08 per share)							(13,721)			(13,721)					(13,721)
Net income attributable to Knight-Swift							80,189			80,189					80,189

Distribution to noncontrolling interest													(214)		(214)
Net income attributable to noncontrolling interest													78		78

Balances – June 30, 2020	170,162	$	1,701	$	4,287,293		$	1,474,466		$	5,763,460		$	2,129	$	5,765,589

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

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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 first ~~half~~quarter of ~~2021,~~2022, the Company operated an average of ~~18,129~~17,965 tractors (comprised of ~~16,225~~16,159 company tractors and ~~1,904~~1,806 independent contractor tractors) and ~~60,382~~71,310 trailers within the ~~Trucking segment.~~Truckload segment and leasing activities within the non-reportable segments. The LTL segment operated an average of 3,091 tractors and 8,302 trailers. Additionally, the ~~Company~~Intermodal segment operated an average of ~~605~~584 tractors and ~~10,844~~11,027 ~~containers in the Intermodal segment.~~intermodal containers. As of ~~June 30, 2021~~March 31, 2022, the Company's 34 reportable segments ~~are Trucking,~~were Truckload, Logistics, LTL, 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 ~~2020~~2021 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.

2021 Acquisitions

The Company recently acquired the following entities:

•100.0% of MME on December 6, 2021. The results are included within the LTL segment.

•100.0% of ACT on July 5, 2021. The results are included within the LTL segment.

•100.0% of UTXL on June 1, 2021. The results are included within the Logistics segment.

•79.44% of Eleos on February 1, 2021. The results are included within the non-reportable segments. The noncontrolling interest is presented as a separate component of the condensed consolidated financial statements.

Note regarding comparability: In accordance with the accounting treatment applicable to the transactions, the Company's consolidated results, as reported, do not include the operating results of its ownership interest in the acquired entities prior to the respective acquisition dates. Accordingly, comparisons between the Company's current and prior period results may not be meaningful.

Additional information regarding the Company's recent acquisitions is included in Note 3.

Seasonality

In the 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,~~weather, while operating expenses generally ~~increase, and tractor~~increase. Tractor productivity of the Company's Truckload fleet, third-party carriers, and 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

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

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.

~~Impact of COVID-19~~

~~The Company~~ continues to operate its business through the COVID-19 pandemic, including recent variants, and has taken additional precautions to ensure the safety of its employees, customers, vendors, and the communities in which it operates.

There are various uncertainties that have arisen from the COVID-19 pandemic. While management is continuing to monitor the impact of the pandemic on Knight-Swift, including its employees, customers, independent contractors, stockholders, and other business partners and stakeholders, it is difficult to predict the impact that the pandemic will have on future results of its operations, financial position, and liquidity. This has caused some uncertainties around various accounting estimates. Due to these uncertainties, the Company's accounting estimates may change, as management's assessment of the impacts of the COVID-19 pandemic continues to evolve.

~~Table of ContentsGlossary of Terms~~

~~KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED~~

Note 2 — Recently Issued Accounting Pronouncements

~~There have been no ASUs issued since the filing date of the 2020 annual report that may have a material impact on the Company.~~

Date Issued

Reference

Description

Expected Adoption Date and Method

Financial Statement Impact

March 2022

ASU No. 2022-02: Financial Instruments – Credit Losses (ASC 326), Troubled Debt Restructurings and Vintage Disclosures

The amendments in this ASU require that a creditor incorporates troubled debt restructurings into the allowance for credit losses and disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases.

January 2023, Prospective

Currently under evaluation, but not expected to be material

Note 3 — Acquisitions

~~AAA Cooper Transportation Acquisition~~First quarter 2022 developments related to the Company's recent acquisitions are discussed below.

MME

On December 6, 2021, the Company, through a wholly owned subsidiary, acquired 100.0% of Bismarck, North Dakota-based MME. MME provides LTL, full truckload, and specialized and other logistics transportation services to a diverse customer base in its service territory in the upper Midwestern and great Northwestern regions of the US.

During the measurement period, the net working capital adjustment increased by $1.3 million based on the actual versus estimated net working capital adjustment as of the transaction date. This adjustment resulted in increasing the total purchase price consideration to $165.7 million. The Company reduced the deferred tax liabilities on MME's opening balance sheet by $2.2 million based on valuation of the Company's intangible assets. These measurement period adjustments resulted a $3.5 million increase in goodwill related to the MME acquisition.

ACT

On July 5, 2021, the Company acquired 100% of Dothan, Alabama-based ~~AAA Cooper Transportation and an affiliated entity ("ACT").~~ACT. ACT is a leading ~~less-than-truckload ("LTL")~~LTL carrier that also offers dedicated contract carriage and ancillary services.

~~The~~During the quarter ended March 31, 2022, the Company's condensed consolidated operating results included ACT's total ~~purchase price consideration~~revenue of ~~$1.31 billion~~$217.7 million and net income of $16.1 million. ACT's net income during the quarter ended March 31, 2022 included ~~$1.30 billion in cash and $10.0~~$3.5 million ~~in Knight-Swift shares issued~~related to the ~~sellers at closing. Additionally, the Company assumed $36.7 million in debt, net~~amortization of cash. Cash was funded from the 2021 Term Loan, as well as existing Knight-Swift liquidity. ACT was an S corporation for tax purposes, and the transaction included an election under Internal Revenue Code Section 338(h)(10). The Stock Purchase Agreement contains customary representations, warranties, and covenants. The results of ACT will be included in our consolidated results beginningintangible assets acquired in the third quarter of 2021. The Company has not completed the initial accounting for this transaction as it is still in the preliminary stages of assessing the fair value of the underlying tangible and intangible assets.

On July 6, 2021, Knight-Swift entered into the $1.2 billion 2021 Term Loan with Bank of America, N.A. The 2021 Term Loan is incremental to, and is separate from, the 2017 Debt Agreement. The 2021 Term Loan was fully funded on July 6, 2021 and there are no scheduled principal payments prior to maturity in October 2022. The interest rate applicable to the 2021 Term Loan is subject to a leverage-based grid and equals the BSBY rate (Bloomberg Short-term Bank Yield index) plus 1.000% at closing.

The 2021 Term Loan contains similar terms to the 2017 Debt Agreement, including the financial covenants, usual and customary events of default for a facility of this nature, and certain usual and customary restrictions and covenants.

~~UTXL Enterprises, Inc.~~

On June 1, 2021, pursuant to a stock purchase agreement (the "SPA") the Company, through a wholly owned subsidiary, acquired 100.0% of the equity interests of UTXL Enterprises, Inc. (“UTXL”), a premier third-party logistics company which specializes in over-the-road full truckload and multi-stop loads.

The total purchase price consideration of $37.2 million, including cash on hand and net working capital adjustments, consisted of $32.2 million in cash to the sellers at closing, which was funded through cash-on-hand and borrowing on the Revolver on the transaction date. At closing $2.25 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and remains subject to further adjustments.

The purchase price also included contingent consideration consisting of two additional annual payments of up to $2.5 million each (or $5.0 million in total), representing the maximum possible annual deferred payments to the sellers based on UTXL’s operating ratio and revenue growth targets for each of the twelve-month periods ending May 31, 2022 and May 31, 2023.

For income tax purposes, the sale of UTXL's equity interests to the Company is intended to be treated as a sale and purchase of assets. Accordingly, the book and tax basis of the acquired assets and liabilities are the same as of the purchase date. The SPA contains customary representations, warranties, covenants, and indemnification provisions.

The goodwill recognized represents expected synergies from combining the operations of UTXL 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.ACT Acquisition.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Pro Forma Information (Unaudited)— The following unaudited pro forma information combines the historical operations of the Company and ACT giving effect to the ACT Acquisition, and related transactions as if consummated on January 1, 2020.


	Quarter Ended March 31,
		2021
	(in thousands, except per share data)
Total revenue		$	1,412,232
Net income attributable to Knight-Swift		139,189
Earnings per share – diluted		0.83

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 ACT during the periods presented that were directly related to the ACT Acquisition, and related income tax effects of these items.

The unaudited pro forma condensed combined financial information does not purport to represent the actual results of operations that Knight-Swift and ACT 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 ACT Acquisition and also does not reflect any restructuring or integration-related costs to achieve those potential cost savings.

UTXL

On June 1, 2021, pursuant to a stock purchase agreement, the Company, through a wholly owned subsidiary, acquired 100.0% of the equity interests of UTXL, a premier third-party logistics company which specializes in over-the-road full truckload and multi-stop loads.

As of March 31, 2022, contingent consideration associated with the transaction was $2.5 million included in "Accrued liabilities" and $2.5 million included in "Other long-term liabilities" in the Company's condensed consolidated balance sheets, depending on the expected payment dates.

Eleos

On February 1, 2021, pursuant to a membership interest purchase agreement ("MIPA"), the Company, through a wholly owned subsidiary, acquired 79.44% of the issued and outstanding membership interests of Eleos Technologies, LLC ("Eleos"), a Greenville, South Carolina-based software provider, specializing in mobile driving platforms, which complement the Company's suite of services. 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 February 1, 2021 acquisition date.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Purchase Price Allocations

Unless otherwise stated, the purchase price allocations for the ~~acquisition is~~above acquisitions are preliminary and ~~has~~have 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.~~items as applicable. As the Company obtains more information, the preliminary purchase price ~~allocation~~allocations disclosed below isare subject to change. Any future adjustments to the preliminary purchase price ~~allocation,~~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,~~periods, which is not to exceed one year from the respective acquisition ~~date.~~dates.

~~June 1, 2021 Opening Balance Sheet as Reported at June 30, 2021~~

~~Fair value of the consideration transferred~~

~~37,230~~

~~Cash and cash equivalents~~

~~8,206~~

~~Trade receivables and other current assets~~

~~9,451~~

~~Property and equipment~~

~~Identifiable intangible assets~~ 1

~~22,121~~

~~Total assets~~

~~39,832~~

~~Accounts payable~~

~~(14,183)~~

~~Accrued payroll and payroll-related expenses~~

~~(247)~~

~~Accrued liabilities~~

~~(69)~~

~~Claims accruals – current portion~~

~~(418)~~

~~Total liabilities~~

~~(14,917)~~

~~Goodwill~~

~~12,315~~

~~1 Includes $19.2 million in customer relationships, $0.3 million in noncompete agreements, and a $2.6 million trade name.~~

~~Eleos Acquisition~~

On February 1, 2021, pursuant to a membership interest purchase agreement ("MIPA"), the Company, through a wholly owned subsidiary, acquired 79.44% of the issued and outstanding membership interests of Eleos Technologies, LLC ("Eleos"), a Greenville, South Carolina based software provider, specializing in mobile driving platforms, which complement the Company's suite of services. The total purchase price consideration, including cash on hand and net working capital adjustments, consisted of $41.5 million in cash to the sellers at closing, which was funded through cash-on-hand and borrowing on the Revolver on the transaction date. At closing, $4.1 million of the cash consideration was placed in escrow to secure certain of the sellers' indemnification obligations and other items.

The MIPA included that both the buyer and sellers would file an election under the Internal Revenue Code Section 754 to adjust the tax basis of the Company's assets and liabilities, with respect to the buyer's purchase of the equity. The MIPA contains customary representations, warranties, covenants, and indemnification provisions for transactions of this nature.

The goodwill recognized represents expected synergies from combining the operations of Eleos 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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The purchase price allocation for the acquisition is preliminary and has been allocated based on estimated fair values of the assets acquired and liabilities assumed at the acquisition date, 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 the Company obtains more information, the preliminary purchase price allocation disclosed below is subject to change. Any future adjustments to the preliminary purchase price allocation, 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.

~~The following table summarizes the fair value of the consideration transferred as of the acquisition date:~~

~~February 1, 2021 Opening Balance Sheet as Reported at June 30, 2021~~

~~Fair value of the consideration transferred~~

~~41,518~~

~~Cash and cash equivalents~~

~~2,237~~

~~Trade and other receivables~~

~~545~~

~~Prepaid expenses and other assets~~

~~Operating lease right-of-use assets~~

~~560~~

~~Identifiable intangible assets~~ 1

~~15,850~~

~~Total assets~~

~~19,239~~

~~Accounts payable~~

~~(156)~~

~~Accrued payroll and payroll-related expenses~~

~~(605)~~

~~Accrued liabilities~~

~~(1,391)~~

~~Operating lease liabilities – current and noncurrent portions~~

~~(560)~~

~~Other long-term liabilities~~

~~(475)~~

~~Total liabilities~~

~~(3,187)~~

~~Noncontrolling interest~~

~~(10,281)~~

~~Total stockholders' equity~~

~~(10,281)~~

~~Goodwill~~

~~35,747~~

~~1 Includes $8.8 million in customer relationships, $0.2 million in noncompete agreements, $3.5 million in internally-developed software, and a $3.4 million trade name.~~

~~Warehousing Co.~~

Information about the accounting treatment for the acquisition of Warehousing Co., including the details of the transaction, determination of the total fair value consideration, allocation of the purchase price at the end of the measurement period are included in the Company’s Quarterly Report for the quarter ended March 31, 2021.

As of June 30, 2021 and December 31, 2020, the remaining estimated contingent consideration was $16.2 million representing the fair value of the remaining annual deferred payments for the calendar year ending December 31, 2021 and the annualized six-month period ending June 30, 2022.

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Note 4 — ~~Investments~~

~~Restricted Investments, Held-to-Maturity~~

~~The following tables present the cost or amortized cost, gross unrealized gains and temporary losses, and estimated fair value of the Company's restricted investments, held-to-maturity:~~

June 30, 2021
Gross Unrealized
Cost or Amortized
Cost Gains Temporary
Losses Estimated Fair Value
(In thousands)
US corporate securities $ 8,589 $ 0 $ (3) $ 8,586
Restricted investments, held-to-maturity $ 8,589 $ 0 $ (3) $ 8,586

December 31, 2020
Gross Unrealized
Cost or Amortized
Cost Gains Temporary
Losses Estimated Fair Value
(In thousands)
US corporate securities $ 9,001 $ 2 $ (8) $ 8,995
Restricted investments, held-to-maturity $ 9,001 $ 2 $ (8) $ 8,995

As of June 30, 2021, the contractual maturities of the restricted investments, held-to-maturity, were one year or less. There were 14 securities and 16 securities that were in an unrealized loss position for less than twelve months as of June 30, 2021 and December 31, 2020, respectively. The Company did 0t recognize any impairment losses related to its held-to-maturity investments during the quarter or year-to-date periods ended June 30, 2021 or 2020.

~~Embark Convertible Note~~

During the second quarter of 2021, the Company invested $25.0 million in Embark in exchange for a convertible note. The convertible note accrues simple interest on the unpaid principal balance at a rate of 10.0% and is payable on demand any time after April 16, 2022, unless earlier converted into shares of Embark's common stock. The amount outstanding on the convertible note is automatically converted into a number of shares of Embark's common stock upon either the closing of a qualified financing or upon a public event, subject to discounted conversion pricing per share based on a valuation of Embark.

On June 22, 2021, Embark and Northern Genesis Acquisition Corp II ("NGA"), a publicly-traded special purpose acquisition company ("SPAC"), entered into a definitive business combination agreement that will result in Embark becoming a publicly listed company. Completion of the transaction is expected to occur in the fourth quarter of 2021 and is subject to approval of NGA stockholders and the satisfaction or waiver of certain other customary closing conditions. Based on the valuation of this public event, the Company estimated that the fair value of this investment was $37.6 million and recognized a $12.6 million gain on the convertible note during the quarter ended June 30, 2021.

~~Refer to Note 15 for additional information regarding fair value measurements of the Company's investments.~~

~~Note 5 — Assets Held for Sale~~

The Company expects to sell its assets held for sale, which primarily consist of revenue equipment, within the next twelve months. Revenue equipment held for sale totaled $17.6 million and $29.8 million as of June 30, 2021 and December 31, 2020, respectively. Net gains on disposals, including disposals of property and equipment classified

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~~as assets held for sale, reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income, were:~~

•$15.1 million and $1.7 million for the quarter-to-date periods ended June 30, 2021 and 2020, respectively. The increase in net gains on disposals was primarily due to a stronger market for used revenue equipment during the quarter-to-date period ended June 30, 2021, as compared to the same period in 2020.

•$25.6 million and $4.7 million for the year-to-date periods ended June 30, 2021 and 2020, respectively. The increase in net gains on disposals was primarily due to a stronger market for used revenue equipment during the year-to-date period ended June 30, 2021, as compared to the same period in 2020.

The Company did 0t recognize impairment losses related to assets held for sale during the quarters and year-to-date periods ended June 30, 2021. The Company recognized impairment losses related to assets held for sale of $0.4 million during the quarter and year-to-date periods ended June 30, 2020.

~~Note 6 — Goodwill and Other Intangible Assets~~

~~Goodwill~~

~~The changes in the carrying amount of goodwill were as follows:~~



	~~(In thousands)~~
~~Goodwill, balance at December 31, 2020~~	$	~~2,922,964~~
~~Adjustments relating to deferred tax assets~~	~~(3)~~
~~Acquisitions~~ 1	~~48,062~~

~~Goodwill, balance at June 30, 2021~~	$	~~2,971,023~~

1The goodwill associated with the Eleos and UTXL acquisitions referenced in Note 3 was allocated to the non-reportable and logistics segments, respectively, and is net of purchase price accounting adjustments.

~~The Company did~~ 0t ~~record any~~ ~~goodwill impairments during the quarter or year-to-date periods ended June 30, 2021 or 2020.~~

~~Other Intangible Assets~~

~~Other intangible asset balances were as follows:~~

June 30, 2021 December 31,
2020
(In thousands)
Definite-lived intangible assets 1
Gross carrying amount $ 929,910 $ 894,597
Accumulated amortization (169,585) (145,852)
Definite-lived intangible assets, net 760,325 748,745
Indefinite-lived trade names:
Gross carrying amount 643,158 640,500
Intangible assets, net $ 1,403,483 $ 1,389,245

1~~The major categories of the Company's definite-lived intangible assets include customer relationships, non-compete agreements, internally-developed software, trade names, and others.~~

Identifiable intangible assets subject to amortization have been recorded at fair value. Intangible assets related to acquisitions other than the 2017 Merger are amortized over a weighted-average amortization period of 17.5 years. The Company's customer relationship intangible assets related to the 2017 Merger are being amortized over a weighted average amortization period of 19.9 years.

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As of June 30, 2021, management anticipates that the composition and amount of amortization associated with intangible assets will be $24.4 million for the remainder of 2021, $48.8 million in 2022, $48.2 million for each of the years 2023 and 2024, and $48.1 million in 2025. Actual amounts of amortization expense may differ from estimated amounts due to additional intangible asset acquisitions, impairment of intangible assets, accelerated amortization of intangible assets, and other events.

~~Note 7 —~~ Income Taxes

Effective Tax Rate — The quarter-to-date ~~June 30,~~March 31, 2022 and March 31, 2021 ~~and June 30, 2020~~ effective tax rates were ~~25.3%~~24.9% and ~~25.0%, respectively. The year-to-date June 30, 2021 and June 30, 2020 effective tax rates were 25.5% and 26.0%~~25.9%, respectively.

Valuation Allowance — The Company has 0tnot established a valuation allowance as it has been determined that, based upon available evidence, a valuation allowance is not required. Management believes that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets.

Unrecognized Tax Benefits — Management believes it is reasonably possible that a decrease of up to ~~$0.7~~$0.3 million in unrecognized tax benefits relating to federal deductions may be necessary within the next twelve months.

Interest and Penalties — Accrued interest and penalties related to unrecognized tax benefits were approximately $~~0.4 million~~ ~~and~~ ~~$0.3~~0.1 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020, respectively.~~2021.

Tax Examinations — Certain of the Company's subsidiaries are currently under examination by Federal and various state jurisdictions for tax years ranging from ~~2013~~2014 to ~~2019~~2020. At the completion of these examinations, management does not expect any adjustments that would have a material impact on the Company's effective tax rate. Years subsequent to ~~2015~~2017 remain subject to examination.

Note 85 — Accounts Receivable Securitization

On April 23, 2021, the Company entered into the Fifth Amendment to the Amended and Restated Receivables Sales Agreement ("2021 RSA") which further amended the 2018 RSA. The 2021 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 condensed consolidated balance sheets. As of ~~June 30, 2021,~~March 31, 2022, the Company's eligible receivables related to the 2021 RSA generally have high credit quality, as determined by the obligor's corporate credit rating.

The 2021 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 ~~June 30, 2021.~~March 31, 2022. 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 2021 RSA (dollars in thousands):




Effective date			April 23, 2021
Final maturity date			April 23, 2024
Borrowing capacity			$400,000
Accordion option 1			$100,000
Unused commitment fee rate 2			20 to 40 basis points
Program fees on outstanding balances 3			one-month LIBOR + 82.5 basis points

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~~The following table summarizes the key terms of the 2021 RSA and 2018 RSA (dollars in thousands):~~

2021 RSA 2018 RSA
Effective date April 23, 2021 July 11, 2018
Final maturity date April 23, 2024 July 9, 2021
Borrowing capacity $400,000 $325,000
Accordion option 1
$100,000 $175,000
Unused commitment fee rate 2
20 to 40 basis points 20 to 40 basis points
Program fees on outstanding balances 3 4
one-month LIBOR + 82.5 basis points one-month LIBOR + 80 to 100 basis points

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

2The 2021 RSA ~~and 2018 RSA~~ commitment fees rate are based on the percentage of the maximum borrowing capacity utilized.

3~~Only the rate for the 2018 RSA program fee is subject to the Company's consolidated total net leverage ratio.~~

4As identified within the 2021 RSA, the lender can trigger an amendment by identifying and deciding upon a replacement for LIBOR.

Availability under the 2021 RSA ~~and 2018 RSA~~ is calculated as follows:


		2021 RSA		2018 RSA
		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(In thousands)					(In thousands)
Borrowing base, based on eligible receivables	Borrowing base, based on eligible receivables	$	400,000	$	302,700	Borrowing base, based on eligible receivables	$	400,000	$	400,000
Less: outstanding borrowings 1	Less: outstanding borrowings 1	(279,000)		(214,000)		Less: outstanding borrowings 1	(279,000)		(279,000)
Less: outstanding letters of credit		(65,281)		(67,281)
Less: outstanding letters of credit, net						Less: outstanding letters of credit, net	(65,300)		(65,300)
Availability under accounts receivable securitization facilities	Availability under accounts receivable securitization facilities	$	55,719	$	21,419	Availability under accounts receivable securitization facilities	$	55,700	$	55,700

1As of ~~June 30,~~March 31, 2022 and December 31, 2021, outstanding borrowings are included in "Accounts receivable securitization – less current portion" in the condensed consolidated balance sheets and are offset by ~~$0.6~~$0.5 million of deferred loan costs. ~~As of December 31, 2020, outstanding borrowings are included in "Accounts receivable securitization – current portion" in the condensed consolidated balance sheets and are offset by~~ ~~$0.1 million of deferred loan costs~~. Interest accrued on the aggregate principal balance at a rate of ~~0.9%~~1.1% and ~~1.0%~~0.9% as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively.

Program fees and unused commitment fees are recorded in "Interest expense" in the condensed consolidated statements of comprehensive income. The Company incurred accounts receivable securitization program fees of $0.8 million and $0.7 million during the quarter-to-date June 30, 2021 and 2020 periods, respectively. The Company incurred accounts receivable securitization program fees of $1.4 million and $2.1 million during the year-to-date June 30, 2021 and 2020 periods, respectively.

Refer to Note 1512 for information regarding the fair value of the 2021 ~~RSA~~RSA.

Note 6 — Debt and ~~2018 RSA.~~Financing

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


	March 31, 2022		December 31, 2021
	(In thousands)
2021 Term Loan A-1, due December 3, 2022, net 1 2	$	169,765	$	199,676
2021 Term Loan A-2, due September 3, 2024, net 1 2	199,645		199,607
2021 Term Loan A-3, due September 3, 2026, net 1 2	798,440		798,352






2021 Prudential Notes, net 1	39,261		47,265
Other	4,567		5,069
Total long-term debt, including current portion	1,211,678		1,249,969
Less: current portion of long-term debt	(182,519)		(212,417)
Long-term debt, less current portion	$	1,029,159	$	1,037,552


	March 31, 2022		December 31, 2021
	(In thousands)
Total long-term debt, including current portion	$	1,211,678	$	1,249,969
2021 Revolver, due September 3, 2026 1 3	165,000		260,000

Long-term debt, including revolving line of credit	$	1,376,678	$	1,509,969

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

2The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 arenet of $0.2 million, $0.4 million, and $1.6 million in deferred loan costs as of March 31, 2022, respectively. The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and 2021 Term Loan A-3 arenet of $0.3 million, $0.4 million, and $1.6 million in deferred loan costs as of December 31, 2021, respectively.

3The Company also had outstanding letters of credit of $64.4 million and $64.0 million under the 2021 Revolver, primarily related to workers' compensation and self-insurance liabilities at March 31, 2022 and December 31, 2021, 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 2017 Debt Agreement and the July 2021 Term Loan. The following table presents the key terms of the 2021 Debt Agreement:

2021 Term Loan A-1

2021 Term Loan A-2

2021 Term Loan A-3

2021 Revolver 2

2021 Debt Agreement Terms

(Dollars in thousands)

Maximum borrowing capacity

$200,000

$800,000

$1,100,000

Final maturity date

December 3, 2022

September 3, 2024

September 3, 2026

Interest rate minimum margin

BSBY

Interest rate minimum margin 1

0.75%

0.88%

Interest rate maximum margin 1

1.38%

1.50%

Minimum principal payment — amount

$—

$10,000

$—

Minimum principal payment — frequency

Once

Quarterly

Once

Minimum principal payment — commencement date

December 3, 2022

September 3, 2024

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 March 31, 2022, interest accrued at 1.08% on the 2021 Term Loans and 1.13% 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 March 31, 2022, commitment fees on the unused portion of the 2021 Revolver accrued at 0.1% and outstanding letter of credit fees accrued at 1.0%.

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 March 31, 2022, 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 domestic subsidiaries (other than its captive insurance subsidiaries, driving academy subsidiary, and bankruptcy-remote special purpose subsidiary).

ACT Credit Agreement

Prudential Notes — The 2021 Prudential Notes allow ACT to borrow up to $125.0 million, less amounts then 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 October 2023 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 March 31, 2022, ACT had $87.9 million available under the agreement.

See Note 12 for fair value disclosures regarding the Company's debt instruments.

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Note 97 — Defined Benefit Pension Plan

Net periodic pension income and benefits paid during the first quarter of 2022 were immaterial.

Assumptions

A weighted-average discount rate of 3.38% was used to determine benefit obligations as of March 31, 2022.

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


	Quarter Ended March 31,
	2022
Discount rate	2.55	%
Expected long-term rate of return on pension plan assets	6.00	%

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

Note 8 — Commitments

Purchase Commitments

As of ~~June 30, 2021,~~March 31, 2022, the Company had outstanding commitments to purchase revenue equipment of ~~$509.2~~$682.2 million in the remainder of ~~2021~~2022 ($~~317.3~~479.3 million of which were tractor commitments), $58.6 million in 2023 ($50.4 million of which were tractor commitments), and ~~0ne~~none thereafter. These purchases may be financed through any combination of ~~operating~~finance leases, ~~finance~~operating leases, debt, proceeds from sales of existing equipment, and cash flows from operations.

As of ~~June 30, 2021,~~March 31, 2022, the Company had outstanding commitments to purchase facilities and non-revenue equipment of ~~$36.9~~$52.0 million in the remainder of ~~2021, $4.6~~2022, $6.4 million ~~in the two-year period 2022~~from 2023 through ~~2023, $0.8~~2024, $1.2 million ~~in the two-year period 2024~~from 2025 through ~~2025,~~2026, and ~~0ne~~none thereafter. Factors such as costs and opportunities for future terminal expansions may change the amount of such expenditures.

~~As of June 30, 2021, the Company had outstanding commitments for fuel purchases of $14.5 million in the remainder of 2021, and 0ne thereafter.~~

~~TRP Commitments~~

Since 2003, Knight has entered into partnership agreements with entities that make privately-negotiated equity investments. In these agreements, Knight committed to invest in return for an ownership percentage. During the first quarter of 2021, Knight increased its commitment to invest in TRP Capital Partners V, LP by $10.0 million to $30.0 million, with $26.3 million outstanding as of June 30, 2021. There were no other material changes related to the previously disclosed TRP commitments during the quarter ended June 30, 2021.

~~Embark Commitment~~

~~On June 23, 2021, the Company entered into a stock subscription agreement with Embark to purchase $25.0 million of Embark's common stock, with $25.0 million outstanding as of June 30, 2021.~~

Note 109 — Contingencies and Legal Proceedings

Legal Proceedings

Information is provided below regarding the nature, status, and contingent loss amounts, if any, associated with the Company's pending legal matters. 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.

The Company has made accruals with respect to its legal matters where appropriate, which are included in "Accrued liabilities" in the condensed consolidated balance sheets. The Company has recorded an aggregate accrual of approximately ~~$23.9~~$18.6 million, relating to the Company's outstanding legal proceedings as of ~~June 30, 2021.~~March 31, 2022.

Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's overall financial position, operating results, or cash flows after taking into account any existing accruals. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.

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EMPLOYEE COMPENSATION AND PAY PRACTICES MATTERS

~~CRST Expedited~~

~~The plaintiff alleges tortious interference with contract and unjust enrichment related to non-competition agreements entered into with certain of its drivers.~~

~~Plaintiff(s)~~

~~Defendant(s)~~

~~Date instituted~~

~~Court or agency currently pending in~~

~~CRST Expedited, Inc.~~

~~Swift Transportation Co. of Arizona LLC.~~

~~March 20, 2017~~

~~United States District Court for the Northern District of Iowa~~

~~Recent Developments and Current Status~~

In July 2019, a jury issued an adverse verdict in this lawsuit. The court issued a decision granting in part and denying in part certain motions related to the jury’s verdict. Both parties have appealed the court’s decision. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of June 30, 2021.

California Wage, Meal, and Rest Class Actions

The plaintiffs generally allege one or more of the following: that the Company 1) failed to pay the California minimum wage; 2) failed to provide proper meal and rest periods; 3) failed to timely pay wages upon separation from employment; 4) failed to pay for all hours worked; 5) failed to pay overtime; 6) failed to properly reimburse work-related expenses; and 7) failed to provide accurate wage statements.

Plaintiff(s)

Defendant(s)

Date instituted

Court or agency currently pending in

John Burnell 1

Swift Transportation Co., Inc

March 22, 2010

United States District Court for the Central District of California

James R. Rudsell 1

Swift Transportation Co. of Arizona, LLC and Swift Transportation Company

April 5, 2012

United States District Court for the Central District of California

Recent Developments and Current Status

In April 2019, the parties reached settlement of this matter. In January 2020, the court granted final approval of the settlement. Two objectors appealed the court’s decision granting final approval of the settlement. The likelihood that a loss has been incurred is probable and estimable, and the loss has accordingly been accrued as of ~~June 30, 2021.~~March 31, 2022.

INDEPENDENT CONTRACTOR MATTERS

Ninth Circuit Independent Contractor Misclassification Class Action

The putative class alleges that Swift misclassified independent contractors as independent contractors, instead of employees, in violation of the Fair Labor Standards Act and various state laws. The lawsuit also raises certain related issues with respect to the lease agreements that certain independent contractors have entered into with Interstate Equipment Leasing, LLC. The putative class seeks unpaid wages, liquidated damages, interest, other costs, and attorneys' fees.

Plaintiff(s)

Defendant(s)

Date instituted

Court or agency currently pending in

Joseph Sheer, Virginia Van Dusen, Jose Motolinia, Vickii Schwalm, Peter Wood 1

Swift Transportation Co., Inc., Interstate Equipment Leasing, Inc., Jerry Moyes, and Chad Killebrew

December 22, 2009

~~Unites~~United States District Court of Arizona and Ninth Circuit Court of Appeals

Recent Developments and Current Status

In January 2020, the court granted final approval of the settlement in this matter. In March 2020, the Company paid the settlement amount approved by the court. As of ~~June 30, 2021,~~March 31, 2022, the Company has accrued for anticipated costs associated with finalizing this matter.

1 Individually and on behalf of all others similarly situated.

~~Other Environmental~~

The Company's tractors and trailers are involved in motor vehicle accidents, experience damage, mechanical failures and cargo issues as an incidental part of its normal ordinary course of operations. From time to time, these matters result in the discharge of diesel fuel, motor oil or other hazardous materials into the environment. Depending on local regulations and who is determined to be at fault, the Company is sometimes responsible for the clean-up costs associated with these discharges. As of June 30, 2021, the Company's estimate for its total legal

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~~liability for all such clean-up and remediation costs was approximately $0.5 million in the aggregate for all current and prior year claims.~~

Self Insurance

~~Automobile Liability, General Liability, and Excess Liability~~ — Effective ~~November~~March 1, ~~2020, the Company has $100.0~~2022, ACT retains a $10.0 million ~~in excess auto liability ("AL") coverage. Effective November 1, 2019, the Company had $130.0~~self-insured retention per occurrence, as compared to $2.0 million ~~in excess auto liability ("AL") coverage. For prior years, Swift and Knight separately maintained varying excess AL and general liability limits. During prior policy periods, Swift AL claims were~~per occurrence with a $5.0 million annual corridor deductible subject to a $10.0 million ~~self-insured retention ("SIR") per occurrence and Knight AL claims were subject to a $1.0 million to $3.0 million SIR per occurrence. Additionally, Knight carried a $2.5 million~~three-year policy term aggregate ~~deductible for any loss or losses within the $5.0 million excess of $5.0 million layer of coverage. Effective March 1, 2020, Knight and Swift retain the same $10.0 million SIR per occurrence.~~

~~Cargo Damage and Loss~~ ~~— The Company is insured against cargo damage and loss with liability limits of $2.0 million per truck or trailer with a $10.0 million limit per occurrence.~~

~~Workers' Compensation and Employers' Liability~~ — The Company is self-insured for workers' compensation coverage. Swift maintains statutory coverage limits, subject to a $5.0 million SIR for each accident or disease. Effective March 1, 2019, Knight maintains statutory coverage limits, subject to a $2.0 million SIR for each accident or disease.

~~Medical~~ — Knight maintains primary and excess coverage for employee medical expenses, with a $0.4 million SIR per claimant. Effective January 1, 2020, Swift provides primary and excess coverage for employee medical expenses, with an SIR of $0.5 million per claimant to all employees.

~~Note 11 — Share Repurchase Plan~~

On November 30, 2020, the Company announced that the Board approved the repurchase of up to $250.0 million worth of the Company's outstanding common stock (the "2020 Knight-Swift Share Repurchase Plan"). With the adoption of the 2020 Knight-Swift Share Repurchase Plan, the Company terminatedcap during the previous ~~share repurchase plan, which had approximately $54.1 million~~policy period. This was the only material change related to our self insurance policies during the first quarter of ~~authorized purchases remaining upon termination.~~

~~The following table presents the Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:~~

Share Repurchase Plan Quarter-to-Date June 30, 2021 Year-to-Date June 30, 2021
Board Approval Date Authorized Amount Shares Amount Shares Amount
(shares and dollars in thousands)
November 24, 2020 1
$250,000 0 $ 0 1,303 $ 53,661
Quarter-to-Date June 30, 2020 Year-to-Date June 30, 2020
May 30, 2019 $250,000 0 $ 0 1,139 $ 34,630

1~~$196.3 million and $250.0 million remained available under the 2020 Knight-Swift Share Repurchase Plan as of June 30, 2021 and December 31, 2020, respectively.~~2022.

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Note 1210 — Share Repurchase Plans

2020 Knight-Swift Share Repurchase Plan

The following table presents the Company's repurchases of its common stock under the respective share repurchase plans, excluding advisory fees:

Share Repurchase Plan

Quarter Ended March 31, 2022

Quarter Ended March 31, 2021

Board Approval Date

Authorized Amount

Amount

(shares and dollars in thousands)

November 24, 2020 1

$250,000

2,723

144,881

1,303

53,661

1$47.9 million and $192.8 million remained available under the 2020 Knight-Swift Share Repurchase Plan as of March 31, 2022 and December 31, 2021, respectively.

Subsequent to March 31, 2022, the Company repurchased 0.1 million shares for $5.1 million under the 2020 Knight-Swift Share Repurchase Plan.

2022 Knight-Swift Share Repurchase Plan

On April 25, 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.

Subsequent to March 31, 2022, the Company repurchased 0.4 million shares for $17.3 million under the 2022 Knight-Swift Share Repurchase Plan, leaving $332.7 million available as of May 4, 2022.

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-to-Date June 30,		Year-to-Date June 30,			Quarter Ended March 31,
		2021	2020	2021	2020			2022	2021
		(In thousands)						(In thousands)
Basic weighted average common shares outstanding	Basic weighted average common shares outstanding	165,577	169,948	165,751	170,283	Basic weighted average common shares outstanding		165,377	167,478
Dilutive effect of equity awards	Dilutive effect of equity awards	1,008	676	999	675	Dilutive effect of equity awards		1,122	896
Diluted weighted average common shares outstanding	Diluted weighted average common shares outstanding	166,585	170,624	166,750	170,958	Diluted weighted average common shares outstanding		166,499	168,374
Anti-dilutive shares excluded from diluted earnings per share 1	Anti-dilutive shares excluded from diluted earnings per share 1	31	365	47	329	Anti-dilutive shares excluded from diluted earnings per share 1		239	6

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 1312 — ~~Related Party Transactions~~Fair Value Measurement

The following table presents ~~Knight-Swift's transactions with companies controlled by and/or affiliated with its related parties:~~the carrying amounts and estimated fair values of the Company's major categories of financial assets and liabilities:

Quarter-to-Date June 30, Year-to-Date June 30,
2021 2020 2021 2020
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)
Freight Services:
Central Freight Lines 1
$ 0 $ 0 $ 1,020 $ 0 $ 0 $ 0 $ 7,836 $ 0
SME Industries 1
0 0 28 0 0 0 28 0
Total $ 0 $ 0 $ 1,048 $ 0 $ 0 $ 0 $ 7,864 $ 0
Facility and Equipment Leases:
Central Freight Lines 1
$ 0 $ 0 $ 23 $ 93 $ 0 $ 0 $ 23 $ 185
Other Affiliates 1
0 88 4 36 0 145 9 109
Total $ 0 $ 88 $ 27 $ 129 $ 0 $ 145 $ 32 $ 294
Other Services:
Central Freight Lines 1
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 15 $ 0
DPF Mobile 1
0 0 0 19 0 0 0 31
Other Affiliates 1
7 9 10 0 13 18 19 0
Total $ 7 $ 9 $ 10 $ 19 $ 13 $ 18 $ 34 $ 31


		March 31, 2022		December 31, 2021
	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	78,750	78,750	75,769	75,769

Investments in equity securities	Other long-term assets	53,352	53,352	74,201	74,201
Convertible note	Other current assets	10,437	10,437	10,141	10,141

Financial Liabilities:

2021 Term Loan A-1, due December 2022 1	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	169,765	170,000	199,676	200,000
2021 Term Loan A-2, due September 2024 1	Long-term debt – less current portion	199,645	200,000	199,607	200,000
2021 Term Loan A-3, due September 2026 1	Long-term debt – less current portion	798,440	800,000	798,352	800,000
2021 Revolver, due September 2026	Revolving line of credit	165,000	165,000	260,000	260,000
2021 Prudential Notes 2	Finance lease liabilities and long-term debt – current portion, Long-term debt – less current portion	39,261	39,341	47,265	47,354

2021 RSA, due April 2024 3	Accounts receivable securitization – less current portion	278,539	279,000	278,483	279,000
Contingent consideration, acquisitions	Accrued liabilities, Other long-term liabilities	13,100	13,100	13,100	13,100

1 ~~Entities affiliated with former Board member Jerry Moyes include Central Freight Lines, SME Industries, Compensi Services,~~The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and ~~DPF Mobile. "Other affiliates" includes entities that~~2021 Term Loan A-3 are ~~associated with various board members~~net of $0.2 million, $0.4 million, and ~~executives~~$1.6 million in deferred loan costs as of March 31, 2022, respectively. The carrying amounts of the 2021 Term Loan A-1, 2021 Term Loan A-2, and ~~require approval by~~2021 Term Loan A-3 arenet of $0.3 million, $0.4 million, and $1.6 million in deferred loan costs as of December 31, 2021, respectively.

2The carrying amount of the ~~Board prior to completing transactions. Transactions with these entities generally include freight services, facility~~2021 Prudential Notes is net of $0.1 million in deferred loan costs as of March 31, 2022 and ~~equipment leases, equipment sales,~~December 31, 2021. The carrying amount of the 2021 Prudential Notes is net of $2.2 million and ~~other services.~~$2.4 million in fair value adjustments as of March 31, 2022 and December 31, 2021, respectively.

3The carrying amount of the 2021 RSA is net of $0.5 million in deferred loan costs as of March 31, 2022 and December 31, 2021.

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•~~Freight Services Provided by Knight-Swift~~ — ~~The Company charges each of these companies for transportation services.~~

•~~Freight Services Received by Knight-Swift~~ — ~~Transportation services received from Central Freight Lines represent less-than-truckload freight services rendered to haul parts and equipment to Company shop locations.~~

•~~Other Services Provided by Knight-Swift~~ —~~Other services provided by the Company to the identified related parties include equipment sales and miscellaneous services.~~

•~~Other Services Received by Knight-Swift~~ — Consulting fees, diesel particulate filter cleaning, sales of various parts and tractor accessories, and certain third-party payroll and employee benefits administration services from the identified related parties are included in other services received by the Company.

During the quarter ended September 30, 2020, the ownership percentage of Jerry Moyes and related affiliates fell below the threshold requiring related party disclosure. The amounts included in this Note 13 pertain to transactions that occurred prior to the date that the ownership percentage changed.

~~Receivables and payables pertaining to related party transactions were:~~

June 30, 2021 December 31, 2020
Receivable Payable Receivable Payable
(In thousands)
Central Freight Lines $ 0 $ 0 $ 133 $ 0
DPF Mobile 0 0 0 41
Other Affiliates 1,792 20 2 10
Total $ 1,792 $ 20 $ 135 $ 51

~~Note 14 — Information by Segment and Geography~~

~~Segment Information~~

The Company has 3 reportable segments: Trucking, Logistics, and Intermodal, as well as the non-reportable segments, discussed below. Based on how economic factors affect the nature, amount, timing, and uncertainty of revenue or cash flows, the Company disaggregates revenues by reportable segment for the purposes of applying the ASC Topic 606 guidance.

The Company's NaN operating segments are structured around the types of transportation service offerings provided to our customers, as well as the equipment utilized. In addition, the operating segments may be further distinguished by the Company’s respective brands. The Company aggregated these various operating segments into the three reportable segments discussed below based on similarities with both their qualitative and economic characteristics.

~~Trucking~~

The Trucking reportable segment is comprised of nine trucking operating segments that provide similar transportation services to our customers utilizing similar transportation equipment over both irregular (one-way movement) and/or dedicated routes.~~The Trucking reportable segment consists of irregular route and dedicated, refrigerated, expedited, flatbed, and cross-border operations.~~

~~Logistics~~

The Logistics reportable segment is comprised of six logistics operating segments that provide similar transportation services to our customers and primarily consist of brokerage and other freight management services utilizing third-party transportation providers and their equipment.

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~~Intermodal~~

~~The Intermodal reportable segment is comprised of two intermodal operating segments that provide similar transportation services to our customers.~~These transportation services include arranging the movement of customers' freight through third-party intermodal rail services on the Company’s trailing equipment (trailers on flat cars and rail containers), as well as drayage services to transport loads between the railheads and customer locations.

~~Non-reportable~~

The non-reportable segments include five operating segments that consist of support services provided to the Company's customers and independent contractors (including repair and maintenance shop services, equipment leasing, warranty services, and insurance), trailer parts manufacturing, warehousing, and certain driving academy activities, as well as certain corporate expenses (such as legal settlements and accruals, certain impairments, and amortization of intangibles related to the 2017 Merger and various acquisitions).

~~Intersegment Eliminations~~

Certain operating segments provide transportation and related services for other affiliates outside of their segments. For certain operating segments, such services are billed at cost, and no profit is earned. For the other operating segments, revenues for such services are based on negotiated rates, and are reflected as revenues of the billing segment. These rates are adjusted from time to time, based on market conditions. Such intersegment revenues and expenses are eliminated in Knight-Swift's consolidated results.

~~The following tables present the Company's financial information by segment:~~

Quarter-to-Date June 30, Year-to-Date June 30,
2021 2020 2021 2020
Revenue: (In thousands)
Trucking $ 985,858 $ 879,369 $ 1,948,805 $ 1,798,430
Logistics 166,737 70,104 285,624 149,302
Intermodal 115,378 82,820 222,444 177,551
Subtotal $ 1,267,973 $ 1,032,293 $ 2,456,873 $ 2,125,283
Non-reportable segments 66,795 45,289 117,464 91,531
Intersegment eliminations (19,067) (16,884) (35,622) (31,318)
Total revenue $ 1,315,701 $ 1,060,698 $ 2,538,715 $ 2,185,496

Quarter-to-Date June 30, Year-to-Date June 30,
2021 2020 2021 2020
Operating income (loss): (In thousands)
Trucking $ 168,457 $ 107,788 $ 326,940 $ 215,122
Logistics 14,356 3,038 21,933 6,757
Intermodal 5,812 (4,475) 9,269 (7,212)
Subtotal $ 188,625 $ 106,351 $ 358,142 $ 214,667
Non-reportable segments 2,490 (4,184) (4,768) (10,381)
Operating income $ 191,115 $ 102,167 $ 353,374 $ 204,286

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Quarter-to-Date June 30, Year-to-Date June 30,
2021 2020 2021 2020
Depreciation and amortization of property and equipment: (In thousands)
Trucking $ 105,206 $ 97,555 $ 207,091 $ 191,103
Logistics 289 207 497 414
Intermodal 3,940 3,606 7,758 7,094
Subtotal $ 109,435 $ 101,368 $ 215,346 $ 198,611
Non-reportable segments 14,171 13,233 28,175 26,211
Depreciation and amortization of property and equipment $ 123,606 $ 114,601 $ 243,521 $ 224,822

~~Geographical Information~~

In the aggregate, total revenue from the Company's foreign operations was less than 5.0% of consolidated total revenue for the quarter and year-to-date periods ended June 30, 2021 and 2020. Additionally, long-lived assets on the Company's foreign subsidiary balance sheets were less than 5.0% of consolidated total assets as of June 30, 2021 and December 31, 2020.

~~Note 15 — Fair Value Measurement~~

~~ASC Topic 820,~~ ~~Fair Value Measurements and Disclosures,~~ requires that the Company disclose estimated fair values for its financial instruments. The estimated fair value of a financial instrument is the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date in the principal or most advantageous market for the asset or liability. Fair value estimates are made at a specific point in time and are based on relevant market information and information about the financial instrument. These estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument. Changes in assumptions could significantly affect these estimates. Because the fair value is estimated as of June 30, 2021 and December 31, 2020, the amounts that will actually be realized or paid at settlement or maturity of the instruments in the future could be significantly different.

The estimated fair values of the Company's financial instruments represent management's best estimates of the amounts that would be received to sell those assets or that would be paid to transfer those liabilities in an orderly transaction between market participants at that date. The estimated fair value measurements maximize the use of observable inputs. However, in situations where there is little, if any, market activity for the asset or liability at the measurement date, the estimated fair value measurement reflects management's own judgments about the assumptions that market participants would use in pricing the asset or liability. These judgments are developed by the Company based on the best information available under the circumstances.

~~The following summary presents a description of the methods and assumptions used to estimate the fair value of each class of financial instrument.~~

~~Restricted Investments, Held-to-Maturity —~~ The estimated fair value of the Company's restricted investments, held-to-maturity, is based on quoted prices in active markets that are readily and regularly obtainable. See Note 4 for additional disclosures regarding restricted investments, held-to-maturity.

~~Convertible Notes —~~ ~~The estimated fair value of the Company's convertible note is based on probability weighted discounted cash flow analysis of the corresponding pay-off/redemption.~~

~~Equity Method Investments —~~ ~~The estimated fair value of the Company's equity method investments are privately negotiated investments. The carrying amount of these investments approximates the fair value.~~

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~~Equity Securities —~~ ~~The estimated fair value of the Company's investments in equity securities is based on quoted prices in active markets that are readily and regularly obtainable.~~

~~Debt Instruments and Leases —~~ For notes payable under the Revolver and the 2017 Term Loan, fair value approximates the carrying value due to the variable interest rate. The carrying values of the 2021 RSA and 2018 RSA approximate fair value, as the underlying receivables are short-term in nature and only eligible receivables (such as those with high credit ratings) are qualified to secure the borrowed amounts. For finance and operating lease liabilities, the carrying value approximates the fair value, as the Company's finance and operating lease liabilities are structured to amortize in a manner similar to the depreciation of the underlying assets.

~~Contingent Consideration —~~ ~~The estimated fair value of the Company's contingent consideration owed to sellers is calculated using applicable models and inputs for each acquiree.~~

~~Other —~~ Cash and cash equivalents, restricted cash, net accounts receivable, income tax refund receivable, and accounts payable represent financial instruments for which the carrying amount approximates fair value, as they are short-term in nature. These instruments are accordingly excluded from the disclosures below. All remaining balance sheet amounts excluded from the below are not considered financial instruments, subject to this disclosure.

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

June 30, 2021 December 31, 2020
Carrying
Value Estimated
Fair Value Carrying
Value Estimated
Fair Value
(In thousands)
Financial Assets:
Restricted investments, held-to-maturity 1
$ 8,589 $ 8,586 $ 9,001 $ 8,995
Equity method investments 2
81,237 81,237 77,562 77,562
Investments in equity securities 3
19,707 19,707 18,675 18,675
Convertible note 4
37,631 37,631 0 0
Financial Liabilities:
2017 Term Loan, due October 2022 5
$ 299,219 $ 300,000 $ 298,907 $ 300,000
2018 RSA, due July 2021 6
0 0 213,918 214,000
2021 RSA, due April 2024 7
278,372 279,000 0 0
Revolver, due October 2022 55,000 55,000 210,000 210,000
Contingent consideration associated with acquisitions 8
21,200 21,200 16,200 16,200

1~~Refer to Note 4 for the differences between the carrying amounts and estimated fair values of the Company's restricted investments, held-to-maturity.~~

2~~Net equity method investment balances included in "Other long-term assets" in the condensed consolidated balance sheets.~~

3~~The investments are carried at fair value and are included in "Other long-term assets" on the condensed consolidated balance sheets.~~

4~~The loan is carried at fair value and is included in "Other current assets" in the condensed consolidated balance sheets.~~

5~~The carrying amount of the 2017 Term Loan is included in~~ ~~"Finance lease liabilities and long-term debt – less current portion," on the condensed consolidated balance sheets and is~~ ~~net of $0.8 million and $1.1 million in deferred loan costs as of June 30, 2021 and December 31, 2020, respectively.~~

6~~The carrying amount of the 2018 RSA is included in~~ "~~Accounts receivable securitization – current portion," on the condensed consolidated balance sheets and is net of~~ ~~$0.1 million~~ ~~in deferred loan costs as of~~ ~~December 31, 2020~~.

7~~The carrying amount of the 2021 RSA is included in~~ "~~Accounts receivable securitization – less current portion," on the condensed consolidated balance sheets and is net of~~ ~~$0.6 million~~ ~~in deferred loan costs as of~~ ~~June 30, 2021~~.

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8The carrying amount of the contingent consideration associated with acquisitions is included in both the "Accrued liabilities" and "Other long-term liabilities" line items on the condensed consolidated balance sheets.

Recurring Fair Value Measurements (Assets) — The following table depicts the level in the fair value hierarchy of the inputs used to estimate the fair value of assets measured on a recurring basis as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021:

Fair Value Measurements at Reporting Date Using:
Estimated
Fair Value Level 1 Inputs Level 2 Inputs Level 3 Inputs Unrealized Gain Position
(In thousands)
As of June 30, 2021
Convertible note 1
$ 37,631 $ 0 $ 0 $ 37,631 $ 12,631
Investments in equity securities 2
$ 19,707 $ 19,707 $ 0 $ 0 $ 8,126
As of December 31, 2020
Investments in equity securities 3
$ 18,675 $ 18,675 $ 0 $ 0 $ 3,553


			Fair Value Measurements at Reporting Date Using:
	Estimated Fair Value		Level 1 Inputs		Level 2 Inputs		Level 3 Inputs		Unrealized Gain (Loss) Position
	(In thousands)
As of March 31, 2022
Convertible note 1	$	10,437	$	—	$	—	$	10,437	$	296
Investments in equity securities 2	53,352		53,352		—		—		(7,817)


As of December 31, 2021
Convertible note 1	10,141		—		—		10,141		141
Investments in equity securities 2	74,201		74,201		—		—		14,456

1The Company recognized ~~$12.6~~$0.3 million of unrealized gains on the convertible note for the quarter ~~and year-to-date periods~~ ended ~~June 30, 2021,~~March 31, 2022, which is included within "Other (expense) income, net" within the condensed consolidated statement of comprehensive income. No gain was recognized on the convertible note for the quarter ended March 31, 2021. The fair value of the note was determined using a discounted cash flow analysis based on the probability of exit event options and exit event dates.

2Fair value activity from the investments in equity securities is recorded in "Other (expense) income, net" within the condensed consolidated statement of comprehensive income.

•During the quarter ended ~~June 30, 2021,~~March 31, 2022, the Company recognized ~~$1.5~~$20.8 million in ~~net~~ losses on these investments in equity securities, consisting of ~~$2.3~~$20.8 million in unrealized losses and ~~$0.8~~no realized loss. During the quarter ended March 31, 2021, the Company recognized $10.4 million in gains, consisting of $6.9 million in unrealized gains and $3.5 million in realized gains.

•Embark Investment —~~During~~As of March 31, 2022, the ~~year-to-date period~~fair value of the combined investment in Embark was $37.0 million, resulting in a net unrealized loss of $17.5 million recognized during the quarter ended ~~June 30, 2021, the Company recognized $8.9 million~~March 31, 2022 in ~~gains on these investments in equity securities, consisting of $4.6 million in unrealized gains and $4.3 million in realized gains.~~

3~~Fair value activity from the investments in equity securities is recorded in "Other~~"Operating (expense) income, net" ~~within~~in the condensed consolidated ~~statement~~statements of comprehensive income.

•~~During the quarter ended June 30, 2020, the Company recognized $7.6 million in unrealized gains on these investments in equity securities.~~

•~~During the year-to-date period ended June 30, 2020, the Company recognized $2.5 million in unrealized gains on these investments in equity securities.~~

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:

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 June 30, 2021
Contingent consideration associated with acquisitions 1
$ 21,200 $ 0 $ 0 $ 21,200 $ 0
As of December 31, 2020
Contingent consideration associated with acquisition 2
$ 16,200 $ 0 $ 0 $ 16,200 $ (6,730)


			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 March 31, 2022
Contingent consideration associated with acquisitions 1	$	13,100	$	—	$	—	$	13,100	$	—

As of December 31, 2021
Contingent consideration associated with acquisition 1	13,100		—		—		13,100		—

1The Company did 0tnot recognize any gains (losses) during the ~~quarter or year-to-date periods~~quarters ended ~~June 30,~~March 31, 2022 and 2021 related to the revaluation of these liabilities. Refer to Note 3 for information regarding the components of these liabilities.

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2During the fourth quarter of 2020, the Company increased the estimated fair value of the remaining contingent consideration representing the final two annual payments, resulting in a $6.7 million fair value adjustment of the deferred earnout, which was recorded in “Miscellaneous operating expenses” in the consolidated statement of comprehensive income. The Company did 0t recognize any losses during the quarter and year-to-date periods ended June 30, 2020.

Nonrecurring Fair Value Measurements (Assets) — ~~As of June 30, 2021, the Company had 0 major categories of assets estimated at fair value that were measured on a nonrecurring basis.~~

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 March 31, 2022 and December 31, ~~2020:~~2021:

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 December 31, 2020
Equipment 1
5,851 0 5,851 0 (5,335)


			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 March 31, 2022
Buildings 1	$	—	$	—	$	—	$	—	$	(810)

As of December 31, 2021

Equipment 2	—		—		—		—		(299)

1 Reflects the non-cash impairment of ~~certain alternative fuel technology~~building improvements (within the non-reportable segments) ~~and~~.

2 Reflects the non-cash impairment of certain revenue equipment held for sale (within the ~~Trucking~~non-reportable segments and the Truckload segment). ~~The Company recognized $0.4~~

Gain on Sale of Revenue Equipment — Net gains on disposals, including disposals of property and equipment classified as assets held for sale, reported in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income, were $34.8 million and ~~$1.3~~$10.5 million ~~of impairments~~for the quarters ended March 31, 2022 and 2021, respectively. The increase in net gains on disposals was primarily due to a stronger market for used revenue equipment during the quarter ~~and year-to-date periods~~ ended ~~June 30, 2020.~~March 31, 2022, as compared to the same period in 2021.

Nonrecurring Fair Value Measurements (Liabilities) — As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the Company had 0no major categories of liabilities estimated at fair value that were measured on a nonrecurring basis.

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 March 31, 2022
US equity funds	$	14,442	$	14,442	$	—	$	—
International equity funds	5,902		5,902		—		—
Fixed income funds	42,431		42,431		—		—
Cash and cash equivalents	1,418		1,418		—		—
Total pension plan assets	$	64,193	$	64,193	$	—	$	—

As of December 31, 2021
US equity funds	$	14,877	$	14,877	$	—	$	—
International equity funds	6,304		6,304		—		—
Fixed income funds	47,873		47,873		—		—
Cash and cash equivalents	1,413		1,413		—		—
Total pension plan assets	$	70,467	$	70,467	$	—	$	—

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED

Note 13 — Related Party Transactions


	Quarter Ended March 31,
		2022	2021
			Provided by Knight-Swift		Received by Knight-Swift		Provided by Knight-Swift		Received by Knight-Swift
			(In thousands)





Facility and Equipment Leases:

Certain affiliates 1			—		78		—		57
Total			$	—	$	78	$	—	$	57
Other Services:





Certain affiliates 1			5		9		6		9
Total			$	5	$	9	$	6	$	9


	March 31, 2022				December 31, 2021
	Receivable		Payable		Receivable		Payable
	(In thousands)



Certain affiliates 1	2		39		14		44
Total	$	2	$	39	$	14	$	44

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

Note 14 — Financial Information by Segment and Geography

Segment Information


	Quarter Ended March 31,
		2022		2021
Revenue:		(In thousands)
Truckload		$	1,080,531	$	962,947

Logistics		282,039		118,887
LTL		255,125		—
Intermodal		109,222		107,066

Subtotal		$	1,726,917	$	1,188,900
Non-reportable segments		117,639		50,669
Intersegment eliminations		(17,567)		(16,555)
Total revenue		$	1,826,989	$	1,223,014

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) — CONTINUED


	Quarter Ended March 31,
		2022		2021
Operating income (loss):		(In thousands)
Truckload		$	205,117	$	158,483

Logistics		39,601		7,577
LTL		26,377		—
Intermodal		15,170		3,457

Subtotal		$	286,265	$	169,517
Non-reportable segments		11,821		(7,258)
Operating income		$	298,086	$	162,259


	Quarter Ended March 31,
		2022		2021
Depreciation and amortization of property and equipment:		(In thousands)
Truckload		$	110,349	$	101,885

Logistics		596		208
LTL		15,260		—
Intermodal		3,864		3,818

Subtotal		$	130,069	$	105,911
Non-reportable segments		14,975		14,004
Depreciation and amortization of property and equipment		$	145,044	$	119,915

Geographical Information

In the aggregate, total revenue from the Company's international operations was less than 5.0% of consolidated total revenue for the quarters ended March 31, 2022 and 2021. Additionally, long-lived assets on the Company's international subsidiary balance sheets were less than 5.0% of consolidated total assets as of March 31, 2022 and December 31, 2021.

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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:

•the ability of our infrastructure to support future growth, whether we grow organically or through potential acquisitions,

•the ~~impacts of the COVID-19 global pandemic,~~

•~~the~~ future impact of acquisitions, including achievement of anticipated synergies and the anticipated risks regarding our acquisition of ACT,

•the future performance of our LTL business, including revenue and margins,

•the flexibility of our model to adapt to market conditions,

•our ability to recruit and retain qualified driving associates,

•future safety performance,

•future performance of our segments or businesses,

•our ability to gain market share,

•the ability, desire, and effects of expanding our logistics, brokerage, LTL, and intermodal operations,

•future equipment prices, our equipment purchasing or leasing plans (including containers in our Intermodal segment), and our equipment turnover (including expected tractor trade-ins),

•our ability to sublease equipment to independent contractors,

•the impact of pending legal proceedings,

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

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

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

•future pricing terms from vendors and suppliers,

•expected liquidity and methods for achieving sufficient liquidity,

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

•future expenses and cost structure and our ability to control costs,

•future operating profitability and margin,

•future third-party service provider relationships and availability,

•future contracted pay rates with independent contractors and compensation arrangements with driving associates,

•~~our expected need or desire to incur indebtedness,~~

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•our expected need or desire to incur indebtedness and our ability to comply with debt covenants,

•future capital expenditures and expected sources of liquidity, capital allocation, capital structure, capital requirements, and growth strategies and opportunities,

•expected capital expenditures,

•future mix of owned versus leased revenue equipment,

•future asset utilization,

•future return on capital,

•future share repurchases and dividends,

•future tax rates,

•future trucking industry capacity and balance between industry demand and capacity,

•future rates,

•future depreciation and amortization,

•expected tractor and trailer fleet age,

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

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

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

•~~future~~ purchased transportation expense, 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 ~~II, Item 1A "Risk Factors" of this Quarterly Report, Part~~ I, Item 1A "Risk Factors" in our ~~2020~~2021 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 ~~2020~~2021 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, ~~carrier and a provider of transportation solutions, headquartered in Phoenix, Arizona. The Company provides multiple truckload transportation,~~LTL, intermodal, and logistics ~~services using~~services. 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 ~~its~~operating the country's largest truckload ~~services,~~fleet, Knight-Swift also contracts with third-party ~~capacity~~equipment providers to provide a broad range of ~~shipping solutions~~transportation services to ~~its~~our customers while creating quality driving jobs for our driving associates and successful business opportunities for independent contractors. Our ~~three~~four reportable segments are ~~Trucking,~~Truckload, Logistics, LTL, and Intermodal. Additionally, we have various non-reportable segments. Refer to Note 14 in Part I, Item 1 of this Quarterly Report for ~~descriptions of~~information regarding our segments.

Our objective is to operate our business with industry-leading margins and growth while providing safe, high-quality, cost-effective solutions for our customers.

~~ACT Acquisition —~~ ~~On July 5, 2021, we acquired 100% of ACT. ACT is a leading less-than-truckload ("LTL") carrier that also offers dedicated contract carriage~~We continue to grow our company organically and ~~ancillary services. Further details regarding this acquisition are included in~~through acquisitions. Refer to Note 3 in Part I, Item 1 of this Quarterly ~~Report.~~Report for information about our recent acquisitions.

Revenue

•Our ~~trucking~~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. We primarily generate revenue by transporting freight for our customers through our Trucking segment.~~base with 13,249 irregular route and 4,716 dedicated tractors.

•Our ~~logistics~~Logistics and ~~intermodal operations~~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. ~~Revenue in our logistics and intermodal operations is generated~~We continue to offer power-only services through our Logistics segment with our consolidated fleet of over 71,000 trailers.

•Our LTL business, which was initially established in 2021 through the ACT and ~~Intermodal segments.~~later the MME acquisition, provides our customers with regional LTL transportation service through our growing network of approximately 100 service centers within our geographical footprint. Our LTL segment operates approximately 3,100 tractors and 8,300 trailers and also provides national coverage to our customers by utilizing partner carriers for areas outside of our direct network.

•Our non-reportable segments include support services provided to our ~~customers and independent contractors (including repair and~~third-party carriers including insurance, equipment maintenance, ~~shop services,~~ equipment leasing, ~~warranty services, and insurance),~~warehousing, trailer parts manufacturing, ~~warehousing,~~ and ~~certain driving academy activities, as well as~~warranty services. Our non-reportable 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 ~~program,~~programs, which ~~serves~~serve to recover a majority of our fuel costs. This applies only to loaded miles for our Truckload segment 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 ~~Trucking segment.~~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 ~~independent contractors~~third-party service providers (including other trucking companies, railroad and ~~other transportation providers (such as railroads,~~ drayage providers, and ~~other trucking companies).~~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 ~~improvements,~~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 ~~expense, and non-driver employee compensation.~~expense.

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Operating Statistics — We measure our consolidated and segment results through certain operating statistics, which are discussed under "Results of Operations — Segment Review — Operating Statistics," below. Our results are affected by various economic, industry, operational, regulatory, and other factors, which are set forth in Part I, Item 1A "Risk Factors" in our ~~2020~~2021 Annual ~~Report, supplemented in Part II, Item 1A "Risk Factors" of this Quarterly~~ Report, and various disclosures in our press releases, stockholder reports, and other filings with the SEC.

Consolidated Key Financial Highlights and Operating Metrics


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter Ended March 31,
		2021			2020			2021			2020					2022			2021
GAAP financial data:	GAAP financial data:	(Dollars in thousands, except per share data)												GAAP financial data:		(Dollars in thousands, except per share data)
Total revenue	Total revenue	$	1,315,701		$	1,060,698		$	2,538,715		$	2,185,496		Total revenue		$	1,826,989		$	1,223,014
Revenue, excluding trucking fuel surcharge		$	1,212,872		$	997,597		$	2,345,977		$	2,024,692
Revenue, excluding truckload and LTL fuel surcharge														Revenue, excluding truckload and LTL fuel surcharge		$	1,647,878		$	1,133,105
Net income attributable to Knight-Swift	Net income attributable to Knight-Swift	$	152,804		$	80,189		$	282,594		$	145,615		Net income attributable to Knight-Swift		$	208,337		$	129,790
Earnings per diluted share	Earnings per diluted share	$	0.92		$	0.47		$	1.69		$	0.85		Earnings per diluted share		$	1.25		$	0.77
Operating ratio	Operating ratio	85.5		%	90.4		%	86.1		%	90.7		%	Operating ratio		83.7		%	86.7		%

Non-GAAP financial data:	Non-GAAP financial data:													Non-GAAP financial data:
Adjusted Net Income Attributable to Knight-Swift 1	Adjusted Net Income Attributable to Knight-Swift 1	$	162,998		$	96,498		$	302,431		$	172,703		Adjusted Net Income Attributable to Knight-Swift 1		$	224,863		$	139,433
Adjusted EPS 1	Adjusted EPS 1	$	0.98		$	0.57		$	1.81		$	1.01		Adjusted EPS 1		$	1.35		$	0.83
Adjusted Operating Ratio 1	Adjusted Operating Ratio 1	83.1		%	87.6		%	83.8		%	88.1		%	Adjusted Operating Ratio 1		80.6		%	84.5		%

Revenue equipment:
Average tractors (Trucking segment only) 2		18,034			18,393			18,129			18,428
Revenue equipment statistics by segment:														Revenue equipment statistics by segment:
Truckload														Truckload
Average tractors 2														Average tractors 2		17,965			18,224
Average trailers 3	Average trailers 3	60,858			57,269			60,382			57,456			Average trailers 3		71,310			59,797
LTL														LTL
Average tractors 4														Average tractors 4		3,091			N/A
Average trailers 5														Average trailers 5		8,302			N/A
Intermodal														Intermodal
Average tractors														Average tractors		584			597
Average containers	Average containers	10,842			10,853			10,844			10,355			Average containers		11,027			10,846

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.

2 ~~The~~Our tractor fleet within the Truckload segment had a weighted average age of 2.6 years and 2.3 years as of March 31, 2022 and 2021, respectively.

3Note that average trailers includes 7,561 trailers related to leasing activities recorded within our ~~company-owned~~ ~~tractor~~non-reportable segments in 2022. Our trailer fleet ~~was~~ ~~2.4~~within the Truckload segment had a weighted average age of 8.4 years and ~~2.1~~8.2 years as of ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively.~~respectively.

~~3 The~~4Our LTL tractor fleet had a weighted average age of ~~our~~ 4.5 years as of March 31, 2022, and includes 695 tractors from ACT's and MME's dedicated and other businesses for the first quarter of 2022.

5Our LTL trailer fleet ~~was~~ ~~8.3 years~~ ~~and 7.6~~had a weighted average age of 8.0 years as of ~~June 30, 2021~~March 31, 2022, and includes 907 trailers from ACT's and MME's dedicated and other businesses for the first ~~2020, respectively~~.quarter of 2022.

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Market Trends and Company Performance

Our Company Trends and Outlook — ~~Our~~Each reportable segment grew revenue while improving margins, leading to consolidated revenue growth of 45.4%, excluding ~~trucking~~truckload and LTL fuel surcharge, ~~grew by 15.9% during~~and an improvement of 83.7% in consolidated operating income to $298.1 million in the first ~~half~~quarter of ~~2021, reflecting meaningful growth across all reportable segments. We generated consolidated Adjusted~~2022, as compared to the same quarter last year. Net Income Attributable to Knight-Swift ~~of $302.4 million, which represents a 75.1% increase from $172.7 million~~increased by 60.5% to $208.3 million.

•Truckload—81.0% operating ratio during the first ~~half~~quarter of ~~2020. Revenue per tractor~~2022. We generated a 78.2% Adjusted Operating Ratio during the quarter, a 360 basis point improvement, supported by continued year-over-year revenue growth. This represents our strongest performance in a first quarter since the 2017 Merger.

•Logistics —86.0% operating ratio during the first quarter of 2022. The Adjusted Operating Ratio was ~~up 9.0% despite lower fleet utilization~~85.7% with operating income improvement of 422.6%. Load count grew by 76.9%, leading to a 142.1% increase in revenue, excluding intersegment transactions. Within our power-only service offering, revenue more than quadrupled as compared to the first quarter of 2021, and we expect this service offering will continue to grow as a ~~result~~percentage of our overall logistics revenue.

•LTL —89.7% operating ratio during the ~~difficult driver sourcing environment. Our Trucking segment increased~~first quarter of 2022. An 85.9% Adjusted Operating Ratio was led by a 13.8% improvement in revenue, excluding fuel surcharge, ~~and intersegment transactions,~~per hundredweight, as well as cost synergies being realized, representing a sequential 440 basis point improvement. This was supported by ~~7.2%, resulting~~a 24.8% sequential increase in total revenue, which includes the results of MME.

•Intermodal — Operating ratio of 86.1% during the first quarter of 2022, a ~~470~~1,070 basis point improvement leading to a 338.8% increase in operating income with year-over-year revenue growth of 2.1%.

•Non-reportable — Revenue growth of 132.2% was supported by the ~~Adjusted Operating Ratio~~activities within our diverse operating segments of insurance, equipment maintenance, equipment leasing, and warehousing, leading to ~~81.3%~~a $19.1 million improvement in operating income within our non-reportable segments.

•Free Cash Flow1 — During the first ~~half~~quarter of ~~2021 from 86.0% in the first half~~2022, we generated $352.4 million of ~~2020. Our Logistics segment increased revenue, excluding intersegment transactions by 93.2%~~Free Cash Flow1. ~~Our Intermodal segment grew revenue 25.3%~~

Market Trends and improved its Adjusted Operating Ratio by 820 basis points to 95.8% in the first half of 2021, compared to the same period last year. We anticipate ongoing improvement within the Intermodal segment in the coming quarters.Outlook

—The national unemployment rate was ~~5.9%~~3.6%12 as of ~~June 30, 2021.~~March 31, 2022, as compared to 6.0% this time last year. The US gross domestic product, which is the broadest measure of goods and services produced across the economy, ~~increased~~decreased by ~~6.5%~~1.4%2 ~~and 1.6%~~23 on a year-over-year ~~and sequential~~ basis, per preliminary third-party forecasts. ~~Third-party forecasts are predicting~~The deceleration, compared to 2021, was driven by a ~~continued economic rebound~~reduction in private inventory investment and lower spending at all levels of government. Early estimates of the ~~second half of 2021, but perhaps at a slower pace. The~~ first ~~half 2021~~quarter 2022 US employment cost index ~~rose 2.9%~~indicate a year-over-year increase of 4.5%12 and ~~0.7%~~a sequential increase of 1.4%12 ~~on a year-over-year and sequential basis, respectively.~~.

From a freight market perspective, we are encouraged by the continued strength in freight demand; however, demand may be difficult to predict for the rest of ~~2021.~~2022. The ~~2021~~2022 market outlook includes the following:

•~~we expect the unprecedented demand for over-the-road truckload capacity~~Strong contract rates lead to ~~continue throughout 2022,~~an increase in commitments with less spot exposure

•Trailer pool capacity ~~expansion continues to be limited as new tractor builds are constrained by parts availability, and~~remains at a premium

•~~sourcing~~Declining spot rates, historically high used equipment market, limited availability to new equipment and high fuel costs increase barriers to entry

•LTL demand remains strong with increases in revenue per hundredweight remaining in the double digits

•Sourcing and retaining drivers ~~will remain~~remains challenging ~~and lead to additional driver wage inflation.~~

~~The above factors should continue~~•Inflationary pressure on equipment, maintenance, labor and other cost items

•Used equipment market remains strong but begins to ~~support a favorable rate environment.~~

~~In addition to the above market factors, demand for power-only opportunities continues.~~

We anticipate that depreciation and amortization expense will increase and rental expense will correspondingly decrease, as a percentage of revenue excluding trucking fuel surcharge, as we intend to purchase, rather than enter into operating leases, for a majority of our revenue equipment in 2021. With significant tighteningnormalize late in the ~~insurance markets, we may also experience changes in premiums, retention limits, and excess coverage limits~~year

•Uncertainty in the ~~remainder of 2021. While fuel expense is generally offset by fuel surcharge revenue, our fuel expense, net of fuel surcharge revenue may increase in the future.~~

~~We expect that our acquisition of ACT will have a~~market based on China lockdowns, significant ~~impact on future financial results, including an overall increase to operating revenues~~inflation, war overseas, and ~~expenses. However, we are still in the preliminary stages of this transaction and the assessment of the impact on our operations, policies or financial results.~~

We continue to manage our leverage ratio relative to our targeted range and remain committed to a strong capital structure, which we believe will position us for long-term success and enable us to pursue further opportunities for organic growth, growth through acquisitions, and other capital allocation opportunities. We do not foresee material liquidity constraints or any issues with our ongoing ability to meet our debt covenants.consumer confidence

________

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

2Source: bls.gov

23Source: bea.gov

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~~Comparison Between~~The above factors should continue to support a favorable rate environment, likely resulting in double-digit contract rate increases. In addition to the ~~Quarters Ended June 30,~~above, we are seeing strong demand for power-only opportunities and strength in the used equipment market.

We anticipate that depreciation and amortization expense will increase and rental expense will correspondingly decrease, as a percentage of revenue excluding truckload fuel surcharge, as we intend to purchase, rather than enter into operating leases, for a majority of our revenue equipment in 2022. With significant tightening in the insurance markets, we may also experience changes in premiums, retention limits, and excess coverage limits in the remainder of 2022. While fuel expense is generally offset by fuel surcharge revenue, our fuel expense, net of fuel surcharge revenue may increase in the future, particularly during periods of sharply rising fuel prices.

We expect that our entry into the LTL market through our acquisitions of ACT and MME will continue to have a significant impact on our future consolidated financial results, including an overall increase in operating revenues and expenses.

Operating Results: First Quarter 2022 Compared to First Quarter 2021

Note: in accordance with the accounting treatment applicable to each of our recent acquisitions, Knight-Swift's reported results do not include the operating results of the acquired entities prior to the respective acquisition dates. Accordingly, comparisons between the Company's first quarter 2022 results and ~~2020 —~~ prior periods may not be meaningful.

The ~~$72.6~~$78.5 million increase in net income attributable to Knight-Swift to ~~$152.8~~$208.3 million during the ~~second~~first quarter of ~~2021~~2022 from ~~$80.2~~$129.8 million during the same period last year includes the following:

•Contributor — $~~60.7~~46.6 million increase in operating income within our ~~Trucking segment. Average revenue per tractor increased by 10.3%,~~Truckload segment, driven by a ~~18.8%~~7.9% increase in revenue, ~~per loaded mile,~~ excluding fuel surcharge and intersegment transactions.

•Contributor — ~~$11.3~~$32.0 million increase in operating income within our Logistics segment. Revenue, excluding intersegment transactions, increased by ~~141.8% within our Logistics segment,~~142.1%, as ~~brokerage~~ load volumes grew by ~~55.3% and brokerage~~76.9% while revenue per load increased by ~~55.8% (including the results of UTXL beginning June 1, 2021)~~36.8%.

•Contributor — ~~$10.3~~$26.4 million of operating income from our LTL segment in the first quarter of 2022.

•Contributor — $11.7 million improvement in operating income ~~(loss)~~ within our Intermodal segment. Revenue per load increased ~~16.3 %~~35.9%, as rail congestion and allocations reduced load counts ~~increased 19.9%.~~

•~~Contributor —~~ ~~$8.3 million improvement in "Other income (expenses), net," primarily related to unrealized gains recognized from our investment in Embark, partially offset~~ by ~~a reduction in unrealized gains recognized for other investments within our portfolio.~~24.9%.

•Offset — ~~$25.0~~$30.5 million reduction in "Other (expense) income, net," primarily driven by current quarter net losses within our portfolio of investments, including the unrealized loss from the mark-to-market adjustment of our investment in Embark.

•Offset — $23.8 million increase in consolidated income tax expense primarily due to an increase in income before income ~~taxes resulting~~taxes. That results in an effective tax rate of ~~25.3% for the second quarter of 2021 and 25.0% for the second quarter of 2020.~~

~~Comparison Between the Year-to-Date June 30, 2021 and 2020 —~~ ~~The $137.0 million increase in net income attributable to Knight-Swift to $282.6 million during the first half of 2021 from $145.6 million during the same period last year includes the following:~~

•~~Contributor —~~ $111.8 million increase in operating income within our Trucking segment. Average revenue per tractor increased by 9.0%, driven by a 17.5% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions.

•~~Contributor —~~ $15.2 million improvement in operating income within our Logistics segment. Revenue, excluding intersegment transactions, increased by 93.2% within our Logistics segment, as brokerage load volumes grew by 28.4% and brokerage revenue per load increased by 50.4%

•~~Contributor —~~ ~~$16.5 million improvement in operating income (loss) within our Intermodal segment. Revenue per load increased 13.1% and load counts increased 10.8%.~~

•~~Contributor —~~ ~~$31.0 million improvement in "Other income (expenses), net," primarily due to the Embark gain discussed above and an increase in unrealized gains recognized for other investments within our portfolio.~~

•~~Offset —~~ ~~$45.7 millionincrease in consolidated income tax expense, primarily due to an increase in income before income taxes resulting in an effective tax rate of 25.5%~~24.9% for the first ~~half~~quarter of ~~2021~~2022 and ~~26.0%~~25.9% for the first ~~half~~quarter of ~~2020.~~2021.

See additional discussion of our operating results within "Results of Operations — Consolidated Operating and Other Expenses" below.

Liquidity and Capital — During ~~year-to-date June 30, 2021,~~the first quarter of 2022, we generated ~~$459.5~~$456.9 million in operating cash flows ~~reduced~~and paid down $133.3 million in long-term debt, $10.5 million in finance liabilities, and $9.3 million in cash on our operating lease ~~liabilities by $28.3~~liabilities. We also repurchased approximately $150 million ~~used $120.5 million for capital expenditures (net~~ of ~~disposal proceeds), spent $63.3 million~~our shares, calculated based on ~~acquisitions,~~the trade dates, and ~~returned $53.7 million in share repurchases and $30.3~~issued $20.1 million in dividends to our stockholders. Gain on sale of revenue equipment increased to $34.8 million in the first quarter of 2022, compared to $10.5 million in the same quarter of 2021.

We ended the quarter with ~~$179.0~~$242.9 million in unrestricted cash and cash equivalents, ~~$55.0~~$165.0 million outstanding on the 2021 Revolver, ~~$300.0 million~~$1.0 billion face value outstanding on the ~~2017~~2021 Term ~~Loan,~~Loans, and ~~$6.1~~$6.6 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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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS — CONTINUED

~~See discussion under "Liquidity and Capital Resources" for additional information.~~


Results of Operations — Segment Review

The Company has ~~three~~four reportable segments: ~~Trucking,~~Truckload, Logistics, Intermodal, and ~~Intermodal,~~LTL, as well as certain non-reportable segments. Refer to Note 14 to the condensed consolidated financial statements, included in Part I, Item 1 of this Quarterly Report for ~~descriptions of the operations of these reportable~~information regarding our segments.

Consolidating Tables for Total Revenue and Operating Income (Loss)


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter Ended March 31,
		2021		2020		2021		2020				2022		2021
Revenue:	Revenue:	(In thousands)								Revenue:		(In thousands)
Trucking		$	985,858	$	879,369	$	1,948,805	$	1,798,430
Truckload										Truckload		$	1,080,531	$	962,947

Logistics	Logistics	166,737		70,104		285,624		149,302		Logistics		282,039		118,887
LTL										LTL		255,125		—
Intermodal	Intermodal	115,378		82,820		222,444		177,551		Intermodal		109,222		107,066
Subtotal	Subtotal	$	1,267,973	$	1,032,293	$	2,456,873	$	2,125,283	Subtotal		$	1,726,917	$	1,188,900
Non-reportable segments	Non-reportable segments	66,795		45,289		117,464		91,531		Non-reportable segments		117,639		50,669
Intersegment eliminations	Intersegment eliminations	(19,067)		(16,884)		(35,622)		(31,318)		Intersegment eliminations		(17,567)		(16,555)
Total revenue	Total revenue	$	1,315,701	$	1,060,698	$	2,538,715	$	2,185,496	Total revenue		$	1,826,989	$	1,223,014


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter Ended March 31,
		2021		2020		2021		2020				2022		2021
Operating income (loss):	Operating income (loss):	(In thousands)								Operating income (loss):		(In thousands)
Trucking		$	168,457	$	107,788	$	326,940	$	215,122
Truckload										Truckload		$	205,117	$	158,483

Logistics	Logistics	14,356		3,038		21,933		6,757		Logistics		39,601		7,577
LTL										LTL		26,377		—
Intermodal	Intermodal	5,812		(4,475)		9,269		(7,212)		Intermodal		15,170		3,457
Subtotal	Subtotal	$	188,625	$	106,351	$	358,142	$	214,667	Subtotal		$	286,265	$	169,517
Non-reportable segments	Non-reportable segments	2,490		(4,184)		(4,768)		(10,381)		Non-reportable segments		11,821		(7,258)
Operating income	Operating income	$	191,115	$	102,167	$	353,374	$	204,286	Operating income		$	298,086	$	162,259

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Operating Statistics

Our chief operating decision makers monitor the GAAP results of our reportable segments, as supplemented by certain non-GAAP information. Refer to "Non-GAAP Financial Measures" below 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

~~Trucking~~Truckload

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

Total Miles per Tractor

~~Trucking~~Truckload

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

Average Length of Haul

~~Trucking~~Truckload, LTL

Average miles traveled with loaded trailer cargo per ~~order~~order/shipment

Non-paid Empty Miles Percentage

~~Trucking~~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 xFSR 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 xFSR per hundredweight

LTL

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

Average Tractors

~~Trucking,~~Truckload, LTL, Intermodal

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

Average Trailers

~~Trucking~~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

~~Trucking,~~ Truckload,
Logistics, LTL, 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

~~Trucking,~~ Truckload,
Logistics, LTL, 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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Segment Review

~~Trucking~~Truckload Segment

We generate revenue in the ~~Trucking~~Truckload segment primarily through irregular route, dedicated, refrigerated, expedited, flatbed, ~~expedited,~~ and cross-border service ~~offerings with 12,967~~operations across our brands. We operated 13,249 irregular route tractors and ~~5,067~~4,716 dedicated route tractors in use during the quarter-to-date period ended ~~June 30, 2021.~~March 31, 2022. Generally, we are paid a predetermined rate per mile or per load for our ~~trucking~~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 ~~Trucking~~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 ~~Trucking~~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 ~~Trucking~~Truckload segment are depreciation and rent expenses from leasing and acquiring revenue equipment and terminals, as well as compensating our non-driver employees.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands, except per tractor data)												Increase (Decrease)
																Quarter Ended March 31,						Increase (Decrease)
																					2022				2021				Increase (Decrease)
																				(Dollars in thousands, except per tractor data)					Increase (Decrease)
Total revenue	Total revenue	$	985,858		$	879,369		$	1,948,805		$	1,798,430		12.1	%		8.4	%	Total revenue			$	1,080,531			$	962,947			12.2	%
Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions	$	882,560		$	816,033		$	1,755,374		$	1,637,117		8.2	%		7.2	%	Revenue, excluding fuel surcharge and intersegment transactions			$	941,534			$	872,814			7.9	%
GAAP: Operating income	GAAP: Operating income	$	168,457		$	107,788		$	326,940		$	215,122		56.3	%		52.0	%	GAAP: Operating income			$	205,117			$	158,483			29.4	%
Non-GAAP: Adjusted Operating Income 1	Non-GAAP: Adjusted Operating Income 1	$	168,781		$	118,166		$	327,588		$	228,971		42.8	%		43.1	%	Non-GAAP: Adjusted Operating Income 1			$	205,441			$	158,807			29.4	%
Average revenue per tractor 2	Average revenue per tractor 2	$	48,939		$	44,366		$	96,827		$	88,839		10.3	%		9.0	%	Average revenue per tractor 2			$	52,409			$	47,894			9.4	%
GAAP: Operating ratio 2	GAAP: Operating ratio 2	82.9		%	87.7		%	83.2		%	88.0		%	(480	bps)		(480	bps)	GAAP: Operating ratio 2			81.0		%		83.5		%		(250	bps)
Non-GAAP: Adjusted Operating Ratio 1 2	Non-GAAP: Adjusted Operating Ratio 1 2	80.9		%	85.5		%	81.3		%	86.0		%	(460	bps)		(470	bps)	Non-GAAP: Adjusted Operating Ratio 1 2			78.2		%		81.8		%		(360	bps)
Non-paid empty miles percentage 2	Non-paid empty miles percentage 2	13.0		%	13.8		%	12.9		%	13.3		%	(80	bps)		(40	bps)	Non-paid empty miles percentage 2			14.1		%		12.8		%		130	bps
Average length of haul (miles) 2	Average length of haul (miles) 2	408			420			410			424			(2.9	%)		(3.3	%)	Average length of haul (miles) 2			394				412				(4.4	%)
Total miles per tractor 2	Total miles per tractor 2	20,913			22,741			41,841			45,307			(8.0	%)		(7.7	%)	Total miles per tractor 2			18,916				20,928				(9.6	%)
Average tractors 2 3	Average tractors 2 3	18,034			18,393			18,129			18,428			(2.0	%)		(1.6	%)	Average tractors 2 3			17,965				18,224				(1.4	%)
Average trailers 2		60,858			57,269			60,382			57,456			6.3	%		5.1	%
Average trailers 2 4																			Average trailers 2 4			71,310				59,797				19.3	%

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

2 Defined under "Operating Statistics," above.

3 Includes ~~16,144~~16,159 and ~~16,315~~16,305 average company-owned tractors for the ~~second~~first quarter of ~~2021~~2022 and ~~2020,~~2021, respectively.

4 Includes ~~16,225 and 16,327 average company-owned tractors~~7,561 trailers related to leasing activities recorded within our non-reportable segments for the ~~year-to-date June 30,~~first quarter of 2022. Does not include 5,764 trailers related to leasing activities recorded within our non-reportable operating segments for the first quarter of 2021.

Comparison Between the Quarters Ended March 31, 2022 and 2021— Our Truckload segment operated at a 78.2% Adjusted Operating Ratio, which improved by 360 basis points year-over-year. This, along with a 7.9% growth in revenue, excluding fuel surcharge and ~~2020, respectivel~~intersegment transactions, led to a 29.4% improvement in Adjusted Operating Income.y.

Revenue per loaded mile, excluding fuel surcharge and intersegment transactions increased 22.9%, while a 4.4% shorter length of haul contributed to a 9.6% decrease in miles per tractor. These factors ultimately led to a 9.4% increase in average revenue per tractor and improved margins.

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~~Comparison Between the Quarters Ended June 30, 2021~~We continue making modest progress with seating our tractors and ~~2020~~— ~~Operating income grew~~operating them productively. We continue to add scale by 56.3% within the Trucking segment, overcoming inflationary pressures related to sourcing and retaining drivers. Revenue, excluding fuel surcharge and intersegment transactions, grew by 8.2%. Average revenue per tractorincreasing our trailer count which has increased by 10.3%, driven by an 18.8% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions. Consumer demand remained strong, while capacity remained constrained across our industry, which is driving up sourcing costs and corresponding rates. Our year-over-year rate improvement was partially offset by driver-related sourcing expenses, as well as an 8.0% decline in miles per tractor due to an increase in unseated tractors. On a sequential basis, miles per tractor remained relatively flat.

~~Comparison Between Year-to-Date June 30, 2021 and 2020~~— ~~Operating income grew by 52.0% within~~over 2,200 since the Trucking segment. Revenue, excluding fuel surcharge and intersegment transactions, grew by 7.2%. Average revenue per tractor increased by 9.0%, driven by a 17.5% increase in revenue per loaded mile, excluding fuel surcharge and intersegment transactions. Our year-over-year rate improvement was partially offset by an increase in driver-related sourcing and other expenses during the first halffourth quarter of ~~2021, as well as a 7.7% decline in miles per tractor due to inclement weather and an increase in unseated tractors.~~2021.

Logistics Segment

The Logistics segment is less asset-intensive than the ~~Trucking segment~~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 logistic 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.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands, except per load data)												Increase (Decrease)
																Quarter Ended March 31,							Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands, except per load data)					Increase (Decrease)
Total revenue	Total revenue	$	166,737		$	70,104		$	285,624		$	149,302		137.8	%		91.3	%	Total revenue		$	282,039				$	118,887					137.2	%
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions	$	162,167		$	67,066		$	277,889		$	143,823		141.8	%		93.2	%	Revenue, excluding intersegment transactions		$	280,171				$	115,722							142.1	%
GAAP: Operating income	GAAP: Operating income	$	14,356		$	3,038		$	21,933		$	6,757		372.5	%		224.6	%	GAAP: Operating income				$	39,601				$	7,577					422.6	%
Non-GAAP: Adjusted Operating Income 1	Non-GAAP: Adjusted Operating Income 1	$	14,453		$	3,038		$	22,030		$	6,757		375.7	%		226.0	%	Non-GAAP: Adjusted Operating Income 1				$	39,935				$	7,577					427.1	%
Revenue per load 2	Revenue per load 2	$	2,193		$	1,408		$	2,094		$	1,392		55.8	%		50.4	%	Revenue per load 2				$	2,697				$	1,971					36.8	%
Gross margin percentage 2	Gross margin percentage 2	15.7		%	15.7		%	15.2		%	15.1		%	—	bps		10	bps	Gross margin percentage 2				20.2		%			14.4		%				580	bps
GAAP: Operating ratio 2	GAAP: Operating ratio 2	91.4		%	95.7		%	92.3		%	95.5		%	(430	bps)		(320	bps)	GAAP: Operating ratio 2				86.0		%			93.6		%				(760	bps)
Non-GAAP: Adjusted Operating Ratio 1 2	Non-GAAP: Adjusted Operating Ratio 1 2	91.1		%	95.5		%	92.1		%	95.3		%	(440	bps)		(320	bps)	Non-GAAP: Adjusted Operating Ratio 1 2				85.7		%			93.5		%				(780	bps)

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

2 Defined under "Operating Statistics," above.

Comparison Between the Quarters Ended March 31, 2022 and 2021— Demand for our logistics service offering remained strong throughout the quarter, as we continue to leverage our consolidated fleet of approximately 71,000 trailers to support our power-only service offering. Logistics revenue, excluding intersegment transactions, increased 142.1% as we grew load count by 76.9%, while increasing revenue per load by 36.8%. The Adjusted Operating Ratio improved to 85.7%, resulting in a 427.1% increase in Adjusted Operating Income. Brokerage gross margin was 20.2% in the first quarter of 2022, compared to 14.4% in the first quarter of 2021.

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LTL Segment

Dothan, Alabama-based ACT and Bismarck, North Dakota-based MME, both acquired in 2021, 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. Fluctuation within each of these metrics is 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.

Note: In accordance with the accounting treatment applicable to the ACT and MME acquisitions, the LTL segment's reported results do not include the comparative operating results of the acquired entities prior to the respective acquisition dates.


	Quarter Ended March 31, 2022
	(Dollars in thousands, except per tractor data)
Total revenue	$	255,125
Revenue, excluding fuel surcharge	$	214,675
GAAP: Operating income	$	26,377
Non-GAAP: Adjusted Operating Income 1	$	30,322
GAAP: Operating ratio 2	89.7		%
Non-GAAP: Adjusted Operating Ratio 1 2	85.9		%

Shipments per day 2	18,783
Weight per shipment 2	1,098
Average length of haul (miles) 2	522
Revenue per shipment 2	$	178.43
Revenue xFSR per shipment 2	$	150.70
Revenue per hundredweight 2	$	16.25
Revenue xFSR per hundredweight 2	$	13.73
Average tractors 2 3	3,091
Average trailers 2 4	8,302

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

2Defined under "Operating Statistics," above.

3Includes 695 tractors from ACT's and MME's dedicated and other businesses for 2022.

4Includes 907 trailers from ACT's and MME's dedicated and other businesses for 2022.

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~~Comparison Between the Quarters Ended June 30, 2021~~Our LTL segment operates approximately 3,100 tractors and ~~2020~~— ~~Revenue,~~8,300 trailers across approximately 100 facilities with a door count of approximately 4,300. We generated $214.7 million in revenue, excluding ~~intersegment transactions, increased by 141.8% within our Logistics segment, as brokerage load volumes grew by 55.3%~~fuel surcharge and brokerage revenue per load increased by 55.8% (including the results of UTXL beginning June 1, 2021). Excluding the results of UTXL, brokerage load volumes grew by 49.6% and revenue per load increased by 47.5%. Logistics gross margin was 15.7% in the second quarters of 2021 and 2020, whilean 85.9% Adjusted Operating Ratio ~~improved by 440 basis points to 91.1% for~~during the ~~second~~first quarter of ~~2021, from 95.5% for the second quarter of 2020.~~

~~Within our power-only service offering,~~2022. Revenue, excluding fuel surcharge, per hundredweight was $13.73, while revenue ~~grew 410.5%, as a result of a 141.5% increase~~per shipment, excluding fuel surcharge was $150.70. We anticipate continued strength in ~~load volumes. Power-only represented 26.9% of brokerage~~ revenue and ~~over 25% of our total second quarter 2021 brokerage load volumes. During 2020, we introduced our~~ ~~Select~~ platform, which digitally matches shippers with available capacity across our brands through frictionless transactions. During the second quarter of 2021, more than 4,500 carriers were digitally matched with loads through our ~~Select~~ ~~platform, achieving an 18.2% sequential increase in~~ ~~Select~~ ~~platform load volumes.~~

~~Comparison Between Year-to-Date June 30, 2021 and 2020~~— ~~Revenue, excluding intersegment transactions, increased by 93.2%~~margins within our ~~Logistics segment, as brokerage load volumes grew by 28.4% and revenue per load increased by 50.4%. Logistics gross margin was 15.2%~~LTL business in the ~~first half of 2021~~coming quarters, as the ACT and ~~15.1%~~MME teams continue to successfully connect their complementary networks. Additionally, we expanded our network during the quarter by adding six LTL terminals, five in the ~~first half of 2020. Adjusted Operating Ratio improved by 320 basis points to 92.1%~~Texas market and one in the first half of 2021, compared to 95.3% in the first half of 2020. Within our power-only service offering, load volumes grew 284.5%, representing 24.5% of brokerage revenue and over 25.0% of our brokerage load volumes in the first half of 2021.Las Vegas, Nevada.

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

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. 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.

Quarter-to-Date June 30, Year-to-Date June 30, QTD 2021 vs. YTD 2021 vs.
2021 2020 2021 2020 QTD 2020 YTD 2020
(Dollars in thousands, except per load data) Increase (Decrease)
Total revenue $ 115,378 $ 82,820 $ 222,444 $ 177,551 39.3 % 25.3 %
Revenue, excluding intersegment transactions $ 115,294 $ 82,699 $ 222,265 $ 177,321 39.4 % 25.3 %
GAAP: Operating income (loss) $ 5,812 $ (4,475) $ 9,269 $ (7,212) (229.9 %) 228.5 %
Non-GAAP: Adjusted Operating Income (Loss) 1
$ 5,812 $ (4,410) $ 9,269 $ (7,099) (231.8 %) 230.6 %
Average revenue per load 2
$ 2,616 $ 2,249 $ 2,583 $ 2,283 16.3 % 13.1 %
GAAP: Operating ratio 2
95.0 % 105.4 % 95.8 % 104.1 % (1,040 bps) (830 bps)
Non-GAAP: Adjusted Operating Ratio 1 2
95.0 % 105.3 % 95.8 % 104.0 % (1,030 bps) (820 bps)
Load count 44,073 36,769 86,041 77,658 19.9 % 10.8 %
Average tractors 2 3
611 571 605 586 7.0 % 3.2 %
Average containers 2
10,842 10,853 10,844 10,355 (0.1 %) 4.7 %





	Quarter Ended March 31,							Increase (Decrease)
		2022			2021
		(Dollars in thousands, except per load data)
Total revenue		$	109,222		$	107,066			2.0	%
Revenue, excluding intersegment transactions		$	109,192		$	106,971			2.1	%
GAAP: Operating income		$	15,170		$	3,457			338.8	%

Average revenue per load 1		$	3,465		$	2,549			35.9	%
GAAP: Operating ratio 1		86.1		%	96.8		%		(1,070	bps)

Load count		31,515			41,968				(24.9	%)
Average tractors 1 2		584			597				(2.2	%)
Average containers 1		11,027			10,846				1.7	%

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

2 Defined under "Operating Statistics," above.

32 Includes ~~555~~533 and ~~510~~542 company-owned tractors for the ~~second~~first quarter of ~~2021~~2022 and ~~2020, respectively.~~

~~Includes 549 and 523 company-owned tractors for the year-to-date June 30,~~ 2021, ~~and 2020,~~ respectively.

Comparison Between the Quarters Ended ~~June 30, 2021~~March 31, 2022 and ~~2020~~2021 — ~~Intermodal revenue, excluding intersegment transactions~~Operating income increased ~~39.4% year-over-year,~~by 338.8%, as operating ratio improved from 96.8% to 86.1%. Continued chassis allocations and network fluidity resulted in a reduction in load ~~counts increased 19.9% and~~count, but contributed to a 35.9% increase in revenue per ~~load increased 16.3%. The Adjusted Operating Ratio improved~~load. We transitioned to ~~95.0% in~~a new rail partner during the ~~second~~ quarter, ~~of 2021, from 105.3% in the second quarter of 2020. Intermodal is exhibiting solid momentum, and we expect operational improvements in~~while continuing to improve our operations, cost structure, and network ~~design~~design. To position Intermodal for continued growth, we are growing our container count by 2,000 over the course of 2022. Intermodal continues to provide value to our customers and complements the many services we offer. As a result of our new network and improved service offering, we expect load volumes to inflect positive year-over-year in the ~~coming quarters to lead to continued improvement.~~

~~Comparison Between Year-to-Date~~ ~~June 30, 2021~~ ~~and 2020~~ — Intermodal revenue, excluding intersegment transactions increased 25.3%, as load counts increased 10.8% and revenue per load increased 13.1%. Adjusted Operating Ratio within the Intermodal segment improved to 95.8%, compared to 104.0% during the firstback half of ~~2020, despite weather~~the year as we grow with new customers and ~~service disruptions in the beginning of the year.~~

expand with existing customers.

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Non-reportable Segments

~~The~~Our non-reportable segments include support services provided to our ~~customers and independent contractors (including repair and~~third-party carriers including insurance, equipment maintenance, ~~shop services,~~ equipment leasing, ~~warranty services, and insurance),~~warehousing, trailer parts manufacturing, ~~warehousing,~~ and ~~certain driving academy activities, as well as~~warranty services. Our non-reportable segments also include certain corporate expenses (such as legal settlements and accruals, certain impairments, and $11.6 million ~~in quarterly~~of amortization of intangibles related to the 2017 Merger and various acquisitions).


		Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2021 vs.			YTD 2021 vs.
		2021		2020		2021		2020		QTD 2020			YTD 2020
		(Dollars in thousands)								Increase (Decrease)
												Quarter Ended March 31,							Increase (Decrease)
																	2022			2021		Increase (Decrease)
											(Dollars in thousands)					Increase (Decrease)
Total revenue	Total revenue	$	66,795	$	45,289	$	117,464	$	91,531	47.5	%		28.3	%	Total revenue		$	117,639		$	50,669		132.2	%
Operating income (loss)	Operating income (loss)	$	2,490	$	(4,184)	$	(4,768)	$	(10,381)	159.5	%		54.1	%	Operating income (loss)		$	11,821		$	(7,258)				262.9	%

~~Quarter-to-date~~Activities within our diverse operating segments of insurance, equipment maintenance, equipment leasing, and ~~year-to-date~~warehousing led to 132.2% revenue growth, ~~and improved profitability within the non-reportable segments is related to revenue and margin improvement~~which resulted in ~~our warehousing activities, expanded services to third-party carriers, and increased demand for our equipment leasing services. This was partially offset~~operating income improving by ~~an increase in legal accruals.~~

$19.1 million.

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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 ~~trucking~~truckload and LTL fuel surcharge. ~~Trucking~~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 ~~trucking~~truckload and LTL fuel surcharge is a better measure for analyzing many of our expenses and operating metrics.

Quarter-to-Date June 30, Year-to-Date June 30, QTD 2021 vs. YTD 2021 vs.
2021 2020 2021 2020 QTD 2020 YTD 2020
(Dollars in thousands) Increase (Decrease)
Salaries, wages, and benefits $ 377,613 $ 365,311 $ 747,983 $ 720,144 3.4 % 3.9 %
% of total revenue 28.7 % 34.4 % 29.5 % 33.0 % (570 bps) (350 bps)
% of revenue, excluding fuel surcharge 31.1 % 36.6 % 31.9 % 35.6 % (550 bps) (370 bps)
Note: In accordance with accounting treatment applicable to each of our recent acquisitions, Knight-Swift's reported results do not include the comparative operating results of the acquired entities prior to the respective acquisition date. Accordingly, comparisons between the first quarter 2022 results and prior periods may not be meaningful.





	Quarter Ended March 31,							Increase (Decrease)
		2022			2021
		(Dollars in thousands)
Salaries, wages, and benefits		$	536,056		$	370,370			44.7	%
% of total revenue		29.3		%	30.3		%		(100	bps)
% of revenue, excluding truckload and LTL fuel surcharge		32.5		%	32.7		%		(20	bps)

Salaries, wages, and benefits expense is primarily affected by the total number of miles driven by company driving associates, the ~~rate per mile~~rates we pay 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 our biggest 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 terminals that improve the experience of driving associates. We expect labor costs (related to both driving ~~associate pay~~associates and non-driver employees) to remain inflationary, which we expect will result in additional ~~driving associate~~ pay increases in the future, thereby increasing our salaries, wages, and benefits expense.

Consolidated salaries, wages, and benefits increased by ~~$12.3 million for the second quarter of 2021 and by $27.8~~$165.7 million for the first ~~half~~quarter of ~~2021,~~2022, as compared to the ~~same periods last year.~~first quarter of 2021. This increase includes $135.2 million from the first quarter 2022 results of ACT and MME. The ~~increases~~remaining increase pertained to driving associate pay rates and an non-driver salaries and ~~wages. These were~~wages, partially offset by aan 11.9% decrease in miles driven by company driving associates, excluding ACT and ~~lower medical insurance costs.~~MME.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Fuel	Fuel	$	126,055		$	86,381		$	244,291		$	208,236		45.9	%		17.3	%	Fuel		$	190,489				$	118,236					61.1	%
% of total revenue	% of total revenue	9.6		%	8.1		%	9.6		%	9.5		%	150	bps		10	bps	% of total revenue		10.4		%			9.7		%						70	bps
% of revenue, excluding trucking fuel surcharge		10.4		%	8.7		%	10.4		%	10.3		%	170	bps		10	bps
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					11.6	%				10.4	%				120	bps

Fuel expense consists primarily of diesel fuel expense for our company-owned tractors and fuel taxes. 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.

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Our fuel surcharge programs help to offset increases in fuel prices, but apply only to loaded miles for our Truckload segment 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

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

for our ~~Trucking~~Truckload segment. 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.

The ~~$39.7~~$72.3 million ~~and $36.1 million increases~~increase in consolidated fuel expense for the ~~second~~first quarter, includes $27.0 million of fuel expense from ACT's and MME's the first ~~half~~quarter of ~~2021, respectively, are~~2022 results. The remaining increase is attributable to higher average DOE fuel prices when compared to the same ~~periods~~period last year. Average DOE fuel prices were ~~$3.21~~$4.36 per gallon for the ~~second~~first quarter of ~~2021~~2022 and ~~$2.44~~$2.91 per gallon for the ~~second~~first quarter of ~~2020. Average DOE fuel prices were $3.06 per gallon for year-to-date June 30, 2021~~2021. This was partially offset by the decrease in total miles driven by company driving associates, excluding ACT and ~~$2.67 per gallon for year-to-date June 30, 2020.~~MME, discussed above.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Operations and maintenance	Operations and maintenance	$	71,313		$	66,067		$	139,383		$	134,471		7.9	%		3.7	%	Operations and maintenance		$	95,883				$	68,070					40.9	%
% of total revenue	% of total revenue	5.4		%	6.2		%	5.5		%	6.2		%	(80	bps)		(70	bps)	% of total revenue		5.2		%			5.6		%						(40	bps)
% of revenue, excluding trucking fuel surcharge		5.9		%	6.6		%	5.9		%	6.6		%	(70	bps)		(70	bps)
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					5.8	%				6.0	%				(20	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 primarily 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 ~~2021,~~2022, which could increase future driving associate development and recruiting costs and negatively affect our operations and maintenance expense. We expect to continue refreshing our tractor and trailer fleet in the coming quarters, subject to availability of new revenue equipment, to maintain or improve the average age of our equipment.

The ~~increases~~increase of ~~$5.2 million for the second quarter of 2021 and $4.9~~$27.8 million for the first ~~half~~quarter of ~~2021, as compared to the same periods last year, were~~2022 includes $12.4 million in operations and maintenance expense from ACT's and MME's first quarter 2022 results. The remaining increase was attributed to higher ~~driving associate hiring~~port per diem expenses as we navigate a backlog of shipping containers at ports where we operate, and ~~increased chassis expense. This was partially offset by a decrease in miles driven by company driving associates.~~

Quarter-to-Date June 30, Year-to-Date June 30, QTD 2021 vs. YTD 2021 vs.
2021 2020 2021 2020 QTD 2020 YTD 2020
(Dollars in thousands) Increase (Decrease)
Insurance and claims $ 58,776 $ 45,302 $ 114,419 $ 99,582 29.7 % 14.9 %
% of total revenue 4.5 % 4.3 % 4.5 % 4.6 % 20 bps (10 bps)
% of revenue, excluding trucking fuel surcharge 4.8 % 4.5 % 4.9 % 4.9 % 30 bps — bps
higher maintenance expense due to inflation.

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	Quarter Ended March 31,							Increase (Decrease)
		2022			2021
		(Dollars in thousands)
Insurance and claims		$	98,192		$	55,643			76.5	%
% of total revenue		5.4		%	4.5		%		90	bps
% of revenue, excluding truckload and LTL fuel surcharge		6.0		%	4.9		%		110	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, ~~as well as~~ 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. In 2021, we expanded our insurance offerings to third-party carriers, earning additional premium revenues, which were partially offset by increased insurance reserves. 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 or lower excess coverage limits may cause increased volatility in our consolidated insurance and claims expense.

Consolidated insurance and claims expense increased by ~~$13.5 million for the second quarter of 2021 and by $14.8~~$42.5 million for the first ~~half~~quarter of ~~2021,~~2022, as compared to the ~~same periods last year. These increases were~~first quarter of 2021. The increase was primarily due to ~~negative development within certain prior year losses and costs~~an increase of insurance reserves incurred through our third-party carrier insurance program. The remaining increase is primarily due to the inclusion of $9.2 million of insurance and claims expense from ACT's and MME's first quarter 2022 results.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Operating taxes and licenses	Operating taxes and licenses	$	21,717		$	20,883		$	43,765		$	43,052		4.0	%		1.7	%	Operating taxes and licenses		$	29,037				$	22,048					31.7	%
% of total revenue	% of total revenue	1.7		%	2.0		%	1.7		%	2.0		%	(30	bps)		(30	bps)	% of total revenue		1.6		%			1.8		%						(20	bps)
% of revenue, excluding trucking fuel surcharge		1.8		%	2.1		%	1.9		%	2.1		%	(30	bps)		(20	bps)
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					1.8	%				1.9	%				(10	bps)

Operating taxes and licenses include state franchise taxes, state and federal highway use taxes, property taxes, vehicle license and registration fees, 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.

The ~~increases~~quarter over quarter increase of ~~$0.8~~$7.0 million ~~for the second~~is primarily composed of $8.2 million of operating taxes and licenses expense from ACT's and MME's first quarter of 2021 and $0.7 million for the first half of 2021, as compared to the same periods last year, were primarily due to higher overall toll expenses. These increases were partially offset by a decrease in total miles driven by our company driving associates.2022 results.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Communications	Communications	$	4,635		$	4,902		$	9,672		$	9,776		(5.4	%)		(1.1	%)	Communications		$	5,870				$	5,037					16.5	%
% of total revenue	% of total revenue	0.4		%	0.5		%	0.4		%	0.4		%	(10	bps)		—	bps	% of total revenue		0.3		%			0.4		%						(10	bps)
% of revenue, excluding trucking fuel surcharge		0.4		%	0.5		%	0.4		%	0.5		%	(10	bps)		(10	bps)
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					0.4	%				0.4	%				—	bps

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

~~Consolidated~~The quarter over quarter increase of $0.8 million is primarily composed of $1.1 million of communications expense ~~remained relatively flat as a percentage of revenue, excluding trucking fuel surcharge for the second~~from ACT's and MME's first quarter ~~of 2021 and the first half of 2021, as compared to the same periods last year.~~2022 results.

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		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Depreciation and amortization of property and equipment	Depreciation and amortization of property and equipment	$	123,606		$	114,601		$	243,521		$	224,822		7.9	%		8.3	%	Depreciation and amortization of property and equipment		$	145,044				$	119,915					21.0	%
% of total revenue	% of total revenue	9.4		%	10.8		%	9.6		%	10.3		%	(140	bps)		(70	bps)	% of total revenue		7.9		%			9.8		%						(190	bps)
% of revenue, excluding trucking fuel surcharge		10.2		%	11.5		%	10.4		%	11.1		%	(130	bps)		(70	bps)
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					8.8	%				10.6	%				(180	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, which have historically been precipitated in part by new or proposed federal and state regulations. 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 practice.

Consolidated depreciation and amortization of property and equipment increased by ~~$9.0 million for the second quarter of 2021 and increased by $18.7~~$25.1 million for the first ~~half~~quarter of ~~2021,~~2022, as compared to the same ~~periods~~period last year. ~~These increases were~~This increase includes $15.3 million of expense from ACT's and MME's first quarter 2022 results. The remaining increase was primarily related to an increase in owned versus leased equipment.

We expect consolidated depreciation and amortization of property and equipment to increase ~~both~~ in total and as a percentage of consolidated revenue, excluding ~~trucking~~truckload and LTL fuel surcharge,, as we currently do not plan to use operating leases as a primary means of funding our equipment purchases in ~~the remainder of 2021.~~2022.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Amortization of intangibles	Amortization of intangibles	$	11,984		$	11,474		$	23,733		$	22,948		4.4	%		3.4	%	Amortization of intangibles		$	16,166				$	11,749					37.6	%
% of total revenue	% of total revenue	0.9		%	1.1		%	0.9		%	1.1		%	(20	bps)		(20	bps)	% of total revenue		0.9		%			1.0		%						(10	bps)
% of revenue, excluding trucking fuel surcharge		1.0		%	1.2		%	1.0		%	1.1		%	(20	bps)		(10	bps)
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					1.0	%				1.0	%				—	bps

Amortization of intangibles relates to intangible assets identified with the 2017 Merger and ~~other acquisitions. See~~ ~~Note 6 in Part I, Item 1, of this Quarterly Report~~ for further details regarding the Company's intangible assets. The increases of $0.5 million and $0.8 million for the second quarter and first half of 2021, as compared to the same periods last year, were attributed to the Eleos and UTXLvarious acquisitions. See Note 3 in Part I, Item 1, of this Quarterly Report for more details regarding details of our acquisitions.

~~Table~~The increase of ~~ContentsGlossary of Terms~~$4.4 million for the first quarter 2022, as compared to the same period last year, was attributed to the ACT, MME, UTXL, and Eleos acquisitions during 2021.

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


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Rental expense	Rental expense	$	13,399		$	22,372		$	30,263		$	47,747		(40.1	%)		(36.6	%)	Rental expense		$	13,401				$	16,864					(20.5	%)
% of total revenue	% of total revenue	1.0		%	2.1		%	1.2		%	2.2		%	(110	bps)		(100	bps)	% of total revenue		0.7		%			1.4		%						(70	bps)
% of revenue, excluding trucking fuel surcharge		1.1		%	2.2		%	1.3		%	2.4		%	(110	bps)		(110	bps)
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					0.8	%				1.5	%				(70	bps)

Rental expense consists primarily of payments for tractors and trailers financed with operating leases. The primary factors affecting the expense are the size of our revenue equipment fleet and the relative percentage of owned versus leased equipment.

~~Consolidated rental expense decreased by $9.0~~The quarter over quarter decrease of $3.5 million ~~for the second quarter of 2021 and decreased by $17.5 million for the first half of 2021, as compared to the same periods last year. This~~ was primarily due to an increase in our owned versus leased equipment.

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KNIGHT-SWIFT TRANSPORTATION HOLDINGS INC.

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

We expect consolidated rental expense to continue to decrease both in total and as a percentage of consolidated revenue, excluding ~~trucking~~truckload and LTL fuel surcharge, as we currently do not plan to use operating leases as a primary means of funding our equipment purchases in the remainder of ~~2021.~~2022.


		Quarter-to-Date June 30,						Year-to-Date June 30,						QTD 2021 vs.			YTD 2021 vs.
		2021			2020			2021			2020			QTD 2020			YTD 2020
		(Dollars in thousands)												Increase (Decrease)
																Quarter Ended March 31,								Increase (Decrease)
																					2022					2021					Increase (Decrease)
															(Dollars in thousands)					Increase (Decrease)
Purchased transportation	Purchased transportation	$	304,157		$	200,107		$	562,387		$	425,383		52.0	%		32.2	%	Purchased transportation		$	386,446				$	258,230					49.7	%
% of total revenue	% of total revenue	23.1		%	18.9		%	22.2		%	19.5		%	420	bps		270	bps	% of total revenue		21.2		%			21.1		%						10	bps
% of revenue, excluding trucking fuel surcharge		25.1		%	20.1		%	24.0		%	21.0		%	500	bps		300	bps
% of revenue, excluding truckload and LTL fuel surcharge																			% of revenue, excluding truckload and LTL fuel surcharge					23.5	%				22.8	%				70	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.

Consolidated purchased transportation expense increased by $128.2 million for the first quarter of 2022, as compared to the same periods last year. This increase includes $4.6 million of expense from ACT's and MME's first quarter 2022 results. The comparative first quarter increases were primarily due to payments made to third-party carriers, partially offset by a decrease in miles driven by independent contractors of 2.5%.

We expect purchased transportation will increase as a percentage of revenue if we grow our logistics and intermodal businesses faster than our ~~trucking business.~~full truckload and LTL businesses. The increase could be partially offset if independent contractors exit the market due to regulatory changes.

Consolidated purchased transportation expense increased by $104.1 million for the second quarter of 2021 and increased by $137.0 million for the first half of 2021, as compared to the same periods last year. These increases were primarily due to payments made to third-party carriers, partially offset by a decrease in miles driven by independent contractors of 8.3% for the second quarter of 2021 and 10.7% the first half of 2021, as compared to the same periods last year.

Quarter-to-Date June 30, Year-to-Date June 30, QTD 2021 vs. YTD 2021 vs.
2021 2020 2021 2020 QTD 2020 YTD 2020
(Dollars in thousands) Increase (Decrease)
Impairments $ — $ 353 $ — $ 1,255 (100.0 %) (100.0 %)





	Quarter Ended March 31,					Increase (Decrease)
		2022		2021
		(Dollars in thousands)
Impairments		$	810	$	—		100.0	%

In ~~2020,~~2022, we incurred impairment charges associated with ~~revenue equipment held for sale and trailer tracking systems~~building improvements (within our ~~Trucking and~~ non-reportable segments).





	Quarter Ended March 31,					Increase (Decrease)
		2022		2021
		(Dollars in thousands)
Miscellaneous operating expenses		$	11,509	$	14,593		(21.1	%)

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.

Year-over-year consolidated miscellaneous operating expenses decreased during the first quarter primarily due to a $23.9 million increase in gain on sales of equipment, excluding ACT and MME. This was partially offset by $10.2 million in expenses from ACT's and MME's first quarter 2022 results and year-over-year increases from legal settlements and various administrative expenses classified as miscellaneous.

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-to-Date June 30, Year-to-Date June 30, QTD 2021 vs. YTD 2021 vs.
2021 2020 2021 2020 QTD 2020 YTD 2020
(Dollars in thousands) Increase (Decrease)
Miscellaneous operating expenses $ 11,331 $ 20,778 $ 25,924 $ 43,794 (45.5 %) (40.8 %)

~~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 June 30, 2021 and 2020~~ ~~— The decrease in net consolidated miscellaneous operating expenses was primarily due to a $13.4 million increase in gain on sales of equipment.~~

•~~Comparison Between Year-to-Date June 30, 2021 and 2020~~ ~~— The decrease in net consolidated miscellaneous operating expenses was primarily due to a $20.9 million increase in gain on sales of equipment.~~

Consolidated Other Expenses, net


		Quarter-to-Date June 30,				Year-to-Date June 30,				QTD 2021 vs.			YTD 2021 vs.
		2021		2020		2021		2020		QTD 2020			YTD 2020
		(Dollars in thousands)								Increase (Decrease)
												Quarter Ended March 31,							Increase (Decrease)
																	2022			2021			Increase (Decrease)
											(Dollars in thousands)					Increase (Decrease)

Interest expense	Interest expense	$	3,307	$	4,021	$	6,793	$	10,128	(17.8	%)		(32.9	%)	Interest expense		$	6,680		$	3,486			91.6	%
Other (income), net		(16,840)		(8,499)		(32,945)		(1,992)		98.1	%		1,553.9	%
Other expense (income), net															Other expense (income), net				14,405			(16,105)		(189.4	%)
Income tax expense	Income tax expense	51,783		26,815		97,112		51,369		93.1	%		89.0	%	Income tax expense				69,174			45,329		52.6	%

Interest expense — Interest expense is comprised of debt and finance lease interest expense as well as amortization of deferred loan costs. ~~The~~Interest expense increased during the first quarter ~~and year-to-date decreases in interest expense were primarily~~of 2022 due to ~~lower~~higher overall ~~interest rates. We expect interest expense to increase during the second half of 2021 due to the inclusion of~~debt balances from the 2021 ~~Term Loan~~Debt Agreement which was entered into ~~subsequent to June 30, 2021.~~on September 3, 2021 and replaced the July 2021 Term Loan and 2017 Debt Agreement. Additional details are discussed in Note 6 in Part I, Item 1 of this Quarterly Report.

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

•~~Comparison Between~~We incurred $14.4 million of expense in the ~~Quarters Ended June 30, 2021 and 2020~~ ~~— The $8.3 million favorable change between~~condensed consolidated statement of comprehensive income in the ~~second~~first quarter of ~~2021 and~~2022, representing an unfavorable change of $30.5 million, as compared to income of $16.1 million in the ~~second~~first quarter of ~~2020 is~~2021. The change was primarily driven by current quarter net losses within our portfolio of investments, including the unrealized ~~gains recognized~~loss from the mark-to-market adjustment of our investment in ~~Embark, partially offset by a reduction in unrealized gains recognized for other investments within our portfolio.~~

•~~Comparison Between Year-to-Date June 30, 2021 and 2020~~ — The $31.0 million favorable change between the first half of 2021 and the first half of 2020 is primarily due to the Embark gain discussed above and an increase in unrealized gains recognized for other investments within our portfolio.Embark.

Income tax expense — In addition to the discussion below, Note 74 in Part I, Item 1 of this Quarterly Report provides further analysis related to income taxes.

•~~Comparison Between the Quarters Ended June 30, 2021 and 2020~~ — The ~~$25.0~~$23.8 millionincrease in consolidated income tax expense was primarily due to an increase in income before income ~~taxes resulting in an~~taxes. The effective tax rate ~~of 25.3% for the second quarter of 2021 and 25.0% for the second quarter of 2020.~~

•~~Comparison Between Year-to-Date June 30, 2021 and 2020~~ ~~— The $45.7 millionincrease in consolidated income tax expense~~ was ~~primarily due to an increase in income before income taxes resulting in an effective tax rate of 25.5%~~24.9% for the first ~~half~~quarter of ~~2021 and 26.0%~~2022 compared to 25.9% for the first ~~half~~quarter of ~~2020.~~

2021.

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Non-GAAP Financial Measures

The terms "Adjusted Net Income Attributable to Knight-Swift," "Adjusted EPS," "Adjusted Operating Income," and "Adjusted Operating Ratio," 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. 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, and Adjusted Operating Ratio 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, and GAAP reportable segment operating ratio to non-GAAP reportable segment Adjusted Operating Ratio.

Non-GAAP Reconciliation:

Consolidated Adjusted Net Income Attributable to Knight-Swift and Adjusted EPS


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter Ended March 31,
		2021		2020		2021		2020				2022		2021
		(In thousands)										(In thousands)
GAAP: Net income attributable to Knight-Swift	GAAP: Net income attributable to Knight-Swift	$	152,804	$	80,189	$	282,594	$	145,615	GAAP: Net income attributable to Knight-Swift		$	208,337	$	129,790
Adjusted for:	Adjusted for:									Adjusted for:
Income tax expense attributable to Knight-Swift	Income tax expense attributable to Knight-Swift	51,783		26,815		97,112		51,369		Income tax expense attributable to Knight-Swift		69,174		45,329
Income before income taxes attributable to Knight-Swift	Income before income taxes attributable to Knight-Swift	204,587		107,004		379,706		196,984		Income before income taxes attributable to Knight-Swift		277,511		175,119
Amortization of intangibles 1	Amortization of intangibles 1	11,984		11,474		23,733		22,948		Amortization of intangibles 1		16,166		11,749

Impairments 2	Impairments 2	—		353		—		1,255		Impairments 2		810		—
Legal accruals 3	Legal accruals 3	879		—		2,121		—		Legal accruals 3		5,055		1,242

COVID-19 incremental costs 4		—		9,966		—		12,259
Transaction fees 5		659		—		659		—

Adjusted income before income taxes	Adjusted income before income taxes	218,109		128,797		406,219		233,446		Adjusted income before income taxes		299,542		188,110
Provision for income tax expense at effective rate	Provision for income tax expense at effective rate	(55,111)		(32,299)		(103,788)		(60,743)		Provision for income tax expense at effective rate		(74,679)		(48,677)
Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	Non-GAAP: Adjusted Net Income Attributable to Knight-Swift	$	162,998	$	96,498	$	302,431	$	172,703	Non-GAAP: Adjusted Net Income Attributable to Knight-Swift		$	224,863	$	139,433

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


		Quarter-to-Date June 30,				Year-to-Date June 30,					Quarter Ended March 31,
		2021		2020		2021		2020				2022		2021
GAAP: Earnings per diluted share	GAAP: Earnings per diluted share	$	0.92	$	0.47	$	1.69	$	0.85	GAAP: Earnings per diluted share		$	1.25	$	0.77
Adjusted for:	Adjusted for:									Adjusted for:
Income tax expense attributable to Knight-Swift	Income tax expense attributable to Knight-Swift	0.31		0.16		0.58		0.30		Income tax expense attributable to Knight-Swift		0.42		0.27
Income before income taxes attributable to Knight-Swift	Income before income taxes attributable to Knight-Swift	1.23		0.63		2.28		1.15		Income before income taxes attributable to Knight-Swift		1.67		1.04
Amortization of intangibles 1	Amortization of intangibles 1	0.07		0.07		0.14		0.13		Amortization of intangibles 1		0.10		0.07

Impairments 2	Impairments 2	—		—		—		0.01		Impairments 2		—		—
Legal accruals 3	Legal accruals 3	0.01		—		0.01		—		Legal accruals 3		0.03		0.01

COVID-19 incremental costs 4		—		0.06		—		0.07
Transaction fees 5		—		—		—		—

Adjusted income before income taxes	Adjusted income before income taxes	1.31		0.75		2.44		1.37		Adjusted income before income taxes		1.80		1.12
Provision for income tax expense at effective rate	Provision for income tax expense at effective rate	(0.33)		(0.19)		(0.62)		(0.36)		Provision for income tax expense at effective rate		(0.45)		(0.29)
Non-GAAP: Adjusted EPS	Non-GAAP: Adjusted EPS	$	0.98	$	0.57	$	1.81	$	1.01	Non-GAAP: Adjusted EPS		$	1.35	$	0.83

1 "Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the 2017 Merger, the ACT Acquisition, and other acquisitions. Refer to Note 3 in Part I, Item 1 of this Quarterly Report for additional details regarding our ~~acquisition.~~acquisitions.

2 "Impairments" reflects the non-cash impairment of ~~certain tractors~~building improvements (within ~~the Trucking segment) and certain legacy trailers (within the~~our non-reportable segments) as a result of a softer used equipment market during the second quarter of 2020, as well as impairment charges of trailer tracking equipment (within the Trucking segment) during the first quarter of 2020..

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

•First quarter 2022 legal expense reflects costs related to certain settlements and class action lawsuits arising from employee and contract related matters.

•First quarter 2021 legal expense reflects costs related to certain class action lawsuits arising from employee and contract related matters.

4 "COVID-19 incremental costs" reflects costs incurred during 2020 that were directly attributable to the pandemic and were incremental to those incurred prior to the outbreak. These include payroll premiums paid to our driving associates and shop technicians, additional disinfectants and cleaning supplies, and various other pandemic-specific items. The costs are clearly separable from our normal business operations and are not expected to recur once the pandemic subsides.

5 "Transaction fees" represent certain acquisition related expenses associated with the UTXL and ACT acquisitions, consisting of legal and professional fees and are included in "Miscellaneous operating expenses" in the condensed consolidated statements of comprehensive income.

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


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter Ended March 31,
		2021			2020			2021			2020					2022			2021
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation		(Dollars in thousands)
Total revenue	Total revenue	$	1,315,701		$	1,060,698		$	2,538,715		$	2,185,496		Total revenue		$	1,826,989		$	1,223,014
Total operating expenses	Total operating expenses	(1,124,586)			(958,531)			(2,185,341)			(1,981,210)			Total operating expenses		(1,528,903)			(1,060,755)
Operating income	Operating income	$	191,115		$	102,167		$	353,374		$	204,286		Operating income		$	298,086		$	162,259
Operating ratio	Operating ratio	85.5		%	90.4		%	86.1		%	90.7		%	Operating ratio		83.7		%	86.7		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	1,315,701		$	1,060,698		$	2,538,715		$	2,185,496		Total revenue		$	1,826,989		$	1,223,014
Trucking fuel surcharge		(102,829)			(63,101)			(192,738)			(160,804)
Revenue, excluding trucking fuel surcharge		1,212,872			997,597			2,345,977			2,024,692
Truckload and LTL fuel surcharge														Truckload and LTL fuel surcharge		(179,111)			(89,909)
Revenue, excluding truckload and LTL fuel surcharge														Revenue, excluding truckload and LTL fuel surcharge		1,647,878			1,133,105

Total operating expenses	Total operating expenses	1,124,586			958,531			2,185,341			1,981,210			Total operating expenses		1,528,903			1,060,755
Adjusted for:	Adjusted for:													Adjusted for:
Trucking fuel surcharge		(102,829)			(63,101)			(192,738)			(160,804)
Truckload and LTL fuel surcharge														Truckload and LTL fuel surcharge		(179,111)			(89,909)
Amortization of intangibles 1	Amortization of intangibles 1	(11,984)			(11,474)			(23,733)			(22,948)			Amortization of intangibles 1		(16,166)			(11,749)

Impairments 2	Impairments 2	—			(353)			—			(1,255)			Impairments 2		(810)			—
Legal accruals 3	Legal accruals 3	(879)			—			(2,121)			—			Legal accruals 3		(5,055)			(1,242)

COVID-19 incremental costs 4		—			(9,966)			—			(12,259)
Transaction fees 5		(659)			—			(659)			—

Adjusted Operating Expenses	Adjusted Operating Expenses	1,008,235			873,637			1,966,090			1,783,944			Adjusted Operating Expenses		1,327,761			957,855
Adjusted Operating Income	Adjusted Operating Income	$	204,637		$	123,960		$	379,887		$	240,748		Adjusted Operating Income		$	320,117		$	175,250
Adjusted Operating Ratio	Adjusted Operating Ratio	83.1		%	87.6		%	83.8		%	88.1		%	Adjusted Operating Ratio		80.6		%	84.5		%

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

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

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

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

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

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

~~Trucking~~Truckload Segment


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter Ended March 31,
		2021			2020			2021			2020					2022			2021
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation		(Dollars in thousands)
Total revenue	Total revenue	$	985,858		$	879,369		$	1,948,805		$	1,798,430		Total revenue		$	1,080,531		$	962,947
Total operating expenses	Total operating expenses	(817,401)			(771,581)			(1,621,865)			(1,583,308)			Total operating expenses		(875,414)			(804,464)
Operating income	Operating income	$	168,457		$	107,788		$	326,940		$	215,122		Operating income		$	205,117		$	158,483
Operating ratio	Operating ratio	82.9		%	87.7		%	83.2		%	88.0		%	Operating ratio		81.0		%	83.5		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	985,858		$	879,369		$	1,948,805		$	1,798,430		Total revenue		$	1,080,531		$	962,947
Fuel surcharge	Fuel surcharge	(102,829)			(63,101)			(192,738)			(160,804)			Fuel surcharge		(138,661)			(89,909)
Intersegment transactions	Intersegment transactions	(469)			(235)			(693)			(509)			Intersegment transactions		(336)			(224)
Revenue, excluding fuel surcharge and intersegment transactions	Revenue, excluding fuel surcharge and intersegment transactions	882,560			816,033			1,755,374			1,637,117			Revenue, excluding fuel surcharge and intersegment transactions		941,534			872,814

Total operating expenses	Total operating expenses	817,401			771,581			1,621,865			1,583,308			Total operating expenses		875,414			804,464
Adjusted for:	Adjusted for:													Adjusted for:
Fuel surcharge	Fuel surcharge	(102,829)			(63,101)			(192,738)			(160,804)			Fuel surcharge		(138,661)			(89,909)
Intersegment transactions	Intersegment transactions	(469)			(235)			(693)			(509)			Intersegment transactions		(336)			(224)
Amortization of intangibles 1	Amortization of intangibles 1	(324)			(324)			(648)			(648)			Amortization of intangibles 1		(324)			(324)
Impairments 2		—			(153)			—			(1,055)

COVID-19 incremental costs 3		—			(9,901)			—			(12,146)

Adjusted Operating Expenses	Adjusted Operating Expenses	713,779			697,867			1,427,786			1,408,146			Adjusted Operating Expenses		736,093			714,007
Adjusted Operating Income	Adjusted Operating Income	$	168,781		$	118,166		$	327,588		$	228,971		Adjusted Operating Income		$	205,441		$	158,807
Adjusted Operating Ratio	Adjusted Operating Ratio	80.9		%	85.5		%	81.3		%	86.0		%	Adjusted Operating Ratio		78.2		%	81.8		%

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

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

~~3 See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable to Knight-Swift footnote 4.~~

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Logistics Segment


		Quarter-to-Date June 30,						Year-to-Date June 30,							Quarter Ended March 31,
		2021			2020			2021			2020					2022			2021
GAAP Presentation	GAAP Presentation	(Dollars in thousands)												GAAP Presentation		(Dollars in thousands)
Total revenue	Total revenue	$	166,737		$	70,104		$	285,624		$	149,302		Total revenue		$	282,039		$	118,887
Total operating expenses	Total operating expenses	(152,381)			(67,066)			(263,691)			(142,545)			Total operating expenses		(242,438)			(111,310)
Operating income	Operating income	$	14,356		$	3,038		$	21,933		$	6,757		Operating income		$	39,601		$	7,577
Operating ratio	Operating ratio	91.4		%	95.7		%	92.3		%	95.5		%	Operating ratio		86.0		%	93.6		%

Non-GAAP Presentation	Non-GAAP Presentation													Non-GAAP Presentation
Total revenue	Total revenue	$	166,737		$	70,104		$	285,624		$	149,302		Total revenue		$	282,039		$	118,887

Intersegment transactions	Intersegment transactions	(4,570)			(3,038)			(7,735)			(5,479)			Intersegment transactions		(1,868)			(3,165)
Revenue, excluding intersegment transactions	Revenue, excluding intersegment transactions	162,167			67,066			277,889			143,823			Revenue, excluding intersegment transactions		280,171			115,722

Total operating expenses	Total operating expenses	152,381			67,066			263,691			142,545			Total operating expenses		242,438			111,310
Adjusted for:	Adjusted for:													Adjusted for:

Intersegment transactions	Intersegment transactions	(4,570)			(3,038)			(7,735)			(5,479)			Intersegment transactions		(1,868)			(3,165)
Amortization of intangibles 1	Amortization of intangibles 1	(97)			—			(97)			—			Amortization of intangibles 1		(334)			—

Adjusted Operating Expenses	Adjusted Operating Expenses	147,714			64,028			255,859			137,066			Adjusted Operating Expenses		240,236			108,145
Adjusted Operating Income	Adjusted Operating Income	$	14,453		$	3,038		$	22,030		$	6,757		Adjusted Operating Income		$	39,935		$	7,577
Adjusted Operating Ratio	Adjusted Operating Ratio	91.1		%	95.5		%	92.1		%	95.3		%	Adjusted Operating Ratio		85.7		%	93.5		%

1"Amortization of intangibles" reflects the non-cash amortization expense relating to intangible assets identified in the UTXL acquisition.

~~Intermodal~~LTL Segment

Quarter-to-Date June 30, Year-to-Date June 30,
2021 2020 2021 2020
GAAP Presentation (Dollars in thousands)
Total revenue $ 115,378 $ 82,820 $ 222,444 $ 177,551
Total operating expenses (109,566) (87,295) (213,175) (184,763)
Operating income (loss) $ 5,812 $ (4,475) $ 9,269 $ (7,212)
Operating ratio 95.0 % 105.4 % 95.8 % 104.1 %
Non-GAAP Presentation
Total revenue $ 115,378 $ 82,820 $ 222,444 $ 177,551
Intersegment transactions (84) (121) (179) (230)
Revenue, excluding intersegment transactions 115,294 82,699 222,265 177,321
Total operating expenses 109,566 87,295 213,175 184,763
Adjusted for:
Intersegment transactions (84) (121) (179) (230)
COVID-19 incremental costs 1
— (65) — (113)
Adjusted Operating Expenses 109,482 87,109 212,996 184,420
Adjusted Operating Income (Loss) $ 5,812 $ (4,410) $ 9,269 $ (7,099)
Adjusted Operating Ratio 95.0 % 105.3 % 95.8 % 104.0 %


	Quarter Ended March 31, 2022
GAAP Presentation	(Dollars in thousands)
Total revenue	$	255,125
Total operating expenses	(228,748)
Operating income	$	26,377
Operating ratio	89.7		%

Non-GAAP Presentation
Total revenue	$	255,125
Fuel surcharge	(40,450)

Revenue, excluding fuel surcharge and intersegment transactions	214,675

Total operating expenses	228,748
Adjusted for:
Fuel surcharge	(40,450)

Amortization of intangibles 1	(3,945)





Adjusted Operating Expenses	184,353
Adjusted Operating Income	$	30,322
Adjusted Operating Ratio	85.9		%

1~~See Non-GAAP Reconciliation: Consolidated Adjusted Net Income Attributable~~"Amortization of intangibles" reflects the non-cash amortization expense relating to ~~Knight-Swift footnote 4.~~intangible assets identified with the ACT and MME acquisitions.

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Intermodal Segment


	Quarter Ended March 31,
		2022			2021
GAAP Presentation		(Dollars in thousands)
Total revenue		$	109,222		$	107,066
Total operating expenses		(94,052)			(103,609)
Operating income		$	15,170		$	3,457
Operating ratio		86.1		%	96.8		%

Non-GAAP Presentation
Total revenue		$	109,222		$	107,066

Intersegment transactions		(30)			(95)
Revenue, excluding intersegment transactions		109,192			106,971

Total operating expenses		94,052			103,609
Adjusted for:

Intersegment transactions		(30)			(95)



Adjusted Operating Expenses		94,022			103,514
Adjusted Operating Income		$	15,170		$	3,457
Adjusted Operating Ratio		86.1		%	96.8		%

Non-GAAP Reconciliation: Free Cash Flow


	Quarter Ended March 31, 2022

GAAP: Cash flows from operations	$	456,860
Adjusted for:
Proceeds from sale of property and equipment, including assets held for sale	60,532
Purchases of property and equipment	(164,974)
Non-GAAP: Free Cash Flow	$	352,418

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


Liquidity and Capital Resources

Sources of Liquidity

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


Source	~~June 30, 2021~~March 31, 2022
	(In thousands)
Cash and cash equivalents, excluding restricted cash	$	~~179,032~~242,860
Availability under 2021 Revolver, due ~~October 2022~~September 2026 1	~~708,408~~870,569
Availability under 2021 RSA, due April 2024 2	~~55,719~~55,700
Availability under 2021 Prudential Notes, issuance ending October 2023 3	87,857
Total unrestricted liquidity	$	~~943,159~~1,256,986
Cash and cash equivalents – restricted 34	~~53,035~~130,587
Restricted investments, held-to-maturity, amortized cost 34	~~8,589~~8,302
Total liquidity, including restricted cash and restricted investments	$	~~1,004,783~~1,395,875

1 As of ~~June 30, 2021,~~March 31, 2022, we had ~~$55.0~~$165.0 million in borrowings under our $~~800.0 million~~1.1 billion 2021 Revolver. We additionally had ~~$36.6~~$64.4 million in outstanding letters of credit (discussed below), leaving ~~$708.4~~$870.6 million available under the Revolver.

2 Based on eligible receivables at ~~June 30, 2021,~~March 31, 2022, our borrowing base for the 2021 RSA was $400.0 million, while outstanding borrowings were $279.0 million. We additionally had $65.3 million in outstanding letters of credit (discussed below), leaving $55.7 million available under the 2021 RSA. Refer to Note 85 in Part I, Item 1 of this Quarterly Report for more information regarding the 2021 RSA.

3 As of March 31, 2022, we had $37.1 million outstanding principal on our shelf notes issued under our $125.0 million 2021 Prudential Notes, leaving $87.9 million available for issuance under the 2021 Prudential Notes.

4 Restricted cash and restricted investments are primarily held by our captive insurance companies for claims payments. "Cash and cash equivalents – restricted" consists of ~~$51.6~~$128.8 million, included in "Cash and cash equivalents — restricted" in the condensed consolidated balance sheet and held by Mohave and Red Rock for claims payments. The remaining ~~$1.4~~$1.8 million is included in "Other long-term assets" and is held in escrow accounts to meet statutory requirements.

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, ~~fund replacement~~expand our network of ~~our revenue equipment fleet,~~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 ~~that~~ net cash capital expenditures, ~~from the aforementioned projects~~including net cash capital expenditures of our LTL segment, will be in the range of ~~$500.0~~ $550.0– ~~$550.0~~$600.0 million for ~~the~~ full-year ~~2021, including anticipated net cash capital expenditures of ACT. The~~2022. This range ~~provided~~ excludes cash outlays for potential acquisitions. We believe we have ample flexibility ~~with~~in our trade cycle and purchase agreements to alter our current plans if economic orand other conditions warrant.

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

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.

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

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 ~~June 30, 2021,~~March 31, 2022, we had debt, accounts receivable securitization, and finance lease obligations of ~~$870.7 million,~~$2.0 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. ~~Subsequent to June 30, 2021, we acquired ACT and borrowed $1.2 billion pursuant to the 2021 Term Loan to finance the transaction.~~

Letters of Credit — Pursuant to the terms of the ~~2017~~2021 Debt Agreement and the 2021 RSA, our lenders may issue standby letters of credit on our behalf. When we have letters of credit outstanding, the availability under the 2021 Revolver or 2021 RSA is reduced accordingly. 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 flow availability, debt levels, common stock prices, general economic and market conditions, as well as ~~Board~~internal approval requirements, we may repurchase shares of our outstanding common stock. As of ~~June 30, 2021,~~March 31, 2022, the Company had ~~$196.3~~$47.9 million remaining under the 2020 Knight-Swift Share Repurchase Plan. Subsequently, on April 25, 2022, the Board authorized $350.0 million in share repurchases, replacing the 2020 Knight-Swift Share Repurchase Plan, which had approximately $42.8 million of authorized purchases remaining upon termination.. Additional details are discussed in Note 1110 in Part I, Item 1 of this Quarterly Report.

Working Capital

We had a working capital surplus of ~~$369.3~~$300.2 million as of ~~June 30, 2021~~March 31, 2022 and ~~$83.7~~$339.5 million as of December 31, ~~2020.~~

~~Material Debt Agreements~~

~~As of June 30, 2021, we had $870.7 million in material debt obligations at the following carrying values:~~

•~~$299.2 million: 2017 Term Loan,~~ ~~due~~ ~~October 2022, net of $0.8 million in deferred loan costs~~

•~~$278.4 million: 2021 RSA outstanding borrowings, net of $0.6 million in deferred loan costs~~

•~~$238.1 million: Finance lease obligations~~

•~~$55.0 million: Revolver, due October 2022~~

~~As of December 31, 2020, we had~~ ~~$913.6 million~~ ~~in material debt obligations at the following carrying values:~~

•~~$298.9 million: 2017 Term Loan,~~ ~~due~~ ~~October 2022~~, ~~net of~~ ~~$1.1 million~~ ~~in deferred loan costs~~

•~~$213.9 million: 2018 RSA outstanding borrowings, due July 2021, net of~~ ~~$0.1 million~~ ~~in deferred loan costs~~

•~~$190.8 million: Finance lease obligations~~

•~~$210.0 million: Revolver, due October 2022~~.2021.

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Material Debt Agreements

As of March 31, 2022, we had $2.0 billion in material debt obligations at the following carrying values:

•$169.8 million: 2021 Term Loan A-1, due December 2022, net of $0.2 million in deferred loan costs

•$199.6 million: 2021 Term Loan A-2, due September 2024, net of $0.4 million in deferred loan costs

•$798.4 million: 2021 Term Loan A-3, due September 2026, net of $1.6 million in deferred loan costs

•$278.5 million: 2021 RSA outstanding borrowings, net of $0.5 million in deferred loan costs

•$329.5 million: Finance lease obligations

•$165.0 million: 2021 Revolver, due September 2026

•$43.8 million: Other, net of $0.1 million in deferred loan costs

As of December 31, 2021, we had $2.1 billion in material debt obligations at the following carrying values:

•$199.7 million: 2021 Term Loan A-1, due December 2022, net of $0.3 million in deferred loan costs

•$199.6 million: 2021 Term Loan A-2, due September 2024, net of $0.4 million in deferred loan costs

•$798.4 million: 2021 Term Loan A-3, due September 2026, net of $1.6 million in deferred loan costs

•$278.5 million: 2021 RSA outstanding borrowings, net of $0.5 million in deferred loan costs

•$306.2 million: Finance lease obligations

•$260.0 million: 2021 Revolver, due September 2026

•$52.3 million: Other, net of $0.1 million in deferred loan costs


Cash Flow Analysis


		Year-to-Date June 30,				Change			Quarter Ended March 31,				Change
		2021		2020					2022		2021
		(In thousands)							(In thousands)
Net cash provided by operating activities	Net cash provided by operating activities	$	459,504	$	383,360	$	76,144	Net cash provided by operating activities	$	456,860	$	306,113	$	150,747
Net cash used in investing activities	Net cash used in investing activities	(196,916)		(253,066)		56,150		Net cash used in investing activities	(110,187)		(74,141)		(36,046)
Net cash used in financing activities	Net cash used in financing activities	(227,798)		(173,771)		(54,027)		Net cash used in financing activities	(323,249)		(185,366)		(137,883)

Net Cash Provided by Operating Activities

Comparison Between ~~Year-to-Date June 30,~~Quarter Ended March 31, 2022 and 2021 ~~and 2020~~ — The ~~$76.1~~$150.7 million increase in net cash provided by operating activities was primarily due to a ~~$149.1~~$135.8 million increase in operating income, due to the factors discussed in "Results of Operations — Consolidated Operating and ~~a $4.7 million decrease in interest payments, partially offset by a $129.7 million increase in income tax payments.~~Other Expenses" above. The remaining difference is attributed to various changes in working capital.

Net Cash Used in Investing Activities

Comparison Between ~~Year-to-Date June 30,~~Quarter Ended March 31, 2022 and 2021 ~~and 2020~~ — The ~~$56.2~~$36.0 million ~~decrease~~increase in net cash used in investing activities was primarily due to a ~~$74.7~~$60.6 million increase in net cash capital expenditures, including the first quarter 2022 investing activities of ACT and MME, and was partially offset by a $38.0 million decrease in net cash ~~capital expenditures, partially offset by $25.0 million spent on our investment~~invested in ~~Embark's convertible note.~~acquisitions.

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Net Cash Used in Financing Activities

Comparison Between ~~Year-to-Date June 30,~~Quarter Ended March 31, 2022 and 2021 ~~and 2020~~ — Net cash used in financing activities increased by ~~$54.0~~$137.9 million, primarily due to ~~a $24.5 million increase in net repayments of our debt and finance lease obligations and a $19.0 million~~an increase in repurchases of our common ~~stock.~~stock of $91.2 million and a $42.2 million increase in repayments of finance leases and long-term debt, including the first quarter 2022 financing activities from ACT and MME.


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

~~Inflation can have an impact on~~Most of our operating ~~costs. A prolonged period~~expenses are inflation-sensitive, with inflation generally leading to increased costs of operations. Price increases in manufacturer 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 could cause interest rates, fuel, wages, and other costs to increase ~~which would~~as well. Any of these factors could adversely affect our results of operations unless freight rates correspondingly ~~increased. Consistent with trends in the trucking industry overall, we continue to experience inflationary pressures with respect to driver wages, as compared to prior years.~~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.

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ITEM 3.			QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

We have exposure from variable interest rates, primarily related to our ~~2017~~2021 Debt Agreement and 2021 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 1.1% as of ~~June 30, 2021)~~March 31, 2022) and fixed rate equipment lease financing. Assuming the level of borrowings as of ~~June 30, 2021,~~March 31, 2022, a hypothetical one percentage point increase in interest rates would increase our annual interest expense by ~~$6.3~~$16.6 million.

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 of diesel price per gallon in the US ~~increase~~increased to ~~$3.21~~$4.36 for the ~~second~~first quarter of ~~June 30, 2021~~2022 from an average of ~~$2.44~~$2.91 in the ~~second~~first quarter of ~~June 30, 2020. The weekly average of diesel price per gallon in the US increased to $3.06 for the year-to-date June 30, 2021 from an average of $2.67 in the year-to-date June 30, 2020.~~2021. 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.

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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 ~~June 30, 2021,~~March 31, 2022, 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

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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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PART II OTHER INFORMATION


ITEM 1.			LEGAL PROCEEDINGS

Information about our legal proceedings is included in Note 109 of the notes to our condensed consolidated financial statements, included in Part I, Item 1, of this Quarterly Report for the period ended ~~June 30, 2021,~~March 31, 2022, and is incorporated by reference herein. Based on management's present knowledge of the facts and (in certain cases) advice of outside counsel, management does not believe that loss contingencies arising from pending matters are likely to have a material adverse effect on the Company's overall financial position, operating results, or cash flows after taking into account any existing accruals. However, actual outcomes could be material to the Company's financial position, operating results, or cash flows for any particular period.


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 ~~2020~~2021 Annual Report in the section entitled "Item 1A. Risk Factors," describes some of the risks and uncertainties associated with our business. ~~In addition to the risk factors set forth in our Form 10-K, we believe the following additional risks and uncertainties should be considered in evaluating our business and growth outlook:~~

~~Our acquisition of ACT presents certain additional risks to our business and operations.~~

On July 5, 2021, we acquired ACT, a leading LTL carrier that also offers dedicated contract carriage and ancillary services. The acquisition presents certain additional risks to our business and operations, including, among other things:

•prior to the acquisition of ACT, our management team had limited experience with LTL operations and therefore may be challenged in managing the LTL operations, particularly if there were a loss of the ACT management team;

•~~LTL operations are more capital intensive than truckload operations, including the need for additional terminals and types of equipment;~~

•LTL operations require more human capital than truckload operations, including the need for dock employees and maintenance technicians, both of which are difficult to recruit and retain given the tight labor market;

•potential adverse reactions or changes to business relationships resulting from the completion of the acquisition, including potential breakdown of alliances between ACT and its capacity providers that are needed to meet customer requirements; and

•~~increased workers' compensation incidence rates generally associated with LTL operations.~~

In addition to the risks regarding unionization set forth in our Form 10-K, the unionization of any of our employees, including within ACT’s LTL operations, could have a material adverse effect on our business, customer retention, financial condition, results of operations, and liquidity, and could cause significant disruption of, or inefficiencies in, our operations, because:

•~~restrictive work rules could hamper our ability to improve or sustain operating efficiency or could impair our service reputation and limit our ability to provide certain services;~~

•~~a strike or work stoppage could negatively impact our profitability and could damage customer and employee relationships;~~

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•~~shippers may limit their use of unionized companies because of the threat of strikes and other work stoppages;~~

•~~unionization of any of our LTL operations could lead to pressure on our remaining LTL and truckload employees to unionize;~~

•~~collective agreements could result in material increases in wages and benefits; and~~

•~~an election and bargaining process could divert management’s time and attention from our overall objectives and impose significant expenses.~~

In addition, material differences in results as compared with those expected from the acquisition could arise due to those risks and uncertainties described in our Form 10-K Risk Factors, including, among other things, business disruption, operational problems, financial loss, technology and financial reporting and internal controls integration, legal liability to third parties and similar risks, any of which could have a material adverse effect on our business, customer retention, financial condition, results of operations, or liquidity.


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

~~April 1, 2021 to April 30, 2021~~

—

~~196,338,538~~

~~May 1, 2021 to May 31, 2021~~

—

~~196,338,538~~

~~June 1, 2021 to June 30, 2021~~

—

~~196,338,538~~

~~Total~~

—

~~196,338,538~~


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
January 1, 2022 to January 31, 2022	—	$	—	—	$	192,825,135
February 1, 2022 to February 28, 2022	1,434,998	$	53.61	1,434,998	$	115,895,786
March 1, 2022 to March 31, 2022	1,288,494	$	52.74	1,288,494	$	47,943,813
Total	2,723,492	$	53.20	2,723,492	$	47,943,813

1On ~~November 30, 2020, the Company~~April 25, 2022, we announced that the Board had approved the ~~$250.0~~$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 ~~2020~~2022 Knight-Swift Share Repurchase Plan. See Note 10 in Part I, Item 1 of this Quarterly Report.


ITEM 3.			DEFAULTS UPON SENIOR SECURITIES

Not applicable.


ITEM 4.			MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5.			OTHER INFORMATION

None.

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ITEM 6.			EXHIBITS

Exhibit
Number

Description

Page or Method of Filing

2.1*

Agreement and Plan of Merger, dated as of April 9, 2017, by and among Swift Transportation Company, Bishop Merger Sub, Inc., and Knight Transportation, Inc.

Incorporated by reference to Exhibit 2.1 of Form 8-K filed on April 13, 2017

2.2*

Stock Purchase Agreement, dated as of July 5, 2021, by and among AAA Cooper Transportation, the Stockholders of AAA Cooper Transportation, Knight-Swift Transportation Holdings Inc., and Reid B. Dove, in his capacity as Sellers’ Representative

Incorporated by reference to Exhibit 2.2 of Form 10-Q for the quarter ended September 30, 2021

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

~~Third~~Fourth Amended and Restated By-laws of Knight-Swift Transportation Holdings Inc.

Incorporated by reference to Exhibit ~~3.2~~3.1 of Form ~~10-Q for the quarter ended September 30, 2020~~8-K filed on February 9, 2022

10.1 **

F i f ~~th Amendment to Amended and Rest~~a ~~ted Receivables Purchase Agreement, by and among Swift Receivables~~Company II, LLC, Swift Transportation Services, LLC, the various Conduit Purchasers party thereto, the various Related Committed Purchasers party thereto, the various Purchase Agents party thereto, the various LC Participants party thereto, and PNC Bank, National Association, as administrator and LC Bank, dated April 23, 2021.Form of Senior Executive RSU Award Notice

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 David A. Jackson, 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 Adam W. Miller, 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 David A. Jackson, 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 Adam W. Miller, 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(b)(2)~~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.

** Management contract or compensatory plan, contract, or arrangement.

5855

Table of Contents Glossary of Terms

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:

~~August~~May 4, ~~2021~~2022

/s/ David A. Jackson

David A. Jackson

Chief Executive Officer and President, in his capacity as

such and on behalf of the registrant

Date:

~~August~~May 4, ~~2021~~2022

/s/ Adam W. Miller

Adam W. Miller

Chief Financial Officer, in his capacity as such and on

behalf of the registrant

5956


	June 30, 2021
			Gross Unrealized
	Cost or Amortized Cost		Gains		Temporary Losses		Estimated Fair Value
	(In thousands)
US corporate securities	$	8,589	$	0	$	(3)	$	8,586


Restricted investments, held-to-maturity	$	8,589	$	0	$	(3)	$	8,586


Share Repurchase Plan		Quarter-to-Date June 30, 2021			Year-to-Date June 30, 2021
Board Approval Date	Authorized Amount	Shares	Amount		Shares	Amount
		(shares and dollars in thousands)
November 24, 2020 1	$250,000	0	$	0	1,303	$	53,661

		Quarter-to-Date June 30, 2020			Year-to-Date June 30, 2020
May 30, 2019	$250,000	0	$	0	1,139	$	34,630