Knight-Swift Transportation Holdings Inc.

Good afternoon, my name is Aaron and I'll be your conference operator today. At this time, I would like to welcome everyone to the Knightswood Transportation first quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise. If at any time during this call you require immediate assistance, please press star zero for the operator. Speakers from today's call will be Adam Miller, Chief Executive Officer Andrew Heff, Chief Financial Officer, Brad Stewart, Treasurer and Senior VP of Investor Relations. Mr. Stewart, the meeting is now yours.

Thank you, Aaron. Good afternoon, everyone, and thank you for joining our first quarter 2025 earnings call. Today, we plan to discuss topics related to the results of the quarter, current market conditions, and our earnings guidance. We have slides to accompany this call, which are posted on our investor website. Our call is scheduled to last one hour. Following our commentary, we will answer questions related to these topics. In order to get to as many participants as possible, we limit the questions to one per participant. If you have a second question, please feel free to get back in the queue. We will answer as many questions as time allows. If we are not able to get to your question due to time restrictions, you may call 602-606-6349. To begin, I will first refer you to the disclosures on slide two of the presentation and note the following. This conference call and presentation may contain forward-looking statements made by the company that involve risks, assumptions, and uncertainties that are difficult to predict. Investors are directed to the information contained in item 1A, Risk Factors, or Part 1 of the company's annual report on Form 10-K filed with the United States Securities and Exchange Commission. for a discussion of the risks that may affect the company's future operating results. Actual results may differ. Before we get into the slides, I will hand the call over to Adam for some opening remarks.

Thanks, Brad, and good afternoon, everyone. With all the uncertainty in the market, I thought it would make sense to maybe open up the call with some high-level remarks regarding the first quarter as well as the current market, and then I'll turn it over to Brad and Andrew to cover the remaining slides. Here to kick it off, early in the first quarter, several indicators, both internal and external, were pointing to positive momentum in the truckload market. Early bid season results were positive and volumes remained healthy following the fourth quarter. In February, severe weather in areas of the country not well positioned to handle snow and ice contributed to a slowdown in volumes. We were expecting a nice seasonal volume rebound in March. However, talks of tariffs and the fluid trade policy spurred more cautious tone among shippers that brought a pause to the momentum in the market. The increased uncertainty among shippers and growing concern among consumers resulted in lower volumes and an absence of the typical seasonal build in March. This has also impacted current rate negotiations in the truckload bid season. We are still achieving increases in the low to mid single digit percentage range, however, we are not seeing the increases build like we had originally anticipated the bid environment would play out. Further, the progress we are making on contractual rates may not be as visible in our second quarter overall realized revenue per mile if the market experiences a low in volumes and the spot market remains weak. We are staying close with our customers as the situation unfolds, and they are generally expressing a few different approaches at this point. Some are pressing forward with little change, needing product as they see strength in their underlying sales. Some have already cut back or in the process of cutting back on purchases, mostly centered around China, while still others are in wait and see mode where they're drawing down inventory to support sales in the near term. At this point, our customers are expressing more concern around cost impacts of tariffs and less concern regarding demand from their customers. These strategies can create negative disruptions in volume in the near term. However, if consumer spending remains steady, goods will have to move at some point, and that may create opportunities for carriers that are proven to be nimble with scale, like many of our Knight Swift truckload brands. We recognize Our customers' plans can change as clarity develops, so we are focused on controlling what we can control. For example, we are tightening our equipment fleet by selling underutilized tractors and trailers that will lead to lower depreciation and greater utilization of our remaining assets. We are also investing in new technology and raising the intensity around our safety and claims and reducing overhead costs. We need to have the most efficient cost structure possible in order to be prepared for what could be a volatile environment in the near term. With all that being said, during the first half of April, market conditions have largely been stable with where we exited the first quarter, but there is a wide range of possible paths forward from here. There could be a lull in volumes as shippers work to adjust supply chains, or there could be a pull forward in anticipation of a return of reciprocal tariffs. Changes in trade policy could create the need for shippers to react quickly in managing inventory levels, which could benefit the fast, flexible nature of truckload service. On the other hand, concerns of recession risk could cause shippers to trim inventories and to aggressively prioritize the lowest short-term cost over all other factors. In light of the unusual uncertainty, we feel we must adjust our approach to providing near-term earnings guidance. Starting with this report, we are updating our guidance for the second quarter and will hold off on introducing guidance for the third quarter until enough clarity develops to support a return to two quarters of forward guidance. Business conditions for the second quarter are also uncertain enough that we are providing a wider range than our normal practice, and with risk appearing skewed to the downside in the near term, we are taking a somewhat more conservative approach as well. Even in an uncertain environment, we continue to improve on costs and collaboration across our truckload segment and grow our volumes and network in our LTL segment, opening seven more locations during the quarter and building to 30% growth in daily shipments year over year in March. The LTL industry is not immune to the wait and see attitude dampening freight demand, but we are not expecting the same potential for volatility in LTL demand in the second quarter as we do for truckload. Also, our significant LTL network expansion over the past year positions us for differentiated growth. We are confident that our experienced team leadership alignment across our businesses, strong balance sheet and our unique skill, diversified offerings and value proposition will serve us well as we navigate the unfolding landscape. With that, I will turn it over to Brad for our overview on slide three.